Opendoor, a three-year-old San Francisco startup that uses technology to quickly buy and resell homes, reports that it’s reached a $1.3 billion annual purchase rate, which rounds out monthly home purchases at about $100 million.
“It really shows that this new behavior of selling your home online is more mainstream than it seemed,” Opendoor CEO Eric Wu told Axios.
Although the business is growing in popularity with firm footholds in Phoenix and Dallas-Fort Worth, a smaller operation in Las Vegas, and most recently announcing its expansion into Atlanta and Raleigh, North Carolina, it doesn’t represent your everyday transaction.
“It may be ‘more mainstream’ than we originally thought, but I wouldn’t yet call it mainstream,” strategic adviser and global expert in real estate tech Mike DelPrete said in an email.
“It’s still low, single-digit percent when it comes to overall market share. But the model is appealing to more and more homesellers and shouldn’t be ignored.”
DelPrete added that $100 million in monthly home purchases is nothing to scoff at and shows Opendoor’s growth. He estimates that the company bought around $60 million in homes to start the summer in June between its two biggest markets, Phoenix and Dallas.
“Launching in several new markets plus continuing to grow in existing markets shows impressive traction,” DelPrete said.
Opendoor pioneered what’s come to be known as the “iBuyer” model in which investors leverage automated home valuations and other technology to make quick offers on homes, make light repairs and close in days, thereby compressing the property sale timeline. Unlike traditional investors, Opendoor purports to pay market value for homes and charges an average service fee of 7 percent.
The startup has raised more than $320 million in equity funding, as well as $400 million in debt to purchase properties.
As of November of 2016, Opendoor hoped to expand to 10 cities by 2017 and 30 cities in 2018.
At Inman Connect San Francisco, Wu reported that Opendoor claimed around 7,000 “happy customers,” and was on pace to buy about 400 homes in August.
Typical customers of iBuyers are homesellers who place a premium on convenience and certainty, a panel of iBuyer panelists commented at Inman Connect San Francisco.
Competitors of Opendoor include OfferPad, which has clinched $30 million in funding, and Knock, which has raised at least $32 million. These three main iBuyers now all operate in the city of Atlanta.
“During the summer, Opendoor was buying about two times the number of homes as OfferPad in the Phoenix market,” DelPrete said.
