A laptop displaying the Opendoor homepage against a backdrop of stock tickers.
Illustration by Lanette Behiry/Real Estate News

Opendoor's future is looking a little brighter 

A more ‘judicious’ and partner-focused Opendoor will help the company succeed in the wake of significant losses and layoffs.

August 10, 2023
3 minutes

Key points:

  • After huge losses in 2022, Opendoor turned a profit in the most recent quarter.
  • The company's emphasis on partnerships with listing portals and agents is “potentially very powerful.”
  • Opendoor is now “relatively stable” but needs to remain disciplined.

After an extended run of steep losses, Opendoor could be making a comeback.

The leading iBuyer returned to profitability in the second quarter, but with home prices back on the rise and inventory hovering near record lows, can Opendoor's model — buying houses and quickly reselling them at an increased price — thrive in a cyclical, sometimes volatile real estate market?

"Opendoor's core offering is to help sellers sell a home," explained Tyler Okland, a Colorado-based surgeon and founder of Datadoor.io, a data and analytics company that solely tracks Opendoor stats. "But in the hottest housing market, you don't need Opendoor to sell your home. Their value proposition makes so much more sense in a buyers market, because it's hard to sell your home," he told Real Estate News.

When the U.S. housing market was booming during the pandemic, Opendoor had to, in many cases, offer over market rate to acquire homes, Okland said.

But scooping up tens of thousands of homes right before mortgage rates spiked and the market cooled led to an "existential event" for the iBuyer, Okland noted. In 2022, Opendoor sold over 39,000 homes — far more than in 2021 — but still ended the year with a net loss of $1.4 billion. 

Since then, the company has focused on cutting costs, including a staff reduction of 22% in April, and building partnerships. 

Partnerships could be key to a healthy sales funnel

A little over a year ago, Opendoor announced a significant partnership with Zillow — which shut down its iBuying program in November 2021 — that gives consumers the ability to request an offer from Opendoor through Zillow's website and app. 

Okland sees this partnership as a huge opportunity for the iBuyer to expand its reach. "The relationship with Zillow is potentially very powerful for Opendoor because the sales funnel is at least 10 times bigger," he said. 

During the company's second-quarter earnings call, CEO Carrie Wheeler talked up the success of Opendoor's partnerships, saying that the channel "represented 40% of total acquisition contracts" in Q2 alone. The company has also been upping incentives to agents.

"Opendoor is beginning to lean more into brand marketing to try and improve relationships with agents involved in the process," Okland said of Opendoor's stance on agents. "What they found is that agents are still integral to the process."

Future success hinges on 'much more judicious' approach

Does this mean that Opendoor has turned a page? Time will tell, said Rick Sharga, Founder and CEO of CJ Patrick Company.

"They've stopped hemorrhaging," he said to Real Estate News. "If I were a doctor, I'd say that the bleeding has stopped and the patient is now relatively stable." 

Sharga does see a path forward for a more streamlined, more disciplined Opendoor, and believes there's a market for what they're selling.

"For several years, they were overpaying for properties they bought relative to what kind of return they were going to get, so I think you'll see them be much more judicious going forward," he said. "What they have, they can sell, there's no question."

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