Orchard, which operates a home-buying and selling platform, announced it has raised $100 million in Series D funding at over a $1 billion valuation.
Accomplice led the round with participation from repeat Orchard investors FirstMark, Revolution Growth, First American, Juxtapose and a syndicate of new investors.
Last year, the company completed a $69 million series C funding round. It also launched its lending division, Orchard Home Loans, in July. Its rival, Knock, shifted its focus to lending around the same time. Since its launch in 2017, Orchard has raised $255 million in total equity.
In 2022, following this latest round, the company said it will expand to four new markets. The company is headquartered in New York City and currently offers services in Colorado, Georgia, Washington, D.C., North Carolina and Texas. Next year, it plans to expand to the West Coast. Orchard also said it will launch “new services to offer millions more homebuyers a better way to purchase their dream home.”
“We’re proud to have built a business that gives the consumer unparallelled convenience, certainty, and control when buying a home.“ said Court Cunningham, CEO and co-founder of Orchard, in a prepared statement accompanying the announcement. “We’ve had a year of hyper growth, but at Orchard it’s still day one for transforming residential real estate in favor of the customer. This funding will allow Orchard to continue to innovate for our customers and expand geographically to offer our services to millions more homeowners across the country.“
As rates change and the market shifts to a more purchase-driven origination environment, lenders need to carefully monitor margins and profitability. If we’ve learned anything in the past year, it’s that operational flexibility and accurate servicing valuation are key to lending profitability.
Presented by: Black Knight
In addition to its funding round, Orchard announced that Christa Quarles, CEO of Canadian graphics processing company Corel Corporation, will join its board of directors in October 2021. Prior to joining Corel, Quarles served as CEO of OpenTable. She also previously held senior roles at Nextdoor, a social networking service for neighborhoods, and was senior vice president of The Walt Disney Company‘s online gaming division.
Cunningham said Orchard is doing to the home-buying process what Amazon did to e-commerce, by reducing the “friction and cost” in the process.
Customers first complete an intake process to tell Orchard about their home and goals. After a home assessment, Orchard prepares a cash offer, and customers can tour homes in their area. Orchard then makes a contingency-free cash offer, and customers can move in after closing. The company offers a minimum backstop price on their old home, which it uses a machine learning algorithm to determine.
Homebuyers are prequalified for a mortgage to have an idea of what they can afford, and work with any lender of their choice. The customer uses the mortgage to finalize the purchase of their new home. The homeowners start paying the mortgage on their new home after their old home sells.
Orchard then transfers the new home to the customer’s name, and charges a one-time 6% fee on the sale of the old home.
On average, the old homes Orchard sells are about $400,000, and the new homes it buys on behalf of the homeowners are $475,000. That would amount to a $24,000 fee upon sale of the average old home.
Along with lending, the company’s platform includes title and insurance offerings: Orchard Title and Orchard Insurance. In the past year, it also added Orchard Concierge, a service that repairs and updates homes for homeowners ahead of sale. With the exception of Concierge, those services account for about 40% of the total fees it collects.