Real estate startup Properly eyes cross-canada expansion

Real estate technology startup Properly Inc. has raised $44 million to expand across Canada as it bids to disrupt an industry “largely focused on serving itself.”

The funding round for the Toronto company — which allows buyers to purchase a new home before listing their current property on the market — was led by California-based Bain Capital Ventures. The round values Properly at $220 million.

Intact Ventures, the venture arm of Toronto-based insurance provider Intact Insurance Company Ltd. and real estate technology provider FCT participated in the round, as well as individual investors including Wealthsimple co-founder and chief executive Mike Katchen, and Softbank Vision Fund partner Lydia Jett.

The Toronto housing market, in which Properly operates, saw a surge of activity during the pandemic as homeowners sought more space and raced to lock in low interest rates. The boom translated to more business for the company as buyers facing an intensely competitive market sought out new resources in an industry that has been reluctant to change even as prices have been on a decade-long tear, Properly co-founder and CEO Anshul Ruparell said in an interview.

“Despite the fact that home values have doubled in Canada and that the percentage of commission has stayed the same, the actual experience to buy and own a home hasn't evolved at all,” Ruparell said.

As with most real estate brokers, Properly charges five-percent commission on the sale price of the property. In addition, it provides sellers with a purchase agreement based on the equity in their home. The homeowners then provide their mortgage broker with the agreement to secure financing to purchase their new home before selling the existing property. Properly has 90 days to sell the home before it is required to buy it themselves. If it sells the home for a higher price than the sale agreement, it refunds the customer the difference.

The Canadian market is long overdue for new ways of purchasing real estate, Bain partner Merritt Hummer said.

“When we think about things like home prices ... getting out of reach for consumers, or how difficult and onerous it is to secure a mortgage ... those are some of the pain points ... felt by Canadians to an even greater extent.”