Sequoia Backs Aalto: Direct Home Sales Marketplace Raises $13M

Navigating the Challenges of Home Sales

Selling a property can often be a complex and frustrating undertaking. The traditional process of listing, arranging viewings, and negotiating a sale presents significant hurdles for homeowners.

This difficulty frequently leads individuals to postpone selling, contributing to limited housing availability, particularly in competitive markets like the San Francisco Bay Area.

Aalto: A New Approach to Home Sales

To address this issue, a startup named Aalto has developed a novel homeowner marketplace. This platform operates privately, bypassing the traditional Multiple Listing Service (MLS), and empowers sellers with greater control over the listing, showing, and sale of their properties.

Today, Aalto is officially launching and announcing the successful completion of a $13 million Series A funding round, spearheaded by Sequoia Capital.

Investment Details

Background Capital, Defy Partners, Maple VC, and Greg Waldorf – an early investor in Trulia – also participated in this financing. This brings Aalto’s total funding to $17.3 million since its establishment in 2018.

Direct Connection Between Homeowners and Buyers

Aalto’s online marketplace, which went live in April, directly connects homeowners with prospective buyers. The company asserts that sellers can list their homes on the platform in as little as five minutes, a stark contrast to the conventional timeframe of approximately five weeks.

Since its launch in the Bay Area, Aalto has cultivated a network exceeding 30,000 buyers, and over two dozen homes have been successfully sold through the marketplace. Currently, around 85 properties are listed for sale, with an average of one new listing added daily.

A Family Connection and a Vision for Change

Interestingly, Aalto’s founder and CEO, Nick Narodny, comes from a family deeply rooted in the real estate industry – his parents and sibling are real estate agents. He acknowledges that the platform could be perceived as a challenge to the existing industry, but emphasizes that it ultimately aims to increase housing supply, alleviate affordability concerns, and maximize returns for sellers.

Currently, 5-10% of available properties in competitive areas such as Dublin, Fremont, Mill Valley, and Milpitas are listed on the Aalto platform. Narodny states the company is focused on bringing more homes to market more quickly.

“The experience of buying or selling a home is a major life event for many, yet it remains a cumbersome and outdated process,” he explains.

Streamlining the Listing Process

Aalto’s goal is to double the number of homes available for sale in the Bay Area by simplifying the listing process, eliminating the need for intermediaries and complex contracts. This significantly reduces the barriers to selling, allowing homes to be listed an average of four and a half months earlier than through traditional methods.

The platform features a preview listing option, enabling sellers to list their properties without obligation. They can also create a waitlist of qualified buyers while evaluating their options.

“We utilize public records and information to simplify the process, requesting sellers to answer a series of questions,” Narodny explains. Sellers can then view interested buyers, including those who are prequalified or capable of making all-cash offers.

Enhanced Control and Privacy for Sellers

The platform also offers a more discreet experience, giving sellers greater control over who views their home and when. Sellers can schedule virtual or in-person showings at their convenience and determine their own selling timeline – whether it’s a few weeks or several months.

For instance, a San Francisco-based surgeon recently listed his home on Aalto, aiming to move at the end of October. He received interest from over two dozen potential buyers and facilitated a few tours, ultimately selling the property on a schedule that suited his needs.

“Sellers have complete control over the terms of the sale and are more actively involved in the process,” Narodny emphasizes. The platform currently attracts busy professionals, individuals in leadership positions, and growing families.

Financial Benefits and Personalized Listings

There is also a financial advantage. By removing the agent as an intermediary, sellers can potentially earn an average of $44,000 more on their home sale. Aalto charges a 1% fee, compared to the 2-2.5% commission typically charged by agents. However, the platform also offers access to “expert, licensed” professionals for sellers who require assistance with more complex aspects of the sale.

The platform allows sellers to create more personalized descriptions of their homes, conveying a more authentic narrative than a standard agent listing.

“We encourage sellers to share their own stories about their homes,” Narodny says.

Furthermore, the platform enhances privacy. Unlike the MLS, Aalto listings do not display listing dates or price reductions. Similar to Airbnb, the seller’s exact address is not revealed, only a general radius.

Benefits for Buyers

Buyers also benefit from the platform, gaining access to more options and the ability to set up instant alerts, join waitlists, and schedule showings through a user-friendly interface. They can also “anonymously prequalify and share that information with sellers,” according to Narodny.

Reinventing the Real Estate Experience

Bryan Schreier, a partner at Sequoia Capital, believes that real estate is “one of the last major industries operating with a 20th-century approach.”

“The process is often stressful, with sellers lacking visibility and buyers anxiously awaiting bid outcomes,” he states. “Aalto is the first company to truly reimagine home buying and selling by prioritizing the consumer experience. It goes beyond a simple listing site, fundamentally changing every aspect to be customer-focused rather than agent-focused.”

Future Expansion and Collaboration

Looking forward, Aalto plans to expand its services beyond the Bay Area to other major real estate markets in California and across the United States. The company will also utilize its new funding to further enhance its technology.

Narodny emphasizes that, despite potential concerns from some agents, the platform is not intended to be adversarial.

“My family and I have a strong relationship, and I frequently discuss this with them,” he shared with TechCrunch. “I genuinely believe Aalto is a complementary force. We continue to collaborate with agents daily and will continue to do so… It’s not about replacing agents entirely.”