iBuyer Offerpad debuted as a publicly traded company this week after completing a deal with special purpose acquisition company Supernova Partners to take the company public.The newly formed company, “Offerpad Solutions,” began trading Thursday on the NYSE under the symbol OPAD, and expects to use proceeds of approximately $284 million from the transaction to accelerate market expansion, to invest in technology and product development, to pay transaction expenses and for other general corporate purposes including the repayment of indebtedness, according to a release from the firm.
Shareholders of Supernova, co-chaired by former Zillow CEO Spencer Rascoff, approved the transaction at a special meeting on Aug. 31.
Founder and CEO Brian Bair and Offerpad’s management team will continue to lead the combined company, the release stated. Bair will also serve as Chairman of the Offerpad Solutions board of directors, alongside Katie Curnutte, former SVP of Communications and Public Affairs at Zillow; Ken DeGiorgio, president of First American Financial Corp.; Alexander Klabin, founder and CEO of Ancient and Executive Chairman of Sotheby’s Financial Services; Ryan O’Hara, former CEO of Move, Inc. (realtor.com®); Sheryl Palmer, chairman and CEO of Taylor Morrison Home Corporation; and Roberto Sella, founder and managing partner of LL Funds.
“We have a superior team, combining strong technology backgrounds and real estate experience in every kind of real estate cycle, with the skills and vision to operate as a highly capital-efficient company in our industry,” said Blair in a statement. “We are excited about the tremendous opportunity ahead of us as more and more buyers and sellers opt for our digital-first experience.”
Offerpad is the latest in a growing list of real estate companies that have gone public. The Arizona-based company joins other tech-enabled platforms like Compass, Fathom Realty, Redfin and Zillow on the stock exchange.
Josh Harley, CEO of Fathom, says that he believes there is space in the iBuyer industry for more than one company or approach.
“[I]f you are wondering who will ultimately “win” this real estate race, then you are thinking about this industry the wrong way. I do not believe there will only be one winner. There is plenty of room for several different models to prevail,” Harley told RISMedia via email.
iBuyers have remained a relatively small share of the market, with an analysis by Redfin back in the spring showing only 0.3% of home sales were through iBuyers in Q4 2020. But the industry has grown by leaps and bounds in 2021, with iBuyer purchases doubling between Q1 and Q2 this year, reaching 1% of total home sales for the first time according to a report from Zillow.
Additionally, four U.S. metro areas— Atlanta, Phoenix, Charlotte and Raleigh—saw iBuyers seize 5% or more market share in Q2. Of the people who sold to one of the four largest iBuyers in Q2, 84% had not listed their home beforehand, presumably making at least some of these homes net-new inventory in a market still struggling to keep up with demand.
iBuyers also saw their mark-ups increase slightly this year. The median sale price in Q2 for an iBuyer home was 9.6% over purchase price, compared to 9.1% in Q1.
In the SEC filings related to the Supernova merger, Offerpad cited its “limited operating history” and the unpredictability of entering untested markets as risk factors going forward. At the end of last year, 67% of Offerpad’s revenue came from just five markets—Atlanta, Charlotte, Dallas, Phoenix and Tampa.
The company had accumulated a deficit of $138.5 million at the end of 2020, according to the filing.
This is a developing story. Stay tuned to RISMedia for more information.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to jwilliams@rismedia.com.
