Zillow – Major players join financing for Toronto’s Properly
Executives from Wealthsimple, SoftBank and Zillow have joined Bain Capital and Intact Insurance to provide $44-million in financing for Toronto-based real estate brokerage Properly Inc. as it looks to expand across the country and further into financial services.
About a year after launching in Toronto, Properly plans to triple its 60-person staff and expand into the rest of Ontario, as well as Vancouver and other major Canadian cities. The company will also develop other products to help clients with home buying, selling and homeownership.
It is one of a handful of new companies trying to capture a part of the country’s lucrative residential real estate market that is dominated by established brands Re/Max and Royal LePage.
“We are offering an increasingly large set of tools and services that no other brokerage in Canada offers,” said Properly co-founder and chief executive Anshul Ruparell, adding that the funding will help the company build a one-stop shop for Canadians to buy and sell their homes.
One of Properly’s main draws is providing home sellers with a guaranteed sale if the seller’s property meets specific requirements. Properly also offers clients a $20,000 interest-free loan to help home sellers repair their properties before listing.
Properly’s new investors are Michael Katchen, co-founder of Canadian online financial services firm Wealthsimple Inc.; Lydia Jett, partner at a division of SoftBank Group Corp., the Japanese conglomerate known for big bets in the tech sector and its bungled WeWork investment; and Spencer Rascoff, co-founder of Zillow Group Inc., which helped popularize online home searches in the United States. Other new investors include Eric Wu, co-founder of Opendoor Technologies Inc., which buys and resells property online; and Jonathan Ehrlich, a well-known venture capital investor.
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A good chunk of the funding also comes from Bain Capital LP’s venture financing arm, which is making its first investment in Canadian residential real estate. In a statement, Boston-based Bain said it was backing Properly because it has the opportunity to become a vertically integrated company, providing every service needed to buy, sell and own homes. Unlike the U.S., Bain views Canada’s real estate industry as lacking in new ideas. “There has been very little innovation,” Bain Capital Ventures partner Merritt Hummer said in a statement.
The venture financing arm of Intact Insurance Co. Ltd. and FCT, which used to be known as First Canadian Title Co. Ltd., have also provided Properly with funding.
Mr. Ruparell said the insurers and expertise from his other investors will help speed up Properly’s development of other services, such as home insurance. He said it was too early to say how Properly would expand into the mortgage space except to say it would not become a lender.
So far, the company’s revenue comes from commissions it earns on real estate transactions. Like most realtors in Ontario, Properly charges a 5-per-cent commission on the sale price of the property, split between the buying and selling realtors. But Properly will offer more services for the commission if the seller’s house meets certain criteria or if someone wants to use a Properly realtor to also buy a property.
“Home prices have doubled in the last 10 years and the real estate commission has remained the same, and yet the service they provide customers has not changed at all. There is clearly an opportunity to deliver dramatically more value for the price they are paying,” Mr. Ruparell said.
All real estate players have benefited from the pandemic’s real estate boom. Low interest rates and demand for more room has driven the typical home price in the country up nearly 30 per cent, according to the Canadian Real Estate Association.
In the Toronto region, the typical home price is now more than $1-million. Smaller Ontario cities such as Guelph and Hamilton are no longer considered affordable with houses selling close to $800,000.
Mr. Ruparell said Properly is doubling its customers in the Toronto region every few months. Eventually, Properly expects to earn revenue from other financial services.
Mr. Ruparell would not say whether his company was profitable or provide a timeline of when he expected to be profitable. He said he hopes to one day take Properly public on the Toronto Stock Exchange.
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