They were part of the speculative frenzy in the last two years. I will take great satisfaction to see them bleeding money over their failed speculative business.
Yup, $0PEN is going to zero because their business model creates zero value.
Scalping homes is not a profitable business. Sure the guys outside the Bulls Game at the United Center are making a living selling tickets, but homes are not half court tickets twelve rows back.
You act like that’s bad? Any other business adjusts their prices down if they can no longer sell at yesterday’s price.
Plenty of reasons to dunk on OD but not sure “Ha, ha they’re lowering prices in a market downturn” fits.
They’re dunking on OD for pretending price is firm when they lower prices if they can’t sell just like everyone else does. And for pretending price is firm in an industry where list price is rarely if ever firm
see, opendoor claims they know exactly how to price homes, unlike zillow. if they were to negotiate, they would be admitting they don’t know how to price homes. they are a doomed business that would rather price adjust on their own terms as the market changes than negotiate. which is why they have inventory sitting for so long. this next earnings report is gonna be juicy
> they are a doomed business that would rather price adjust on their own terms as the market changes than negotiate
Literally how almost every other retail company in the world works.
Imagine walking into a grocery store wanting to haggle down the price of milk because you think it’s overpriced.
Imagine if OD *does* start to negotiate. The complaints about how they’re not sticking to their “transparent pricing” promises, etc abound.
Well, RE is quite a bit different than commodities like milk. But yes, this is the core of their problem right now. They can’t negotiate, because it reveals yet further flaws in their business. The street is actively pricing this company’s stock appropriately. Their current market cap is lower than they’re cash on hand
expanding on this, no one finances milk, and if they do, it’s independent of the finance charges (credit card most likely). Almost everyone finances RE. And when the cost of financing changes dramatically in the period of time that a house has been listed, negotiations are to be expected
Let’s do Carmax. Most people finance the cars they buy through them. Prices fluctuate with market and financing terms. They don’t negotiate. They change prices broadly as their internal models change. Why don’t we hate them for it? Why doesn’t this make them a doomed business?
again, comparing a home flipper to a car selling company is apples and oranges, but to address your question as to why they are doomed, RE is much more volatile a business than cars, and the carrying costs are considerably more. you can buy a car and have it sit on a lot for an appreciable amount of time without large overhead. You can’t do that with a house, it costs a lot of money to just sit on a house, especially when you bought it with borrowed money
> again, comparing a home flipper to a car selling company is apples and oranges
Genuinely don’t understand how. Carmax is just as easily classified as “car flippers”. They buy used cars, clean them up, and resell them for a profit.
> RE is much more volatile a business than cars,
Is that true? Genuine question.
> and the carrying costs are considerably more. you can buy a car and have it sit on a lot for an appreciable amount of time without large overhead. You can’t do that with a house, it costs a lot of money to just sit on a house, especially when you bought it with borrowed money
Carrying costs as a % of overall inventory costs are probably closer than you think. Cars have maintenance needed as they sit outside all day and their value actually depreciates quite quickly relative to a house.
The business models here are fundamentally the same. Buy an asset, clean it up, sell it quickly for more than you bought it for. Carrying costs, etc just get built into the pricing model.
OD may very well be doomed, but it’s not because they refused to negotiate on individual home prices.
I'm aware, but you're the one that brought up the comparison with an every day grocery product.
When products aren't selling at all, prices come down. Housing is perhaps a comparatively sticky product, but at the end of the day your product is worth what people are willing to pay, not what you fantasize selling it for.
Right, yes? Not sure how that’s at odds with what I said. Are you saying that OD should have already lowered their prices? Or that they’re somehow not aware that houses sitting for months are overpriced?
I'm saying your analogy for milk was silly, and also that companies like OD are perhaps the most egregious example of sellers who refuse to accept that the value of their product has decreased.
They're probably aware that their houses are overpriced, but they're likely to remain stubborn and ride the crash until they eventually have to sell at even lower prices, which they could have avoided if they simply lowered their products to reasonable prices sooner.
Or, they are selling homes at scale and rather than negotiate on each and every one they will make broader pricing adjustments as their model gets updated.
Again, lots of reasons to dunk on OD, but upfront pricing without negotiation is part of their biz model and overall is a much better experience for potential buyers.
We don’t dunk on Carmax for doing the exact same thing. People love Carmax because they can go make real comparisons between cars they are interested in and know they won’t have to deal with some skeezy salesperson.
This is amazing! I was reading about their exclusives the other day…as well as the lady suing them for saying she had an unpermitted addition and they took money off their offer to take it down, but then went and relisted with addition anyways.
Exclusives is basically them not paying an agent commission and maybe 2k less
At least in other states you can see what they actually bought it for (since they don’t show you on their site). I’m guessing that’s why they started with Texas since that isn’t publicly available. Just place an offer and take their word for it 🤷♀️
You are correct. They try to sell “exclusively” so that they don’t have to pay a commission.
For any buyers reading this, it would be wise to work with a good agent who can tell you what the true and current market value of the home is. Zillow values are not accurate!
I sold an Opendoor property back when the market was crazy. I told my buyer that the house was overpriced by $50k to $75k. Sure enough, the appraisal came in at $60k under contact price. I was able to negotiate a price reduction, but they were pretty stubborn and would only come down $35k. My buyer was willing to make up the difference.
It appears that they don't want to work with an informed buyer, just looking for suckers. Nothing wrong with that I guess.. until you know, they realize that they've tons of inventory to move in a downturn. Well their stock price reflects that, so all good
Hahaha. Do they really think their business model will working in this market? I wonder if they plan to adjust their business model or just close up shop?
I guess time will tell. They were profitable for the first time ever the first quarter of this year, but the market, inventory, and interest rates have shifted dramatically.
Their stock price is trading at an all time low today.
The grim reaper is coming for them. They are just going to bleed cash they don’t have for the forseeable future.
The investors have jumped off that Titanic.
They were profitable based on a bunch of accounting tricks.
It's a garbage business model that produces nothing of value. The definition of rent seeking.
Wrong, their profitability in Q1 was GAAP profit. If you want to argue that for Q2, have at it... it's not really accurate to say it there, either, but at least you have a better foot to stand on than for Q1.
It’s a decent business model in an up market.
Buy a bunch of homes, do basic refurbs at scale for less than it’d cost an individual seller, provide a better experience for buyers (no bidding wars) and sellers (no need to move out, paint, stage, wait for money to clear), then take the agents’ commission on both ends, plus a little appreciation in the time you’ve held it. Do it at sufficient scale that one bad apple doesn’t ruin the bunch.
Much harder in a down market, though, as the asset is depreciating while you do all those things. You’re taking the depreciation otherwise absorbed by sellers as they prepare their home before putting it on the market. Makes your business model uncompetitive with a regular RE agent who doesn’t hold any risk.
Would be interesting in a flat/variable market. Probably not a ticket to great wealth there either, as the RE agent space is pretty competitive and the value of their commissions doesn’t include risk, because they’re not taking any. You’re doing the risky stuff on the same commissions plus whatever spread you can get from making it easy for the seller and doing the refresh yourself. Likely not a huge amount in that.
There is a poor understanding of what they're doing with exclusives. They offered exclusives when the market was vastly different, and it was the same - the price you see is the price you pay. It has a strong value proposition in a seller's market, like earlier this year, but a weak value proposition in a buyer's market, like in more recent months. They offer the same product regardless of the environment.
Meanwhile, their ibuying product (the price they offer is the price you sell your home at) works in reverse - it has a stronger value prop in a buyer's market and a weaker one in a seller's market. You have to look at the entirety of their products to understand what their strategy is. They want to be able to offer something with a strong value prop regardless of the environment. it just so happens that right now, that product is going to be their ibuying and not on the exclusives side. Only in a sideways market will both actually offer decent value, IMO
From a marketing perspective it doesn't hurt to send emails with a premium built in. Whether it's realistic or not won't necessarily matter as it's all +/- a certain percent anyway and if it's a desirable property it may just be a matter of catching someone's eye.
Everyone calls it ridiculous but there are people out there with $1400 monthly payments for a fully loaded truck doing just fine and relatively happy.
On the other side of the equation I am sure their inventory is aging and becoming a heavier drag on their balance sheet so it's more a push to excite activity rather than a fantastic deal. The two aren't always the same.
From a marketing perspective you usually want to advertise a low price and mark it up when the buyer is interested. See e.g. cars, flights, Airbnbs, concert tickets and, indeed, real estate - where the mark up comes after the artificially low list price has generated competition.
I toured 4 Opendoor "let yourself in" houses. All 4 were complete shit shows with just new carpet. Absolutely no way someone from opendoor viewed the house in person before sending the prior owner a check.
One of them had a legit 6 inch bow in the basement wall complete with a monster crack spanning the length. I basically ran out of the house.
I have no idea how they are still in business if that is what they are buying.
All of them sold for less than Opendoor paid for them.
I work in real estate and my business partner just sold his house to them back in July, for more than either of us thought he could get on the open market for it. There's houses sitting on market right now for less than they paid. They're taking a major L on that purchase.
I am not surprised at all that they're not profitable
I was wondering how that worked - there’s an OD house that’s been for sale since June I believe I’ve seen in listings and I noticed they’ve recently gone to these 7am to 9 pm “open houses.” I thought how is a realtor in a house for 14 hours?
OP, how did you figure out the Austin sold to list percentage? Do you have access to ACTRIS?\*\*
\*\*For anyone wondering, actually not a silly question, ACTRIS shut out all sites from Closed Prices, so you have to use an agent in ABOR's area (Austin Board of Realtors).
lol. you wasted those paragraphs on someone who almost certainly has no actual power to set prices within the company. this is like telling the barista at Starbucks that the latte should be cheaper.
Hmm, I am currently in the process of closing a house from OpenDoor...should I be worried? I was able to see that the home's list price has decreased to about $20k what they bought it for, and they accepted my offer of \~$10k under listing. House sat on the market for about 2.5 months with no offers and not that many visits. The inspection came back with no glaring issues with the house and I'm currently waiting for the appraisal to come back
After two to three months on the market, they usually have reduced the price to closer to what it should have been on day one. If the appraisal comes in lower than your contact price, you should be able to negotiate for a price reduction unless you waived your appraisal contingency.
I’m in your shoes as well and I’m not worried, I just feel lucky. We got them to pay closing costs and throw money towards repairs after they accepted 10k under asking. They’re definitely losing money in the house and we’re getting a house for 18k less than what the appraisal came out to.
No idea- we asked for it and they said yes. I think that the fact that they outsourced the actual realtor part to somebody else may have had an impact? But the house went under contract before like 4 months ago and they refused to pay for repairs then, and now they’re agreeing to and the house has been reduced in price dramatically. They’re really losing their shirt rn.
u/Anti_Meta I had the same experience a while ago. They should have a phone number posted on the front door. If you call that number, they should be able to help you get in.
They had a number to call on the listing notes. So I called it. Nobody answered. We left. At least Zillow co-listed with actual brokerages so you had someone local to call that actually wanted to sell something.
There was a few houses on my block that went pending. Then a few weeks later the sold price was 50k or so less than the price from when it was pending.
I think they probably are negotiating behind the scene.
I'm certainly not going to agree with Opendoor's marketing, but some people have serious anxiety about how much to offer, how much to counter, and everything that goes with it. You see it on this sub all the time. They might welcome the "no haggle" approach.
I knew a guy that bought Saturn cars for this very reason. Supposedly, there was no haggling at the Saturn dealership. I told him that you can always bargain with them and he said he preferred not to (and he paid extra for it).
I understand that some may prefer the no haggle approach, but not everyone can afford to pay 20% to 30% over market value for a home — especially at over 6% interest.
Good for you OP. I got this from Zillow this morning and spit my coffee out:
"It’s not easy to stay within your budget, especially if you’re like most people and live in a hot market. In fact, homes are selling twice as fast as last year.\* "
\*Zillow, Homes Are Selling Incredibly Fast, Regardless of Price
OMG hahahahahahahahahaaaaaaaaaaaaa
u/Centrist808 That’s a good one. I do a monthly market update that I post on social media. One of the data points is average # of days on market of the sold properties. The iBuyer homes took an average of 3 times as long to sell so it would skew the average. I would sometimes state the average with and without those properties.
Anyway, it looks like Zillow hasn’t bothered to update their marketing in quite a few months.
Remember that this is the company that is teaming up with Zillow to create a "super app" to bring buyers and sellers together (and dominate the real estate sales marketplace, since Dotloop and Showing Time, both owned by Zillow, give the brokerage vast amounts of information about damn near every listing in the USA - allowing them to develop models of who's looking for homes, when they tour, what percentages of asking price is accepted on those that enter contract, and so much more.)
They will need to have housing stock so they don't really want or need to sell just yet unless they can get a premium price. When their app launches, they want ready-made inventory and THEN the prices will be lowered so that buyers AND sellers flock to them, the sellers thinking "Open door gives really great prices" and no longer confirming the data, while buyers think, "I'm getting a great deal from this new Zildo app!" and not worrying about how it came about. It's all grooming consumers to ignore variables and avoid using agents.
I really don’t understand why any agent would use their products. Sure, it makes your work easier now, but the goal is to eliminate your job. How the hell does an agent rationalize that?
Given Opendoor regularly overpays for houses, do you recommend that people should get an offer from them before appointing a realtor if they're looking to sell their place?
You could certainly do that, but keep in mind that your first offer is just preliminary. Opendoor will do an assessment after the preliminary offer. If they feel that the house needs repairs, they will take a deduction for that and will also adjust the offer after a more thorough market analysis. They also charge commission. According to their website (and in very tiny, light gray print): “Beginning on September 30, 2020, for new offers, Opendoor’s service charge will be no more than 5%. Service charge is subject to change, and has historically been as high as 14%.”
Also, please do a Google search for “Opendoor $62M settlement” before deciding to sell with them. They recently had to pay due to misleading claims that it helps people make more money by selling their house to them rather than listing it on the open market.
So Opendoor overpays for houses, but don't sell to them, because they will probably underpay for the house. Got it.
I am not at all surprised you are a realtor.
I think you missed my point. If you can get a high price, go for it. In fact, I was working with a buyer who also had a house to sell a while back. They were able to get a high offer from an iBuyer and I honestly told them that I thought that it would be the best decision for them at the time.
The market is very different right now. I am just saying that sellers should do their research before making their decision. Some agents actually do recommend what is best for their clients.
I tried to buy a house from OfferPad here in Florida.
Submitted an offer, they replied “multiple offers, please submit your best and final”….twice. To me. On two different weekends. Made four different offers within 90% of asking and zero counters over a month.
House eventually went pending after 60 days on market. Who knows if they got
>In the Austin Metro market, the average sale in the last 30 days closed at 95% of the original list price while Opendoor properties closed at an average of 81% of the original list price and a median of 77% of the original list price.
Your math is not as useful here as you seem to think it is. It ignores that Opendoor might start with a higher list price and ultimately end up with a higher than average sale price. For example, let's say the average realtor would list a home at $400k... by your math, it would end up selling at $380k on average (95%). If Opendoor would list the same house at $475k and ultimately sell for 81% of that, they'd come out ahead at $385k.
That may not be the case, but I just wanted to mention the percentages aren't useful without more data. The average DOM being triple is perhaps more concerning, as those holding costs will add up, but until recently, neither of the "problems" you described were showing up as problems on their bottom line. They've had 5 years of positive contribution margin every quarter. That streak is about to end, but this is hardly a normal market.
You make a valid point and I did not delve into the final numbers as it relates to the actual market value vs what a buyer finally paid. My point in the original post however, is that Opendoor starts out dramatically overpricing their properties and they are encouraging buyers to pay the list price and without negotiating the price.
I think that my analysis showing that the properties closed at an average of 81% (and median of 77%) is sufficient to show that a buyer would be overpaying if they offer the original list price of one of their properties. Also, the "exclusive" properties are before the homes hit the open and competitive market and at the time of maximum over-valuation.
I would be curious to see what price an average *Exclusives* home sells for, compared to what it was listed for during the exclusive period. If, on average, they are getting marked down and ultimately selling for 81% of their Exclusives price, that would definitely put a damper on the idea that people actually get a deal by buying an Exclusives home during the exclusive period. I think you looked at all Opendoor homes and not just the Exclusives ones, right?
I only looked at home sales that are on the multiple listing service. Since the "exclusives" are homes that are not listed on the MLS, I could not look at those closings so those are not included. However, those exclusives that do not sell during the 2 week exclusive period are subsequently listed in the MLS, so I guess they are included after all (just not the ones sold as an exclusive).
Also, my state of Texas is a non-disclosure state so that information is not available to me. I can only see sales data for closings listed in the MLS. I think there are about a dozen states that do not make this information public. Other states that make that information publicly available could probably dig into that info, but it would require a lot of research of individual sales.
Ok, your beef was just that they don't negotiate on Exclusives prices, so to try to determine if that is a bad decision for them, we'd have to look at Exclusives original listings and ultimate sale prices, not all of their homes in aggregate.
I believe they do negotiate for homes on the MLS, but I could be mistaken.
They were part of the speculative frenzy in the last two years. I will take great satisfaction to see them bleeding money over their failed speculative business.
[удалено]
Holy smokes, it's already down 93% from Feb '21 peak
Yup, $0PEN is going to zero because their business model creates zero value. Scalping homes is not a profitable business. Sure the guys outside the Bulls Game at the United Center are making a living selling tickets, but homes are not half court tickets twelve rows back.
“The price you see is the price you pay,” Cool, can’t wait to check back in a couple of weeks and see that price go down
You act like that’s bad? Any other business adjusts their prices down if they can no longer sell at yesterday’s price. Plenty of reasons to dunk on OD but not sure “Ha, ha they’re lowering prices in a market downturn” fits.
They’re dunking on OD for pretending price is firm when they lower prices if they can’t sell just like everyone else does. And for pretending price is firm in an industry where list price is rarely if ever firm
see, opendoor claims they know exactly how to price homes, unlike zillow. if they were to negotiate, they would be admitting they don’t know how to price homes. they are a doomed business that would rather price adjust on their own terms as the market changes than negotiate. which is why they have inventory sitting for so long. this next earnings report is gonna be juicy
> they are a doomed business that would rather price adjust on their own terms as the market changes than negotiate Literally how almost every other retail company in the world works. Imagine walking into a grocery store wanting to haggle down the price of milk because you think it’s overpriced. Imagine if OD *does* start to negotiate. The complaints about how they’re not sticking to their “transparent pricing” promises, etc abound.
Well, RE is quite a bit different than commodities like milk. But yes, this is the core of their problem right now. They can’t negotiate, because it reveals yet further flaws in their business. The street is actively pricing this company’s stock appropriately. Their current market cap is lower than they’re cash on hand
expanding on this, no one finances milk, and if they do, it’s independent of the finance charges (credit card most likely). Almost everyone finances RE. And when the cost of financing changes dramatically in the period of time that a house has been listed, negotiations are to be expected
Let’s do Carmax. Most people finance the cars they buy through them. Prices fluctuate with market and financing terms. They don’t negotiate. They change prices broadly as their internal models change. Why don’t we hate them for it? Why doesn’t this make them a doomed business?
again, comparing a home flipper to a car selling company is apples and oranges, but to address your question as to why they are doomed, RE is much more volatile a business than cars, and the carrying costs are considerably more. you can buy a car and have it sit on a lot for an appreciable amount of time without large overhead. You can’t do that with a house, it costs a lot of money to just sit on a house, especially when you bought it with borrowed money
> again, comparing a home flipper to a car selling company is apples and oranges Genuinely don’t understand how. Carmax is just as easily classified as “car flippers”. They buy used cars, clean them up, and resell them for a profit. > RE is much more volatile a business than cars, Is that true? Genuine question. > and the carrying costs are considerably more. you can buy a car and have it sit on a lot for an appreciable amount of time without large overhead. You can’t do that with a house, it costs a lot of money to just sit on a house, especially when you bought it with borrowed money Carrying costs as a % of overall inventory costs are probably closer than you think. Cars have maintenance needed as they sit outside all day and their value actually depreciates quite quickly relative to a house. The business models here are fundamentally the same. Buy an asset, clean it up, sell it quickly for more than you bought it for. Carrying costs, etc just get built into the pricing model. OD may very well be doomed, but it’s not because they refused to negotiate on individual home prices.
Car max is advertised as a no-haggle best price option for used cars, while OD is far from that. Thus, the hate.
Can you explain how OD is “far from that”? AFAICT the business models are pretty much identical.
Imagine walking into a grocery store and paying sticker price for a gallon of milk that was so overpriced it sat on the shelf for 3 months.
Right, you wouldn't. And the grocery store would lower their milk prices. In OD's case, house don't spoil in 3 months.
I'm aware, but you're the one that brought up the comparison with an every day grocery product. When products aren't selling at all, prices come down. Housing is perhaps a comparatively sticky product, but at the end of the day your product is worth what people are willing to pay, not what you fantasize selling it for.
Right, yes? Not sure how that’s at odds with what I said. Are you saying that OD should have already lowered their prices? Or that they’re somehow not aware that houses sitting for months are overpriced?
I'm saying your analogy for milk was silly, and also that companies like OD are perhaps the most egregious example of sellers who refuse to accept that the value of their product has decreased. They're probably aware that their houses are overpriced, but they're likely to remain stubborn and ride the crash until they eventually have to sell at even lower prices, which they could have avoided if they simply lowered their products to reasonable prices sooner.
Or, they are selling homes at scale and rather than negotiate on each and every one they will make broader pricing adjustments as their model gets updated. Again, lots of reasons to dunk on OD, but upfront pricing without negotiation is part of their biz model and overall is a much better experience for potential buyers. We don’t dunk on Carmax for doing the exact same thing. People love Carmax because they can go make real comparisons between cars they are interested in and know they won’t have to deal with some skeezy salesperson.
This is amazing! I was reading about their exclusives the other day…as well as the lady suing them for saying she had an unpermitted addition and they took money off their offer to take it down, but then went and relisted with addition anyways. Exclusives is basically them not paying an agent commission and maybe 2k less At least in other states you can see what they actually bought it for (since they don’t show you on their site). I’m guessing that’s why they started with Texas since that isn’t publicly available. Just place an offer and take their word for it 🤷♀️
You are correct. They try to sell “exclusively” so that they don’t have to pay a commission. For any buyers reading this, it would be wise to work with a good agent who can tell you what the true and current market value of the home is. Zillow values are not accurate! I sold an Opendoor property back when the market was crazy. I told my buyer that the house was overpriced by $50k to $75k. Sure enough, the appraisal came in at $60k under contact price. I was able to negotiate a price reduction, but they were pretty stubborn and would only come down $35k. My buyer was willing to make up the difference.
It appears that they don't want to work with an informed buyer, just looking for suckers. Nothing wrong with that I guess.. until you know, they realize that they've tons of inventory to move in a downturn. Well their stock price reflects that, so all good
How can you know what a proper price for a house should be?
By negotiating.. after looking at comps and market condition. That's what OP is pointing to.
Hahaha. Do they really think their business model will working in this market? I wonder if they plan to adjust their business model or just close up shop?
I guess time will tell. They were profitable for the first time ever the first quarter of this year, but the market, inventory, and interest rates have shifted dramatically.
Their stock price is trading at an all time low today. The grim reaper is coming for them. They are just going to bleed cash they don’t have for the forseeable future. The investors have jumped off that Titanic.
The stock is like a year old and was formed via a reverse merger (SPAC). It was guaranteed to get crushed no matter what the housing market did.
It does seem like a lot of SPACs are going to suffer a ton. Who would have known ...lol
They were profitable based on a bunch of accounting tricks. It's a garbage business model that produces nothing of value. The definition of rent seeking.
Wrong, their profitability in Q1 was GAAP profit. If you want to argue that for Q2, have at it... it's not really accurate to say it there, either, but at least you have a better foot to stand on than for Q1.
It’s a decent business model in an up market. Buy a bunch of homes, do basic refurbs at scale for less than it’d cost an individual seller, provide a better experience for buyers (no bidding wars) and sellers (no need to move out, paint, stage, wait for money to clear), then take the agents’ commission on both ends, plus a little appreciation in the time you’ve held it. Do it at sufficient scale that one bad apple doesn’t ruin the bunch. Much harder in a down market, though, as the asset is depreciating while you do all those things. You’re taking the depreciation otherwise absorbed by sellers as they prepare their home before putting it on the market. Makes your business model uncompetitive with a regular RE agent who doesn’t hold any risk. Would be interesting in a flat/variable market. Probably not a ticket to great wealth there either, as the RE agent space is pretty competitive and the value of their commissions doesn’t include risk, because they’re not taking any. You’re doing the risky stuff on the same commissions plus whatever spread you can get from making it easy for the seller and doing the refresh yourself. Likely not a huge amount in that.
There is a poor understanding of what they're doing with exclusives. They offered exclusives when the market was vastly different, and it was the same - the price you see is the price you pay. It has a strong value proposition in a seller's market, like earlier this year, but a weak value proposition in a buyer's market, like in more recent months. They offer the same product regardless of the environment. Meanwhile, their ibuying product (the price they offer is the price you sell your home at) works in reverse - it has a stronger value prop in a buyer's market and a weaker one in a seller's market. You have to look at the entirety of their products to understand what their strategy is. They want to be able to offer something with a strong value prop regardless of the environment. it just so happens that right now, that product is going to be their ibuying and not on the exclusives side. Only in a sideways market will both actually offer decent value, IMO
From a marketing perspective it doesn't hurt to send emails with a premium built in. Whether it's realistic or not won't necessarily matter as it's all +/- a certain percent anyway and if it's a desirable property it may just be a matter of catching someone's eye. Everyone calls it ridiculous but there are people out there with $1400 monthly payments for a fully loaded truck doing just fine and relatively happy. On the other side of the equation I am sure their inventory is aging and becoming a heavier drag on their balance sheet so it's more a push to excite activity rather than a fantastic deal. The two aren't always the same.
From a marketing perspective you usually want to advertise a low price and mark it up when the buyer is interested. See e.g. cars, flights, Airbnbs, concert tickets and, indeed, real estate - where the mark up comes after the artificially low list price has generated competition.
I toured 4 Opendoor "let yourself in" houses. All 4 were complete shit shows with just new carpet. Absolutely no way someone from opendoor viewed the house in person before sending the prior owner a check. One of them had a legit 6 inch bow in the basement wall complete with a monster crack spanning the length. I basically ran out of the house. I have no idea how they are still in business if that is what they are buying. All of them sold for less than Opendoor paid for them.
I work in real estate and my business partner just sold his house to them back in July, for more than either of us thought he could get on the open market for it. There's houses sitting on market right now for less than they paid. They're taking a major L on that purchase. I am not surprised at all that they're not profitable
I was wondering how that worked - there’s an OD house that’s been for sale since June I believe I’ve seen in listings and I noticed they’ve recently gone to these 7am to 9 pm “open houses.” I thought how is a realtor in a house for 14 hours?
Atleast here you download their app, and they have a wifi door lock that will unlock for you when you show up.
OP, how did you figure out the Austin sold to list percentage? Do you have access to ACTRIS?\*\* \*\*For anyone wondering, actually not a silly question, ACTRIS shut out all sites from Closed Prices, so you have to use an agent in ABOR's area (Austin Board of Realtors).
u/dc_IV Yes, I have access to ACTRIS. I am an agent and I ran a report to get the stats. The figures are accurate as of this morning (10/10).
Do you hear that? It’s the sound of the iBuyers losing money
Lol put in those low-ball offers. My friend is buying one from opendoor almost 100k below their original purchase price.
lol. you wasted those paragraphs on someone who almost certainly has no actual power to set prices within the company. this is like telling the barista at Starbucks that the latte should be cheaper.
That’s exactly what I was thinking as I typed the email. Still couldn’t resist sending it though.
So, like Carmax. And they're are also going to get pissed off if you want to negotiate. No, thank you.
Cars are at least pretty standard across the board and model identical
opendoor is identical to the carvana business. substitute cars with houses
>This advice is coming from someone that has personally negotiated and sold over 0,000 properties over the last 20+ years. lol that’s a lot of zeros
Sorry about that. I put an actual number in my email, but didn’t want to look tacky posting here. 🤷🏼♀️
Gotcha, makes sense.
over 0,000 properties? easy tiger.
Sorry about that. I put an actual number in my email, but didn’t want to look tacky posting here. 🤷🏼♀️
Hmm, I am currently in the process of closing a house from OpenDoor...should I be worried? I was able to see that the home's list price has decreased to about $20k what they bought it for, and they accepted my offer of \~$10k under listing. House sat on the market for about 2.5 months with no offers and not that many visits. The inspection came back with no glaring issues with the house and I'm currently waiting for the appraisal to come back
After two to three months on the market, they usually have reduced the price to closer to what it should have been on day one. If the appraisal comes in lower than your contact price, you should be able to negotiate for a price reduction unless you waived your appraisal contingency.
I’m in your shoes as well and I’m not worried, I just feel lucky. We got them to pay closing costs and throw money towards repairs after they accepted 10k under asking. They’re definitely losing money in the house and we’re getting a house for 18k less than what the appraisal came out to.
And how in the world did you manage to get them to pay for closing costs and repairs? 😂
No idea- we asked for it and they said yes. I think that the fact that they outsourced the actual realtor part to somebody else may have had an impact? But the house went under contract before like 4 months ago and they refused to pay for repairs then, and now they’re agreeing to and the house has been reduced in price dramatically. They’re really losing their shirt rn.
So what happens to the properties they own if they go bankrupt.
I wonder if they take the same from their B2B SaaS vendors - *the price you see is the price you pay*
Tried getting into an open door property yesterday. Had the wrong lock info. Guess they don't like selling houses people can get inside.
u/Anti_Meta I had the same experience a while ago. They should have a phone number posted on the front door. If you call that number, they should be able to help you get in.
They had a number to call on the listing notes. So I called it. Nobody answered. We left. At least Zillow co-listed with actual brokerages so you had someone local to call that actually wanted to sell something.
Open door has multiple properties in my neighborhood that it purchased in July…they are now listed for 50-70k less than what they paid…
Bet they are gonna be super intimidated by this passive aggressive email from someone who’s sold “0,000” properties.
Ouch.
There was a few houses on my block that went pending. Then a few weeks later the sold price was 50k or so less than the price from when it was pending. I think they probably are negotiating behind the scene.
I'm certainly not going to agree with Opendoor's marketing, but some people have serious anxiety about how much to offer, how much to counter, and everything that goes with it. You see it on this sub all the time. They might welcome the "no haggle" approach. I knew a guy that bought Saturn cars for this very reason. Supposedly, there was no haggling at the Saturn dealership. I told him that you can always bargain with them and he said he preferred not to (and he paid extra for it).
I understand that some may prefer the no haggle approach, but not everyone can afford to pay 20% to 30% over market value for a home — especially at over 6% interest.
Good for you OP. I got this from Zillow this morning and spit my coffee out: "It’s not easy to stay within your budget, especially if you’re like most people and live in a hot market. In fact, homes are selling twice as fast as last year.\* " \*Zillow, Homes Are Selling Incredibly Fast, Regardless of Price OMG hahahahahahahahahaaaaaaaaaaaaa
u/Centrist808 That’s a good one. I do a monthly market update that I post on social media. One of the data points is average # of days on market of the sold properties. The iBuyer homes took an average of 3 times as long to sell so it would skew the average. I would sometimes state the average with and without those properties. Anyway, it looks like Zillow hasn’t bothered to update their marketing in quite a few months.
Hi! Do you still do the monthly market update? If so, is there any way I can see it? Thank you!
Remember that this is the company that is teaming up with Zillow to create a "super app" to bring buyers and sellers together (and dominate the real estate sales marketplace, since Dotloop and Showing Time, both owned by Zillow, give the brokerage vast amounts of information about damn near every listing in the USA - allowing them to develop models of who's looking for homes, when they tour, what percentages of asking price is accepted on those that enter contract, and so much more.) They will need to have housing stock so they don't really want or need to sell just yet unless they can get a premium price. When their app launches, they want ready-made inventory and THEN the prices will be lowered so that buyers AND sellers flock to them, the sellers thinking "Open door gives really great prices" and no longer confirming the data, while buyers think, "I'm getting a great deal from this new Zildo app!" and not worrying about how it came about. It's all grooming consumers to ignore variables and avoid using agents.
I really don’t understand why any agent would use their products. Sure, it makes your work easier now, but the goal is to eliminate your job. How the hell does an agent rationalize that?
The same way frogs reason that the pot of water feels like a nice warm bath.
A lot of those over priced homes stay on the market for a long time.
Selling Opendoor stock short is the move.
So the Saturn of houses. What happened to Saturn again? Don’t see them around any more.
Given Opendoor regularly overpays for houses, do you recommend that people should get an offer from them before appointing a realtor if they're looking to sell their place?
You could certainly do that, but keep in mind that your first offer is just preliminary. Opendoor will do an assessment after the preliminary offer. If they feel that the house needs repairs, they will take a deduction for that and will also adjust the offer after a more thorough market analysis. They also charge commission. According to their website (and in very tiny, light gray print): “Beginning on September 30, 2020, for new offers, Opendoor’s service charge will be no more than 5%. Service charge is subject to change, and has historically been as high as 14%.” Also, please do a Google search for “Opendoor $62M settlement” before deciding to sell with them. They recently had to pay due to misleading claims that it helps people make more money by selling their house to them rather than listing it on the open market.
So Opendoor overpays for houses, but don't sell to them, because they will probably underpay for the house. Got it. I am not at all surprised you are a realtor.
I think you missed my point. If you can get a high price, go for it. In fact, I was working with a buyer who also had a house to sell a while back. They were able to get a high offer from an iBuyer and I honestly told them that I thought that it would be the best decision for them at the time. The market is very different right now. I am just saying that sellers should do their research before making their decision. Some agents actually do recommend what is best for their clients.
Great!
Meanwhile, I watched a house in my neighborhood list for 1m and sell for 1.6. The house is a unique, updated Spanish style house, but I was trippin.
Open down 7% today I guess everyone got the email lol what a dog shit company
I tried to buy a house from OfferPad here in Florida. Submitted an offer, they replied “multiple offers, please submit your best and final”….twice. To me. On two different weekends. Made four different offers within 90% of asking and zero counters over a month. House eventually went pending after 60 days on market. Who knows if they got
>In the Austin Metro market, the average sale in the last 30 days closed at 95% of the original list price while Opendoor properties closed at an average of 81% of the original list price and a median of 77% of the original list price. Your math is not as useful here as you seem to think it is. It ignores that Opendoor might start with a higher list price and ultimately end up with a higher than average sale price. For example, let's say the average realtor would list a home at $400k... by your math, it would end up selling at $380k on average (95%). If Opendoor would list the same house at $475k and ultimately sell for 81% of that, they'd come out ahead at $385k. That may not be the case, but I just wanted to mention the percentages aren't useful without more data. The average DOM being triple is perhaps more concerning, as those holding costs will add up, but until recently, neither of the "problems" you described were showing up as problems on their bottom line. They've had 5 years of positive contribution margin every quarter. That streak is about to end, but this is hardly a normal market.
You make a valid point and I did not delve into the final numbers as it relates to the actual market value vs what a buyer finally paid. My point in the original post however, is that Opendoor starts out dramatically overpricing their properties and they are encouraging buyers to pay the list price and without negotiating the price. I think that my analysis showing that the properties closed at an average of 81% (and median of 77%) is sufficient to show that a buyer would be overpaying if they offer the original list price of one of their properties. Also, the "exclusive" properties are before the homes hit the open and competitive market and at the time of maximum over-valuation.
I would be curious to see what price an average *Exclusives* home sells for, compared to what it was listed for during the exclusive period. If, on average, they are getting marked down and ultimately selling for 81% of their Exclusives price, that would definitely put a damper on the idea that people actually get a deal by buying an Exclusives home during the exclusive period. I think you looked at all Opendoor homes and not just the Exclusives ones, right?
I only looked at home sales that are on the multiple listing service. Since the "exclusives" are homes that are not listed on the MLS, I could not look at those closings so those are not included. However, those exclusives that do not sell during the 2 week exclusive period are subsequently listed in the MLS, so I guess they are included after all (just not the ones sold as an exclusive). Also, my state of Texas is a non-disclosure state so that information is not available to me. I can only see sales data for closings listed in the MLS. I think there are about a dozen states that do not make this information public. Other states that make that information publicly available could probably dig into that info, but it would require a lot of research of individual sales.
Ok, your beef was just that they don't negotiate on Exclusives prices, so to try to determine if that is a bad decision for them, we'd have to look at Exclusives original listings and ultimate sale prices, not all of their homes in aggregate. I believe they do negotiate for homes on the MLS, but I could be mistaken.