Instant homebuyer Opendoor has acquired “tech”-focused mortgage brokerage RedDoor, the companies announced Friday.
The purchase comes amid questions of whether iBuying is a viable business model following Zillow’s announcement Tuesday that the company is winding down its iBuying arm.
Founded in 2018 and headquartered in Sacramento, RedDoor calls itself a “digital first mortgage brokerage” that can preapprove a loan applicant “within 60 seconds,” likely what was appealing to the iBuyer.
The company has funded over $200 million in mortgages and partners with over 70 lenders, according to its website. RedDoor will be rebranded to become part of Opendoor.
An Opendoor spokesperson declined to discuss how much buying RedDoor cost, and messages left with RedDoor went unreturned.
IBuying is empirically a money-losing industry even amid a historic housing boom. But some investors see add on services including mortgage as a possible way for iBuyers to eventually turn a profit.
Opendoor began Opendoor Home Loans in 2019, and the mortgage loan originator operates today in 26 markets and eight states. However, one of those states is not California where RedDoor is licensed to do business.
Opendoor Home Loans present size is not totally clear as the company has not broken out its earnings. Opendoor has $25.4 million in mortgage loans held for sale under agreement to repurchase as of June 30, according to a public filing.
According to a blog post from Opendoor Chief Product Officer Tom Willerer, the company first heard of RedDoor, “From someone at Opendoor who had a fantastic experience working with them – in fact, she called RedDoor ‘magical.’ We immediately reached out to co-founders Heather Harmon and Ali Mackani.”
RedDoor’s chief operating officer, Harmon’s background is in real estate. She is still broker and CEO of Harmon Real Estate in Auburn, California, according to her LinkedIn profile.
Mackani is RedDoor’s CEO. His prior experience includes being part of an ultimately successful effort to keep the National Basketball Association’s Kings in Sacramento.
RedDoor appears to have just a handful of loan officers, who are salaried and don’t receive commission.
The RedDoor deal is one of multiple announcements Opendoor has issued prior to the company’s earnings call next Wednesday.
The company – which has repeatedly maintained it is “open for business” amid Zillow’s struggles – has announced a “real-time offers” partnership with Realtor.com, a new technology platform (Opendoor Complete), and a hiring plan in Canada all within the last 10 days.
