Zillow might be closing the door on Opendoor, but it is expanding its reach into new markets.
The shockwaves that erupted in the real estate sector when Zillow announced it would be suspending its iBuying operations this week were caused by the shocking news.
Zillow attributed the slowdown in labor supply and demand to its inability to renovate quickly and efficiently its housing inventory. Zillow stock plunged 10% within a day of the announcement, while Opendoor rose.
Opendoors recent market growth can be attributed to a fundamental overhaul of its strategy for launching in new cities or regions.
Opendoor's operations overlap in 23 markets where Zillow was buying homes. There was some concern about whether Opendoor would be affected by the same shortages. Opendoor claims it is moving ahead, even though Zillow is slowing down.
Opendoor has grown its inventory and expanded operations over the past nine months. Opendoor purchased 8500 homes in its second quarter, more than twice the Zillows total. It also stated that it had contracts for the purchase of another 8,200 homes in its third quarter.
Opendoor released a statement shortly after Zillow announced a pause in its iBuying operations. It stated, "We know how important certainty is to homeowners looking to move, and weve worked hard over seven years to ensure that we can continue to provide our experience at scale." Opendoor remains open for business, and it continues to grow and scale.
Opendoor doesn't plan to slow down, in fact. Opendoor can point to a combination of proprietary data and central operations as well as an increasingly digital process of evaluating homes and making offers, as some of the reasons it has been able more than twice the number of markets in which it operates over the last nine months.
Data, data everywhere
A strong understanding of what the market is for your home and how it will be valued when it goes up for sale is key to any iBuying business.
This data and how to model it are even more important in a dynamic market such as the one that has developed over the last 18 months. In this market, historically low interest rates and unrivalled demand have constrained inventory, which led to a rapid increase in home prices.
Opendoor CEO Ian Wong stated that our job as a company was to make sellers a compelling and competitive offer. We can't make a compelling offer on the largest asset that most people own, so they won't accept it.
