The announcement that Zillow was putting its iBuying activities on hold earlier this week sent shockwaves through the real estate sector. The hiatus was attributed to labor and supply constraints, which hampered Zillow’s capacity to remodel and turn over its housing inventory swiftly and effectively. The news sent Zillow’s stock tumbling 10% the day after the report, while competitor Opendoor’s price soared.
Given the overlap in operations — Opendoor is in 23 of the 25 markets where Zillow is buying properties — it was unclear whether Opendoor was hit by the same shortages as Zillow. Opendoor, on the other hand, believes it is forging ahead while Zillow retreats. Opendoor has rapidly expanded operations and increased inventory during the last nine months. In the second quarter, the company bought 8,500 residences, more than quadruple Zillow’s total, and said it had contracts to buy another 8,200 homes in the third quarter.
“We recognize how important predictability and convenience are to homeowners wishing to move, and we’ve worked hard over the past seven years to guarantee we can continue to deliver our service at scale,” Opendoor stated shortly after Zillow revealed the delay in its iBuying operation. Opendoor is now accepting new customers and is continuing to build and grow.” In other words, Opendoor does not intend to slow down anytime soon. Over the last nine months, the company has been able more than double the number of markets it operates in thanks to a combination of proprietary data, centralized operations, and an increasingly digitized procedure for appraising properties and making offers.
The utilization of data to make a competitive offer to sellers while also having a clear idea of the price you can anticipate getting when you place the home back on the market is the key to any successful iBuying firm. In a dynamic real estate market like the one that has arisen over the last 18 months, where historically low loan rates and tremendous demand constricted inventory and led to home price increase in a very short period of time, that data, and how you model it, becomes even more important. Opendoor CTO Ian Wong stated, “Our role as a firm is to make a highly compelling and competitive offer to sellers.” “They just won’t take [it] if we can’t make a competitive offer on their single largest asset.”