Trends 2023: A closer look at Opendoor and the marketplace it's creating
Opendoor co-founder and former CEO Eric Wu is now running its marketplace business, including Opendoor Exclusives. Will it be a winner?
Editor's note: Since 2006, the Swanepoel Trends Report has provided in-depth research and analysis to help leaders understand the forces shaping residential real estate. This exclusive series of excerpts highlights each trend featured in the 2023 report.
How the Industry's iBuying Pioneer is Evolving: Opendoor is best known as an iBuying pioneer, but it's much more than an iBuyer. It added mortgage services in 2016, title services in 2019 and its own marketplace, Opendoor Exclusives, in 2022. The latter presents a window into the power of its model and the Silicon Valley network-effect dream of scaling to success. But first, Opendoor must weather the storm of shifting market conditions that drove others out of the iBuying business and led to co-founder and CEO Eric Wu stepping down and taking a role as President, Marketplace (with CFO Carrie Wheeler moving into the CEO role) as 2022 drew to a close. This excerpt takes a closer look at Opendoor Exclusives.
Opendoor, the seller
Opendoor serves as a seller itself, often by listing homes as a brokerage in the MLS. When it lists and sells homes on the MLS, its in-house brokerage technically has the listing. It has licensed real estate employee agents who answer questions, respond to offers and guide a transaction to close. The company offers co-brokerage fees, however, they tend to be lower than the market rate.
In 2022, it introduced a new program to sell homes directly and exclusively to consumers through its own marketplace, Opendoor Exclusives.
In August 2022, the company unveiled Opendoor Exclusives in Austin, Houston, and Dallas-Fort Worth. In this program, Opendoor exclusively lists homes it owns on its online marketplace for 14 days before listing on the MLS. Presented prices are nonnegotiable and are lower than prices that will hit the MLS.
Buyers do not need an agent to purchase a home through the Exclusives marketplace. As the company does not offer co- brokerage fees on these listings, buyers who work with an agent must pay them directly. Or, with the lender's approval, buyers can finance their agent fee through the mortgage with the price of the property increased by the compensation.
Consumers can tour Exclusives homes for sale by contacting Opendoor through a button on the website, which will give the prospective buyer access to the home following a verification process. Exclusives have a nonnegotiable buy-now price, which removes the uncertainty that often accompanies purchasing a home on the open market. The purchase process is fully digital.
Program features include:
Preferred pricing. During the "exclusive" 14-day period, the price of the home will be lower than the list price after the home is on the MLS.
No bidding wars. The price is nonnegotiable and available to the first consumer to make an offer.
Flexible closing date. Buyers can choose the closing date up to 35 days from the contract signing and use any lender or pay cash.
Appraisal price match. The company agrees to lower the purchase price by up to $50,000 to accommodate appraisals that come in under asking price.
Ability to back out. Buyers can walk away from the deal before closing and get all earnest money back.
Especially in markets where inventory is low, the opportunity to view and possibly purchase a home before it hits the market is an appealing option for many frustrated homebuyers. And the appeal of exclusive inventory, in any market, carries cachet and alluring appeal. The messaging reflects that: "Off-market homes you can't find anywhere else."
If the company chooses to make this service more widespread and continues to gain share, this service becomes more attractive and powerful as it includes more properties.
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