The company is also trying to simplify the many moving parts of the home buying transaction into a single platform, including scheduling visits, submitting an offer, and applying for a mortgage.
CEO Court Cunningham, a former marketing technology executive, said the idea for the company came from research into the hot spots for the trillion dollar housing market.
“The two biggest issues are the alignment between buying a new home and selling the old one – and the need to streamline that transaction process,” Cunningham said.
The company’s clients use the proceeds from the sale of their current home to purchase the new home that Orchard is managing. The company earns its money by acting as a broker on the transaction and collecting a 6% commission.
Orchard employs approximately 150 brokers in the 10 markets in which it operates.
If the client’s house does not sell within 120 days, Orchard buys it at a predetermined price. Cunningham said it has happened less than 5% of the time this year.
Orchard draws comparisons with tech companies like Opendoor and Zillow, Instant Buyers or iBuyers, which offer immediate liquidity for homes online. The iBuyers then try to sell the houses at a higher value. What sets Orchard apart, Cunningham said, is that he offers a minimum sale price but also works with the owner to sell at a higher market value.
“The consumer always has the security that his house is going to sell for a minimum price of X in 120 days, but he also has the advantage,” he said.
The company, launched in 2017 as Perch, has raised $ 252 million in venture capital. The last round was led by Complice, a Boston investment firm. Orchard uses lines of credit totaling over $ 100 million to finance the purchase of a home.
Orchard has around 500 employees in total, of which around 135 are in New York City. Those employees operate remotely, though the company is considering leasing a new office in Manhattan, which could open early next year, Cunningham said.
Orchard is not yet active anywhere in New York. It focuses on markets more focused on single-family homes, Cunningham said, including Atlanta, Denver and the Texas cities of Austin, Houston and San Antonio.
The company entered the suburbs of Washington, DC this year, and it plans to launch four more markets by January, but it is not yet considering the complicated New York market, Cunningham said.
“We’re going to start looking at how to support condos, co-ops and townhouses,” he said. “But our point of view is: Why add this complexity to the business when we have 5 million self-contained single-family bread and butter homes that we can make buying easier for the consumer.”