A house is generally a great investment but liquid it's not. While most homes appreciate over time and usually offer an income tax break, it can take a long time to sell a house in today's real estate market.
That's where a start-up called OpenDoor comes in. The San Francisco company buys homes for cash, then tries to flip them at a profit later.
It's basically a data-driven enterprise that has a very good idea how much a home in a given market is worth. It uses that data to give homeowners a quote the same day they inquire, in most cases.
While sellers may make a few dollars less than they would if they sold the home themselves or through a real estate firm, they can get the money much faster and with less hassle through OpenDoor. That's important to families that have to move suddenly for job reasons or who simply need the money. OpenDoor charges fees ranging from 7% to 12%.
It's similar to car-buying services like webuyanycar.com, which offers online quotes and nearly instant cash for cars.
OpenDoor currently operates in the Phoenix area, which has a large inventory of homes and warm weather year-round, providing a robust test of the company's business plan.
Besides its data-driven valuation and purchase methods, OpenDoor uses a unique 24-hour self-guided open house tour system. Prospective buyers get a password that unlocks homes OpenDoor is trying to sell.
If the company's Phoenix operations are successful, watch for OpenDoor or something similar in your neighborhood over the next few years.