Return of the iBuyers: Opendoor gets back to buying
SoftBank-backed firm laid off one-third of staff in March
Opendoor is back in businesses and ready for remote sales.
The SoftBank-backed iBuyer, which suspended home purchases in March, said it will resume operations in Phoenix this week. To do so, the company will now do virtual tours. And it’s rolled out a new service called Home Reserve, where it will buy homes on behalf of customers who want to sell their old home first.
Opendoor is one of several so-called iBuyers that purchase homes, make light repairs and then re-sell the homes at a markup (usually alongside a suite of services). The group, which also includes Zillow, Redfin and Offerpad, stopped buying homes in March when governors across the country enacted stay-at-home policies to help flatten the curve. Although Zillow stopped buying homes, it continued to sell homes in its portfolio.
With several states slowly re-opening, including New York, iBuyers are poised to start transacting again. But there’s considerable risk particularly if they purchase homes and are unable to sell them.
“The value proposition we provide to customers is to help them move with certainty and convenience,” Opendoor’s CEO, Eric Wu, told Bloomberg. “We should be willing to take on some of that exposure and we should price homes appropriately due to that risk.”
Opendoor purchased around 19,000 homes in 2019 and owned around 3,800 in March. Founded in 2014, the company has raised $1.3 billion to date from investors including SoftBank and Invitation Homes, the single-family rental giant. In April, during the height of the pandemic, Opendoor laid off about 600 workers – 35 percent of its staff.
Wu said renting out some of its inventory is “always an option,” albeit not one he’s actively pursuing “at this moment.”
[Bloomberg] — E.B. Solomont