Opendoor Gets Door Slammed on Fingers
Published On: September 19, 2022 Posted by: Jeremy Peterson
Opendoor is a massive company that buys homes with cash from sellers and then flips them at resale for a profit. Or, at least that is how the model is supposed to work. Supported by computer driven models of house prices, market demand, and return on investment, the company emerged on the public stock exchanges in 2020 and entered the housing market in earnest as it snatched up homes while demand and prices skyrocketed.
Well, the business model was working wonderfully on the way up. On the way down, the model has broken. Bloomberg reports today that Opendoor lost money on 42% of its flips in August. Yikes!
In Weber County, there are currently 511 homes for sale under $550,000. About 132 of those homes are vacant and Opendoor owns 23 of them. So, if you are a buyer’s agent showing vacant homes, you have about a 1 in 5 chance that it is owned by Opendoor.
A quick analysis shows that 25% of their listings have been on the market four months or longer. Most of the listings have experienced price decreases since first put on the market. So, if you happen to be placing offer on an Opendoor listing, send them some chocolate with your offer as a consolation for the losses they are likely incurring.
It is all just a reminder that excesses in the marketplace may last for a while but never forever. And with this shift, buyers are beginning to gain an upper hand in the market.
If you are thinking of buying a home, give me a call at 801-390-1480.