Edmonton-based HonestDoor has secured $2.2 million CAD on its mission to improve the accuracy of property valuations in Canada.
With a platform that aggregates data from a variety of sources, HonestDoor has created a space where individuals can review and update home valuations online. It’s a model that is widely available within British Columbia, Alberta, and Manitoba, with the startup looking to become the go-to site for home valuations across Canada.
HonestDoor’s national agenda comes amid a hot housing market that has seen prices soar, a shortage in availability, and bidding wars.
“HonestDoor turned real estate pricing into a science and uses data to remove the human bias,” said Luge Capital co-founder and General Partner David Nault, whose firm led the seed round.
“In Canada, there was no place for real estate data,” said Daniel Belostotsky, co-founder and CEO of HonestDoor. “There’s not really one site that had anything. And if you went to a listing site, the big difference is the listing sites would have information about listed properties, but they wouldn’t have information on anything else.”
HonestDoor is looking to use the capital to make it possible to get on-demand valuations on any property in Canada, and has plans to test the model in select American markets.
The round brings the startup’s total funding to date to $2.7 million after its secured initial capital in early 2020.
In addition to bringing on new investor Luge, Honest Door saw participation from a mix of new and return investors. New investors included Reach Canada, the accelerator of Second Century Ventures, an early-stage technology fund backed by the National Association of Realtors, as HonestDoor took part in the program. Notable Alberta-based Wheaton Group, which has touchpoints in finance, automotive, and airlines, also joined as a first-time investor.
Return investors Bluesky Equities, Conconi Growth Partners, Panache Ventures, SAF Group, and Startup TNT also took part, alongside angel investors Sanders Lee (of real estate group Hopewell), Ashif Mawji (Rising Tide VC), and Blaine LaBonte (Cougar Drilling Solutions).
The idea of providing online home valuations is not a new one. In the United States (US), major real estate listing platform Zillow offers Zestimates, a tool for seeing how much homes are worth. Closer to home, Properly, which has become a major digital real estate player also offers an estimate tool.
While in Canada consumers can also find valuation estimation tools on financial institution and realtor websites, startups looking to innovate in the space are more prominent in the US. Luge’s Nault argues this is because of access to data. “In the US, significant data about real estate is readily available but in Canada it’s another ballgame,” said Nault. “Data and insights on real estate are not readily available and there is a lack of transparency.”
HonestDoor aggregates data from local sources, such as municipalities that hold property data, but also allows users to submit information. The idea behind the latter is to improve the accuracy of the valuations. HonestDoor users are allowed to submit things like before and after pictures of renovations, appraisal reports, and purchase contracts. Belostotsky noted that, to date, 20,000 users have submitted data to the site.
This type of information can be especially useful in a day and age when home buyers are in a competitive market that is forcing them to waive home inspections. It’s also a way for homeowners to improve their valuations, Belostotsky argued.
“The HonestDoor solution is a win-win for everyone in the chain from the seller to the buyer and from the real estate agent to the lender,” Nault told BetaKit. “We invested in HonestDoor because it is a natural fit with the growth of digital mortgages, insurance and real estate shopping.”
Belostotsky explained that one of the reasons he created HonestDoor is because he felt consumers should have access to this kind and level of information online. “Transparency for all rather than transparency for some,” he called it.
HonestDoor was first launched in early 2019 after Belostotsky was working as a venture partner at Panache. He joined the venture firm in 2018 to help establish its presence in the city. Belostotsky also runs his own boutique investment firm, Otto Capital, which he created after he founded his first company out of university and used the money from its sale to invest in real estate.
He launched HonestDoor (alongside Macgyver Ussher) after buying his own properties for years and realizing that access to data wasn’t widely accessible to the public.
Having built out its presence in Western Canada for the last few years, HonestDoor is ready to take on Canada, and the US. Belostotsky said HonestDoor has “aggressive” geographic goals for Canada during this next quarter.
The CEO also pointed to the potential to add real estate listings to HoenstDoor, arguing that the startup’s data would be its differentiator.
“Most of the data providers work with business clients, and they don’t really work with consumers,” said Belostotsky. “Our angle is different … we’re going to find, collect, and we’re going to use our own models to come up with the best HonestDoor prices in the country. And then we’re just going to share it with consumers, and we want … the whole country to be on our site.”