It was an interesting week for Opendoor.
On the heels of being fined by federal regulators, the company has had to juggle a mixed bag of announcements throughout the first week of August, culminating in a shocking partnership and an earnings report underscoring the shifting housing market’s impact on the iBuying giant.
“While we are pleased with these results, the current market volatility is requiring us to be highly dynamic and rigorous at managing risk and overall inventory health,” said Eric Wu, Opendoor’s co-founder and CEO, during Thursday’s conference call reporting the company’s performance for the second quarter.
While strong home sales helped Opendoor tally $4.2 billion in revenue, it couldn’t maintain the profitability that it achieved at the start of the year. The California-based company reported a net loss of $54 million, versus $144 million in Q2 2021.
Opendoor tallied a gross profit of $486 million, marking a 206% increase from the second quarter of last year. It also reported an adjusted EBITDA of $218 million versus $25 million in Q2 2021.
Amid an industrywide cooldown in home sales and home price appreciation coupled with climbing mortgage rates, Wu indicated that the housing market shift occurred faster than Opendoor anticipated.
To navigate the changing market, Wu signaled that Opendoor would be “prioritizing inventory health” in the coming months. He also noted that the company would be cutting prices on its inventory after purchasing 66% more homes in Q2 than last year.
Opendoor sold 10,482 homes in Q2—up 201% from last year—while also purchasing 14,135 homes. It currently owns 17,013 homes, representing $6.6 billion in value, up 143% versus Q2 2021.
Despite the company’s balance sheet tipping back into the red, Wu seemed confident that Opendoor would weather the storm of a shifting housing market.
“We will balance short-term risk management with long-term, transformational investments,” he says.
One of those investments is the company’s newly launched Opendoor Exclusives product, which the iBuyer announced on August 2 in the wake of being fined $62 million by the Federal Trade Commission (FTC) for allegedly “cheating potential home sellers” with misleading information about how much more money they could make selling their home to Opendoor than on the open market with traditional processes.
Touted as a “one-tap buying experience for homebuyers,” Opendoor Exclusives is the company’s rendition of pocket listings. The program makes the Opendoor-owned listings available to consumers at discounted prices for 14 days before the iBuyer lists the property on a multiple listing service (MLS).
Arguably the most important announcement that Wu highlighted during the earnings call was a new multi-year partnership with Zillow to give the tech giant’s users the ability to request an Opendoor offer and sell their home online instantly.
“It’s rare that two market leaders come together and align on a vision, and we believe that this partnership will fundamentally change how people buy and sell a home,” Wu said during the call.
Once its fierce rival in the iBuying playing field, the announced partnership comes less than a year since Zillow announced that it was sunsetting Zillow Offers, shocking the industry and leaving Opendoor at the top of the mountain.
“By bringing together Zillow’s market-leading audience and Opendoor’s e-commerce platform, more consumers will have the option to sell to Opendoor and save themselves the stress and uncertainty of a traditional sale process,” said Opendoor President Andrew Low Ah Kee in a press release.
The partnership will make Opendoor offers available on Zillow, while letting customers use the service as a standalone offering or package deal with other Zillow home shopping services such as financing, closing and agent selection.
Zillow customers will also be able to work with a licensed Zillow advisor who will serve as a helpful guide in understanding these options.
Shocking as the announced deal may be for the industry, it also suggests that Zillow isn’t quite out of the iBuying game yet.
“As we bring the housing super app to life, we’re empowering our millions of visitors to understand all their options and transact in the way that best meets their housing needs,” said Zillow COO Jeremy Wacksman. “We know choice is important for customers, and they can make the best decision when they see all of their selling options upfront—including selling on the open market with a Zillow Premier Agent partner and getting a cash offer from Opendoor.
“This exclusive partnership will pair Zillow’s audience and brand power with Opendoor’s selling solution in one easy place, so customers can evaluate their selling options and easily package it with other Zillow services to buy and finance their next home.”
Jordan Grice is RISMedia’s senior editor. Email him your real estate news to jgrice@rismedia.com.
