opendoor

From staff reports

A few months after Zillow announced it would enter the lending business, iBuyer Opendoor announced Thursday that it would as well, launching Opendoor Home Loans.

In a statement released Thursday, the company said it was aiming to make the home lending process less complicated. It can take around 45 days to finance and close on a new home purchase, and the company saw an opening to streamline the process by encapsulating the buying experience from beginning to end.

“Having helped over 50,000 customers buy or sell with Opendoor and hosted over 1 million on demand self-tours of Opendoor homes, we know our customers value flexibility, simplicity and speed,” the company’s press release said. “We’ve taken those same principles and applied it to the home loan process.” (more…)

By Matthew Templeton
Managing Principal
KW Urban Dallas

Why is there so much movement in the iBuyer world?

First: What is an iBuyer?

An iBuyer is an institutional or business-based investor that uses automated valuation models (using data and algorithms to estimate value and trends over time) to make offers on properties in the market without actually having to have a huge workforce on the ground.

Who are these guys? Opendoor may be the one you’ve heard about the most. But also, Knock (a version of iBuying that gives you cash to buy the home you want before helping you sell yours), Offerpad, Coldwell Banker, Zillow Instant Offers (opened in Dallas on April 15), and coming in May to Texas, Keller Williams, according to Inman News this week.

How is this different than a traditional investor? In some ways, it’s not — individuals with bandit signs that say things like “we buy houses for cash” and companies like HomeVestors (“We Buy Ugly Houses”) with billboards have been models for decades.  

What’s different is that these institutional investors can buy properties at scale and their hope is to make money on the volume acquisition.  They claim to be purchasing at higher prices than a traditional investor (seemingly providing convenience for a slightly lesser price than retail).  The marketing pitch is slick. The idea behind it seems amazing — except that homes are not just data points. The fallout is yet to be determined.

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Get Cozy in this Hampton Hills Cottage, Minutes from Bishop Arts | CandysDirt.com

Institutional investors are buying up properties in bulk through iBuyer programs, a new report shows.

New data from Attom Data Solutions shows that one in 10 homes purchased by the two leading iBuyer programs — Opendoor and Offerpad — were purchased by institutional buyers. Those particular buyers were buying at least 10 homes at a time. In recent months, iBuyer programs have gathered a lot of attention and added to their ranks, with Coldwell Banker launching their own “cataLIST” iBuyer program and Zillow “Instant Offers” becoming quite profligate. Offerpad just moved into North Texas, too, with plans to move into Houston and San Antonio in 2019.

So, just how many investors are buying up homes using iBuyer programs to make all-cash offers so they can turn around and lease these properties? 

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Founding team at Opendoor

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.” 

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So  much information was jam-packed into last week’s National Association of Real Estate Editor’s Spring Conference. Bethany, Jon and I were all in attendance and working to bring you what we learned. Throughout this week, I’ll post what I thought were some of the most significant graphs. The biggest take-aways: disruption, i-buyers, availability, affordability, technology, and experience in home selling and buying. Change is happening, and it is happening in media as well as real estate. For the first time, consumer journalists are paying attention to the way the BUSINESS of real estate is changing: that’s no longer a B to B story. The consumer wants and deserves a better real estate experience.

Best quote from David Mele at Homes.com: technology will not replace the real estate agent, but technology enabled real estate agents will replace the non-technology enabled real estate agents. Stay tuned for more. (more…)

You know what we are talking about: new companies (called “Platforms”)  like Opendoor and now OfferPad (co-founded by a former top producing realtor!) are being embraced by Wall Street as a way to “drive Americans to move more frequently, resulting in more home sales.” Stimulating interest in real estate. Glory be, sounds like the pre-crash days. Inman’s Teke Wiggans got his hands on an internal report from an investment banking firm called Evercore ISI. The research report, created for investors looking to maximize return for institutional investors, is fairly bullish on what they have dubbed the “iBuyer” platform. 

Such companies, which the report terms “iBuyers,” use new technology to make quick offers on homes and close in days. They could also chip into real estate commissions and help homebuilders move their inventory faster, the authors wrote.

The report underscores growing enthusiasm for iBuyers on Wall Street. Institutional investors are funding iBuyers or setting up their own, and their interest in the business model helps explain why Zillow Group created Zillow Instant Offers, which is essentially a marketplace for iBuyers.

The group is encouraging investors to familiarize themselves with this new business model, saying these iBuyers are likely to garner increased attention over the next few years.

“If successful, these iBuyers could improve liquidity in the housing market by reducing friction costs, and drive increased housing turnover (existing home sales).”

Which, they claim, will lead to real estate economic nirvana for remodeling, moving, etc. Great for everyone, in fact, except the mortgage broker and Realtor. (more…)