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Opendoor Is An Unstoppable Force, Disrupting The Antiquated Real Estate Industry

By Dana Donovick | Co-Founder Disrupting & ChargeTalk

📧 Dana@Disrupting.news

Twitter: @DanaDonovick

What is Opendoor?

Opendoor is an online company for transacting residential real estate. Headquartered in San Francisco, it makes instant cash offers on homes through an online process, makes repairs on the properties it purchases and relists them for sale. It also provides mobile application-based home buying services along with financing. As of March 2021, the company operates in 27 markets in the US. They went public in 2020 via SPAC merger with Chamath Palahapitiya.

Business Model:

Property owners bid to sell their properties on the online platform. When a bid is accepted, Opendoor purchases the property as-is, charging a fee comparable to the commissions real estate agents collect in return for the convenience of closing a sale quickly without home showings.

Opendoor then makes necessary repairs before relisting the property. By following this process, the company is known as an "iBuyer” in the real estate industry. Through this process, Opendoor carries an inventory of homes. In 2019, the company reported that the average time a property is held by the company is 90 days. The company has considered renting properties to make use of excess inventory.

Recent Earnings Report:

The company reported revenue of $1.2 billion, up 60% from the year-ago quarter, and 59% above the first-quarter level. Opendoor sold 3,481 homes, up 41% from the first quarter. Adjusted Ebitda, was $26 million, well above the company’s projection of a break-even quarter, give or take $5M, and above both the March quarter loss of $2M and the year-ago quarter loss of $21.7 million.

The company purchased 8,494 homes, up 136% from the March quarter, while ending the quarter with contracts to acquire another 8,158 homes, with a value of $3 billion. The company said it finished the quarter with an inventory balance of $2.7 billion, up 224% sequentially.

For the third quarter, Opendoor is projecting revenue of $1.8 billion to $1.9 billion, well ahead of consensus at $1.5 billion, with adjusted Ebitda ranging from $15 million to $25 million.

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