The Ottawa entrepreneur behind the country’s fastest-growing online car auction platform is now applying the same concept to real estate with a new venture he says is on the cusp of landing the largest seed financing round in Canadian tech history.
Six years after launching auto auction site EBlock and helping build it into a firm with nearly 700 employees, Ryan O’Connor has unveiled his newest startup: Unreserved, an online platform that allows prospective homebuyers to bid on properties in real time while guaranteeing sellers a minimum price.
Four houses have sold on Unreserved since the site went live on July 28, with two more sales expected to close this week. Seven houses are now listed on the platform, and dozens more are in the pipeline, O’Connor says.
The site allows prospective buyers to see every bid that comes in the instant it’s submitted, with the chance to counterbid. That means no one is left making a blind offer and crossing their fingers that it’s a winner, O’Connor explains.
“Everyone wants to talk about people overpaying (for homes), but what nobody’s talking about is the door getting closed on everybody else who wanted to pay more,” he says. “That’s a serious problem for buyers – the lack of transparency.”
Every residence on Unreserved is evaluated by two independent appraisers before a minimum price is set. If a property fails to fetch that baseline amount – a situation that’s already happened once – the firm will cut a cheque to the seller to make up the difference.
One per cent fee
“We’re never going to be perfect on our appraisals, but we’re really confident that sellers will gravitate towards this because of the assurances we’re (offering),” O’Connor says, noting the company took a hit of about $20,000 for its first overvalued estimate.
While realtors typically earn a four to five per cent commission, Unreserved charges only a one per cent fee to sellers. The company also inspects all houses before listing them and offers a one-year warranty that covers essential work such as roof and foundation repairs to a maximum of $100,000 with a $5,000 deductible.
So far, O’Connor says, the concept seems to be a winner. He says every transaction so far has attracted several bidders, suggesting that even though the capital’s red-hot housing market appears to be cooling off a bit – home sales fell more than 20 per cent in July compared with a year earlier, according to the Ottawa Real Estate Board – there is still plenty of interest in the online auction format.
“Buyers are going to gravitate towards transparency,” O’Connor says. “We’re a really well-funded startup that’s committed to improving the buying and selling experience.”
Indeed, the bootstrapped startup’s financial warchest looks to be poised for a dramatic boost.
“Buyers are going to gravitate towards transparency.”
O’Connor says Unreserved is aiming to secure “north of $20 million” in venture capital over the next couple of months, with contributions expected from current investors in EBlock and other well-heeled backers in Canada and the U.S.
“We’re confident it’s going to be the largest seed round in Canadian (tech) history when it’s closed,” he says. “There are investors reaching out every day.”
The firm has also gained a valuable adviser in Simon Dean, the former CEO of Royal LePage who joined Unreserved’s board of directors as chairman last week. O’Connor says Dean, who learned about the startup through one of EBlock’s investors, is “just a wealth of knowledge.”
Armed with his experience of growing EBlock into a multimillion-dollar enterprise from the ground up, O’Connor is confident he can duplicate that feat in a new arena with Unreserved.
He expects the 30-employee company to more than triple its headcount over the next 12 months as it expands beyond the National Capital Region. O’Connor is eyeing a move into the GTA early next year, followed by Vancouver later in 2022.
“We were able to grow 100 per cent year over year at EBlock, and I feel very confident we can do the same with this one,” says the former competitive boxer, who started his first business – a used car dealership – after failing to make Canada’s Olympic team for the 2000 Games in Sydney.
“I’m not going to lie – it is scary auctioning off million-dollar homes unreserved. But when you believe in something … I feel so passionately about trying to bring transparency to this market. When I do something, I go all in. I just have that feeling that we’re building something really special again.”