Austin—An Austin real estate investment company has launched a buyer-focused, online residential home search business called Bungalo Technologies.
Amherst, a business that uses data and analytics to invest billions of dollars into public securities and residential and commercial real estate, is launching Bungalo with $225 million in funding upfront, and says it will invest another $1 billion next year. Amherst’s subsidiary Amherst Residential is making the investment. Bungalo is an online home search tool that appears similar to more established competitors like Redfin and Zillow, but the appearance is where many of the similarities end.
Unlike Redfin and Zillow, which list properties of homeowners, Bungalo owns the homes that it lists. The company buys, inspects and renovates properties. Bungalo is selling homes in two markets so far, the Dallas-Fort Worth metro area and Tampa, FL. It has already purchased 155 homes, according to Bloomberg, which released the news Tuesday before the company issued a press statement. Amherst Residential has a portfolio of 20,000 homes in 28 U.S. markets, according to the news release, which may indicate room to grow for Bungalo.
Bungalo contends that it is making the buying process easier by offering move-in ready homes during a time when housing inventory is limited. The company funnels users toward its affiliate Bungalo Mortgage for financing (it says buyers have a choice in whether they use it), where they can get preapproval and underwriting. Bungalo says its process doesn’t allow for price haggling or over-bidding. While it may make money on the financing end, flipping the homes appears to be the main cash driver of the business—an industry where the margins are slimming, as Bloomberg noted.
Zillow (NASDAQ: [ticker:ZG]) and Redfin (NASDAQ: [ticker:RDFN]), both of which are based in Seattle, offer home listings across the country for the broader housing market. Zillow makes money by selling advertising and data, particularly data to real estate professionals who want to track information about potential clients. Redfin is a real estate brokerage that aims to use its technology, both in an app and on the Web, to limit house-buying costs and draw in more customers and sales.
