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Opendoor could make public debut via reverse merger at $5B valuation

Social Capital founder's blank-check company is reportedly in "advanced talks" to merge with iBuyer

Opendoor, the largest instant home buying platform in the country, could debut on the public market at a $5 billion valuation, according to a new report.

Chamath Palihapitiya’s Social Capital is in talks to use one of his blank-check companies, Social Capital Hedosophia Holdings Corp. II, to merge with Opendoor and take it public, according to Bloomberg

Palihapitiya’s special purpose acquisition company – better known as “SPAC” – raised $360 million in April and is “discussing raising fresh equity to help fund the transaction with prospective investors,” Bloomberg reported. The outlet called the talks “advanced” but noted that nothing has been finalized and the deal could still crumble. 

A representative from Opendoor declined to comment on the report. Social Capital could not immediately be reached for comment. 

Like other iBuyers, Opendoor has experienced a choppy 2020. The company, which has raised $1.3 billion from investors and was most recently valued at $3.8 billion in March 2019, suspended operations in March and did not resume buying homes until May. It laid off 600 workers, roughly 35% of its staff, citing the extraordinary circumstances of the pandemic on its business model.

But it remains the biggest player in a blossoming segment of real estate, in which tech-fueled companies – and even traditional brokerages – aspire to have a hand in every element of the home buying process. iBuyers’ market share more than doubled in 2019, according to industry analyst Mike Del Prete. Roughly $8.7 billion worth of homes were purchased by Opendoor, Zillow, Redfin, Offerpad and other iBuyers last year, Del Prete’s analysis found. 

Last month, Opendoor resumed buying in all 21 of its markets. It also announced that it would be hiring real estate agents (as independent contractors) in Phoenix as part of its plan to bulk up its Home Reserve iBuying platform.

While Opendoor is hiring a yet-to-be-determined number of 1099 agents, it already has an in-house staff to sell scores of homes across the U.S. In 2018, the firm acquired Los Angeles-based discount brokerage Open Listings for an undisclosed sum.

On its website, Opendoor said it paid out more than $133 million in commissions and referrals to other brokerages in 2019.

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