Opendoor, Open Listings, open sesame to way more disruption in the real estate world.
You know about the fast growing, fast-expanding home selling and buying company Opendoor. Launched in the Bay area in 2014, with Dallas as its second focus group city, OpenDoor has raised $645 million in equity financing, has $1.75 billion in debt, and plans to be in 18 markets across the country by year’s end ostensibly to wipe that debt away.
Opendoor takes all that private equity dough and makes instant offers on homes, based on an automated valuation system that determines home prices online, nearly instantly. Homeowners receive a cash offer and can move without the drudgery of selling their homes: no staging, no showings, minor repairs taken out of the equity. The AVM offers are usually lower than what a seller could fetch with a traditional marketing, but they are quicker and time, says Opendoor, is money. Many customers say the Opendoor offer is exactly what they were hoping to sell for. might prefer to pay 6.5 percent or more to Opendoor versus 6% to two agents to unload a home quickly and move on. People choose Opendoor because it gives them convenience and certainty of an offer and price, which gives them confidence to buy their next home. Opendoor also works with a certain price point of home: originally under $600,000 in Dallas/Fort Worth when they launched here, the company is currently only buying properties valued at $300,000 or less in Dallas/Fort Worth (temporarily) because they have so many properties here: 522 on the market.
On Tuesday, September 11, Opendoor made its first acquisition: it bought Open Listings, a discount, technology-based online brokerage with ready-made, in-house real estate agents and partner agents. The Los Angeles-based company launched in San Francisco in 2015 with the slogan, “Shop without an agent. We’ve got your back”. Now in most of California plus Seattle, Chicago, Austin and here in Dallas, the company offers on demand showings with minimal agent interaction, and in-house agents:
“We have different teams of agents that are focused on making the buyer’s experience as smooth as possible at each step, whether it’s researching properties, tracking down answers to specific buyer questions, helping buyers get pre-approved, providing on-demand showings, or fully supporting them from offer negotiations to closing.”
Originally, Open Listings charged a flat fee of $5000, like our Door and other flat fee brokers, but the brokerage now rebates 50 percent of the buy-side commission to the buyer when the commission is $5,000 or more.
So list your home with Opendoor, then buy another home with Open Listings, get a 50% rebate on the buyer’s agent’s commission, which is typically about 3%. The company says this helps consumers save major bucks on closing costs.
Open Listings says it “sav[es] our customers an average of $9,604 at close,” or $7,250 on a $580,000 home purchase, which it compares to a $1,000 credit from rival discount brokerage Purplebricks. In late July, it reported facilitating $1 billion in real estate transactions since its founding, and currently claims to have saved buyers $8 million in commission.
“By integrating Open Listings with Opendoor’s mortgage, title and home services, the company will make it as easy to buy, sell or trade-in a home as it is to hail a ride, book a flight, or shop online,” saith Opendoor’s press release today.
Today’s acquisition transforms Opendoor from an iBuyer, semi house flipper, into a growing brokerage with buyer’s agents, a one stop shop where people can buy, sell and trade-in their homes online.
Opendoor has been on an aggressive move. According to Inman, “Opendoor bought more than 1,000 homes in August (2018), up from 400 a year ago, according to company spokesperson Heather Staples. It has serviced around 20,000 customers since its founding.”
With the company’s mortgage and title services, Open Listings will feed more business and create a smooth “end-to-end” buy, sell, and move experience for consumers.
Industry analysts say 2018 is shaping up to be a big year for Opendoor, and traditional brokers need to pay attention:
“Closing the loop means each customer can remain in the Opendoor ecosystem, which can have a negative impact on market incumbents and traditional brokers that aren’t part of that ecosystem.”
The move also could put industry giant Zillow in a tough place, if that’s possible. Zillow makes its profits by selling advertisements to agents and brokerages. Earlier this year, Zillow launched an “iBuyer” online home-buying and selling service, Zillow Offers, that many in the industry are watching. 71 percent of Zillow’s revenues come from its hyper advertising program for agents called “Premier Agents”, who currently reap the iBuyer leads. Industry experts believe that if Zillow were to become a brokerage, its ad revenue would dry up rapidly..
And of course, now under the Opendoor umbrella, Open Listings can compete more directly, or indirectly, or head on, with Zillow Offers.
More disruption yet to come: stay tuned.