The days of buying a house — entirely online — have arrived.
Bungalo, a startup with $225 million in financial backing, has launched a solely digital platform where buyers can search, finance and purchase newly renovated homes.
The company is an offshoot of Austin-based Amherst Holdings, a $13 billion financial firm that in 2012 created Amherst Residential, which owns and manages 20,000 single-family rentals nationwide.
Amherst said it invested $225 million to launch Bungalo — which joins a burgeoning group of iBuying platforms that includes Opendoor, Zillow and Redfin. All three buy and sell homes directly to consumers after fixing up the houses in varying degrees.
In Bungalo’s case, the company will renovate each home it sells from top to bottom. It also offers “no-haggle” pricing — meaning it sets the price and accepts the first offer it receives.
“Residential real estate has lagged behind in on-demand services,” said Greg Stewart, the company’s chief operating officer.
Bungalo will start by selling 25 homes in Dallas-Forth Worth and 10 in Tampa, Florida, he said, before expanding to new markets later in the year.
Although transactions can be done entirely online, Bungalo also has a sales team of licensed agents who work with clients who prefer a high-touch approach. (For clients with buy-side agents, the company will pay a full commission.)
Drew Flahive, president of Amherst Residential, said a “very large chunk” of the company’s initial investment in Bungalo will be spent on real estate and the services around repairing the property to move-in ready condition, he said. Other capital will go towards technology, infrastructure and staff.
Flahive said Amherst is committed to investing an additional $1 billion in Bungalo next year.
“This is a huge commitment that Amherst Residential and Amherst Holdings has made to the business,” Flahive said. “And it’s one that we’re able to be very patient with because it’s our own capital we’re investing in Bungalo.”
Each Bungalo home has to meet a 160-point quality standard, and all homes come with a one-year, third-party warranty. Buyers can also choose to get financing from Bungalo Mortgage, an affiliated underwriter which is also part of the new venture.
According to Stewart, homes will be priced around $250,000 to $550,000 after a full renovation.
“There’s a lack of high-quality inventory,” he said said. “From our research, buyers are looking for turn-key. We’re trying to get them as close to a new build as possible.”