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Old 07-13-2018, 08:32 AM
 
Location: LEAVING CD
22,947 posts, read 21,854,107 times
Reputation: 15446

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Quote:
Originally Posted by MikeJaquish View Post
So, they are in at $233,300 (if we count the rent back) and resell at $255,000.
In my market they pay 2.4% to a buyer's agent.
$248,800.

They have held 148 listings in my MLS. 17 county market, and I would have to dig deeper into the geography.
More than 2 million population, but some of that is a bit rural.

Average DOM here for Open Door is 48.
Median DOM here for Open Door is 36.

At a $15,500 gross profit and considerable operational expenses, that is a slim margin for the risks entailed. Most good flippers would not entertain it.
I wonder how they will tweak to build a LT sustainable model.

But, clearly in this instance it worked for you. Good enough, today!
Yep, it sure did!
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Old 07-13-2018, 10:21 AM
 
Location: Columbia, SC
8,933 posts, read 17,645,827 times
Reputation: 6364
Quote:
Originally Posted by MikeJaquish View Post
So, they are in at $233,300 (if we count the rent back) and resell at $255,000.
In my market they pay 2.4% to a buyer's agent.
$248,800.

They have held 148 listings in my MLS. 17 county market, and I would have to dig deeper into the geography.
More than 2 million population, but some of that is a bit rural.

Average DOM here for Open Door is 48.
Median DOM here for Open Door is 36.

At a $15,500 gross profit and considerable operational expenses, that is a slim margin for the risks entailed. Most good flippers would not entertain it.
I wonder how they will tweak to build a LT sustainable model.

But, clearly in this instance it worked for you. Good enough, today!
It would be less in my market. That's very low profit margins when you factor in the overhead. Those numbers won't be sustainable in a declining market. I wonder if they close up shop when the market turns or change the model? I would think they'd have to start paying much less for a home when the bubble pops. Right now their model relies greatly on appreciation.
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Old 07-15-2018, 09:21 AM
 
Location: LEAVING CD
22,947 posts, read 21,854,107 times
Reputation: 15446
Quote:
Originally Posted by Brandon Hoffman View Post
It would be less in my market. That's very low profit margins when you factor in the overhead. Those numbers won't be sustainable in a declining market. I wonder if they close up shop when the market turns or change the model? I would think they'd have to start paying much less for a home when the bubble pops. Right now their model relies greatly on appreciation.
One part of the equation that has to be taken into account is how this differs from the way things work in the normal RE world. I'm fairly certain that the few licensed RE agents they use are employees,not commission based. I'm also fairly certain that all the ancillary services used to close are either employees or tightly contracted so the costs to acquire are way lower than a traditional sale/purchase. As long as they keep tight control of overhead they should make money. Kind of like JB Hunt in the trucking industry. It is said he only made $5 or less per day on his trucks but he has thousands of trucks.
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Old 07-16-2018, 07:56 AM
 
Location: Columbia, SC
8,933 posts, read 17,645,827 times
Reputation: 6364
Quote:
Originally Posted by jimj View Post
One part of the equation that has to be taken into account is how this differs from the way things work in the normal RE world. I'm fairly certain that the few licensed RE agents they use are employees,not commission based. I'm also fairly certain that all the ancillary services used to close are either employees or tightly contracted so the costs to acquire are way lower than a traditional sale/purchase. As long as they keep tight control of overhead they should make money. Kind of like JB Hunt in the trucking industry. It is said he only made $5 or less per day on his trucks but he has thousands of trucks.
Right, but at 3-7% margin now, that's going to go negative in a buyers market. They'll have to shift somehow to account for depreciation. I'm not saying they can't, just that they'll have to in order to remain profitable.
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Old 07-16-2018, 08:48 AM
 
Location: Research Triangle Area, NC
3,284 posts, read 2,237,044 times
Reputation: 4702
Quote:
Originally Posted by Brandon Hoffman View Post
Right, but at 3-7% margin now, that's going to go negative in a buyers market. They'll have to shift somehow to account for depreciation. I'm not saying they can't, just that they'll have to in order to remain profitable.
I am more taken back by the fact that Opendoor charges a 6% commission on the sales side. Sell your house for less, pay the same commission you'd pay a traditional broker.

For a seller I see that as really only being advantageous if you are in a buyer's market...or if you just REALLY didn't want to negotiate and had to move really quickly and wanted a guaranteed quick sale. They certainly aren't saving any money and in most cases are probably making less on the sale.

I don't even work with listings at all and I have no qualms about taking buyers to Opendoor listings (though they do tend to have shoddy re-hab work done; so do regular "flippers"). So no skin in the game for me really....the numbers just don't add up.

Still not NEARLY as insane as Knock though.
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Old 01-12-2019, 07:07 PM
 
387 posts, read 246,407 times
Reputation: 824
I just got an estimate from Opendoor; thought I'd check it out as I'm planning on selling in a few months.

I was shocked at the numbers. Based on what I've seen in my area, I was expecting something in the $340,000 range. Their estimate came in at $382,800 with estimated net proceeds of $363,500. That sounds really good but I'm guessing that they will find some not-so-cheap repairs that need to be done as I've had some settling issues. I've had a pre-inspection done and have fixed almost everything that needed to be done, but there are some cosmetic issues.

When I'm ready to sell I think I'll go through the process with them and see what happens. Glad to hear you had a positive experience, jimj.
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Old Yesterday, 09:29 AM
 
603 posts, read 675,871 times
Reputation: 941
It's interesting to read about it from the seller standpoint.

We put an offer in on an OfferPad home in late October - we have a realtor, we were pre-approved with a well-known mortgage company. We put the offer in about 2k less than list price - this should not have been a problem.

They came back and stated that they would need us to get pre-approved with their in-house mortgage officer. We wouldn't be required to use them but they wouldn't present the offer until we got the pre-approval with their lender.

My realtor called their rep, explained we were well qualified. My mortgage officer called and said she could share our credit report (with our permission) but I didn't want to have another hit on our credit report nor did I want the seller to have full access to exactly what we were qualified up to (another $80k or so above their asking price).

They refused and said that if we didn't do the application with their in-house lender, they couldn't present our offer. We walked. Found another house. Closed on it in 28 days. That house is still on the market and now, with price drops, listed for $10,000 less than what we offered. It's listed for $13k more than what the pricing history shows they closed on it (in August - so with carrying costs, I can't imagine they will make all that much on this deal).

I don't know if this is how they conduct business all the time or if this particular house had a reason to that condition. I'm guessing part of how they make money is by trying to get buyers to use their lender. They likely get people who come in without a realtor and/or a lender already and they can recoup some fees this way. Having some experience in the real estate world, I was not happy with the way they conducted business from the buyer side. I might consider it as a seller but I would caution as a buyer.
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Old Yesterday, 09:56 AM
 
Location: Cary, NC
32,145 posts, read 56,251,316 times
Reputation: 30830
Quote:
Originally Posted by sandy6879 View Post
It's interesting to read about it from the seller standpoint.

We put an offer in on an OfferPad home in late October - we have a realtor, we were pre-approved with a well-known mortgage company. We put the offer in about 2k less than list price - this should not have been a problem.

They came back and stated that they would need us to get pre-approved with their in-house mortgage officer. We wouldn't be required to use them but they wouldn't present the offer until we got the pre-approval with their lender.

My realtor called their rep, explained we were well qualified. My mortgage officer called and said she could share our credit report (with our permission) but I didn't want to have another hit on our credit report nor did I want the seller to have full access to exactly what we were qualified up to (another $80k or so above their asking price).

They refused and said that if we didn't do the application with their in-house lender, they couldn't present our offer. We walked. Found another house. Closed on it in 28 days. That house is still on the market and now, with price drops, listed for $10,000 less than what we offered. It's listed for $13k more than what the pricing history shows they closed on it (in August - so with carrying costs, I can't imagine they will make all that much on this deal).

I don't know if this is how they conduct business all the time or if this particular house had a reason to that condition. I'm guessing part of how they make money is by trying to get buyers to use their lender. They likely get people who come in without a realtor and/or a lender already and they can recoup some fees this way. Having some experience in the real estate world, I was not happy with the way they conducted business from the buyer side. I might consider it as a seller but I would caution as a buyer.
Everyone has a learning curve.
I paid for mine.
OfferPad may be paying for theirs with OPM.
https://www.offerpad.com/press/relea...new-financing/

With $410 million to play with and the intent to buy and sell $1.5 Billion in residential real estate in the next year, their financials could be a fascinating read.
I am always curious whether businesses are profit-oriented or disruption-oriented.
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Old Yesterday, 10:37 AM
 
Location: DFW - Coppell / Las Colinas
30,160 posts, read 35,151,281 times
Reputation: 36300
Quote:
Originally Posted by MikeJaquish View Post
Everyone has a learning curve.
I paid for mine.
OfferPad may be paying for theirs with OPM.
https://www.offerpad.com/press/relea...new-financing/

With $410 million to play with and the intent to buy and sell $1.5 Billion in residential real estate in the next year, their financials could be a fascinating read.
I am always curious whether businesses are profit-oriented or disruption-oriented.
It's easy to pay high and flip higher when the market is booming. now that the markets have returned to a more normal time, I've wondered how they are doing.

I suspect not all that great right now. They are limiting what price they will buy. I suspect their DOM is quite a bit higher than it was 1 or 2 years ago.
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Old Yesterday, 10:45 AM
 
Location: Cary, NC
32,145 posts, read 56,251,316 times
Reputation: 30830
Quote:
Originally Posted by Rakin View Post
It's easy to pay high and flip higher when the market is booming. now that the markets have returned to a more normal time, I've wondered how they are doing.

I suspect not all that great right now. They are limiting what price they will buy. I suspect their DOM is quite a bit higher than it was 1 or 2 years ago.
Disruptors will always skim the cream when they can. They must because too often they just haven't the market knowledge or the ability to turn on a dime.

I do a lot that many agents will not do, let alone a disruptor. Even at that, I don't do everything that comes my way.
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