It wasn’t that long ago that newspapers were quaking in their boots at the prospect of Craigslist, a free peer-to-peer buy/sell/trade site that would eventually be the death knell of the traditional classified section. Likewise, could Opendoor’s expansion of Opendoor Exclusives into a peer-to-peer marketplace mean the end of the Multiple Listing Service as we know it?
The iBuyer announced the expansion of its Opendoor Exclusives today, a program that offers pre-market listings owned by the company. The expansion comes less than 24 hours after Opendoor cut 18 percent of its workforce — approximately 550 employees — before the company’s third-quarter earnings call. It’s not the first time that Opendoor has made significant cuts in 2022. Opendoor already laid off 830 workers earlier this year.
“We did not make the decision to downsize the team today lightly but did so to ensure we can accomplish our mission for years to come,” Opendoor co-founder and CEO Eric Wu said in a blog post. “And while we may be navigating a once-in-forty year market transition, it doesn’t take away the difficulty, frustration, and sadness downsizing brings.”
Opendoor Exclusives: “An Amazon-Like” Experience
Despite losing so much of its workforce, Opendoor’s expansion of the Opendoor Exclusives program is being heralded by the company as a game changer that will “avoid the hassle of the traditional real estate model” and streamline the buying and selling experience to turn “what has historically felt like Craigslist into an Amazon-like, modern way to buy and sell a home,” the company said in a press release.
The program allows sellers to consider offers from investors and retail buyers alongside an offer from Opendoor.
“Homeowners can request an offer from our network of buyers, on top of an Opendoor offer, and sell in minutes without the need for repairs, extensive home prep, or months of open houses or listings,” Wu said in a statement. “The experience end-to-end is designed to put home sellers in control, with no upfront commitment, flexibility to close early, and certainty of close.”
For buyers on the platform, users can see Opendoor Exclusives before they hit MLS. If the property is owned by Opendoor, it can be reserved in the app. Otherwise, buyers can send offers to sellers, who can then choose the best one for them.
But what if the purchase price is higher than the appraisal? According to the company’s Appraisal Price Match Guarantee:
“If you are financing the purchase of an Opendoor-Owned Exclusive and the appraised price of the property is lower than the purchase price, we will reduce the purchase price to the appraised price, up to a maximum purchase price reduction of $50,000, so long as: (a) your lender is a duly licensed residential mortgage lender, (b) you provide us with an appraisal for the property from your lender that is dated no earlier than the executed date of the purchase contract, and (c) your lender used an independent, licensed appraiser retained through an appraisal management company to generate the appraisal.”
That price match policy is good for everything except financing agent commissions.
Could Opendoor Exclusives be The End of The MLS?
This peer-to-peer marketplace is a complete 180 from the traditional real estate market. For decades, the primary way to market a home was by hiring a licensed real estate professional and putting the property on MLS. But the iBuyer and industry disruptor aims to cut out the MLS altogether with the marketplace.
“Our belief is that by building a better, more efficient, and more transparent system, we can improve the outcomes for both buyers and sellers,” Wu said. “Marketplaces have the unique ability to layer in more trust, simplify the process, and eliminate much of the complexity, opacity, and cost. We intend to do just that for real estate.”
However, while Opendoor aims to streamline the process of buying and selling, does that best serve the people making one of the biggest transactions of their lives? That’s where Realtors have always shown their value — walking their clients through a complex process as an ally.
“Avoiding the ‘hassle of the traditional real estate model’ leaves buyers and sellers unrepresented by real estate professionals that ensure their best interest,” said Halo Group Realty’s Kevin Caskey, a leader in the Dallas-Fort Worth real estate community.
According to the press release, Opendoor’s expansion of the program is largely due to its success in Dallas-Fort Worth and Austin, where more than $100 million in real estate has been purchased and approximately 20 percent of its offers on homes have been made through the Opendoor Exclusives platform.
“While our offices aren’t above a loud Irish pub anymore and though we’ve just launched, we are being bold with our ambition – aiming for over 30 percent of our total transactions via our Exclusives marketplace by the end of 2023 and be on the path to helping the next 250,000 customers,” Wu said. “More importantly, we are aiming to change how the entire real estate system works for the better.”
Update: Inman reports that Opendoor lost almost $1 billion in the third quarter of 2022 according to the company’s earnings call.
In total, Opendoor suffered a net loss of $928 million between July and September, the company’s earnings report shows. That’s up from a loss of just $57 million during the third quarter of 2021. However, Opendoor’s revenue did jump 48 percent year over year, from about $2.3 billion in the third quarter of 2021 to about $3.4 billion this year.
In a shareholder letter, Opendoor attributed $573 million of its net loss to “inventory valuation adjustments,” or in other words the reduced value of the homes Opendoor has in inventory. The letter states that excluding this forward-looking adjustment, adjusted net loss was $328 million, compared to $18 million a year ago.
Inman
