Opendoor homes, can you get a deal on theses

Riverside CA · Member since 2019 · 11 posts · 6 votes

Ok, here’s another topic I’m interested in, has anyone been successful with submitting low offers on opendoor properties given all the bad news about this company and in high risk of bankruptcy. Would today be a goo time to send in offers or will they stick to their numbers given the company has been trying to offload debt?

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Chris Martin

Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes

At least in my market (Raleigh NC) they (Opendoor) are not yet desperate to unload inventory at a discount. I looked at 30 or so properties that they sold recently and posted the dozen or so (since 11/1/2022) of their sales in this BP post. The more I dig into their SEC filings, the more I think it is premature to talk bankruptcy. Even with two more bad quarters, most likely they have enough cash, liquidity of inventory, and credit lines to stay afloat. There is a possibility, though, their next few quarters will be worse than last (ending 9/30/22). A key metric to follow is the Homes Sold to Homes Purchased ratio, which should be closer to 2 in 2022Q4 and 2023Q1. At 9/30/22, they had roughly six months of inventory per SEC filings. Here is a page list of their latest Letter to Shareholders which is split up into individual pages. I don't know why they didn't just make one file.

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Nicholas Coulter
Real Estate Agent · Southern California · Member since 2019 · 681 posts · 281 votes
3y
@Juan Zamora I think you can. Have you talked about this at length with your Agent to submit the offers below ask?
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
3y
Quote from @Juan Zamora:

Ok, here’s another topic I’m interested in, has anyone been successful with submitting low offers on opendoor properties given all the bad news about this company and in high risk of bankruptcy. Would today be a goo time to send in offers or will they stick to their numbers given the company has been trying to offload debt?

If I was shooting my shot, I'd totally give it a try. What's the downside? They say no?
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Juan Zamora
OP
Riverside CA · Member since 2019 · 11 posts · 6 votes
3y
Quote from @Nicholas Coulter:

@Juan Zamora I think you can. Have you talked about this at length with your Agent to submit the offers below ask?

I think the problem is that when I do talk about below asking, my realtor wants the reasoning. I don't think she's comfortable but she's done it but not sure she's broken it down to the listing agent. So check my logic:
I look at the home value of the home in 2019, then I give it a good generous appreciation of 6% a year on a healthy normal market value of growth for the 3 years. So then I see when it's listing price is and I want to get to the closest to that number if possible. What I'm trying to do is not get a home that will devalue if the economy goes to a recession in 2023, and based on all the data it's very very likely. So I figured to submit a offer close or max maybe 25% below listing price.
is this a flaw way of thinking? Is there another way to look for value in today's crazy landscape?
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Nicholas Coulter
Real Estate Agent · Southern California · Member since 2019 · 681 posts · 281 votes
3y
@Juan Zamora not at all. We should connect more and see what the ideal offers could look like.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@V.G Jason
We have made some offers on properties and they were rejected. They countered back but really the price they countered at was probably closer to new market value so we have yet to see any distress in them selling for steep discount
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Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
3y
Unless you are buying large quantities of properties, there is no reason for them to sell to someone below market versus selling to others at market.
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
3y
Quote from @Juan Zamora:

Quote from @Nicholas Coulter:

@Juan Zamora I think you can. Have you talked about this at length with your Agent to submit the offers below ask?

I think the problem is that when I do talk about below asking, my realtor wants the reasoning. I don't think she's comfortable but she's done it but not sure she's broken it down to the listing agent. So check my logic:
I look at the home value of the home in 2019, then I give it a good generous appreciation of 6% a year on a healthy normal market value of growth for the 3 years. So then I see when it's listing price is and I want to get to the closest to that number if possible. What I'm trying to do is not get a home that will devalue if the economy goes to a recession in 2023, and based on all the data it's very very likely. So I figured to submit a offer close or max maybe 25% below listing price.
is this a flaw way of thinking? Is there another way to look for value in today's crazy landscape?

You need a new agent. You should not have to justify your price to your agent. Find an agent that will happily submit your offers recognizing that many may get rejected. I speculate that your agent is not an RE investor. RE investor agents typically have an understanding that many sellers may not sell at numbers that work for the investor and that they may be submitting many offers to get a few accepted.
If my agent wants to learn how I value properties, they can discount their commission for the lesson. I have more success in RE than they have, and I am fine them getting their commission for their services/skill. If they want to learn what I know, they should also be willing to compensate me for my knowledge.
I recently placed an offer on a high value quad (close to $3m) that had no obvious value add. I made a competitive offer (it was not accepted). The agent knows that I was not paying close to retail without a plan to extract most/all of my investment. She asked the plan for it and I basically told her I would let her know if she was able to get the deal completed. When the deal did not get accepted she asked again what my plan was and I told her that the deal did not get done. She got the message.
If the agent is reluctant to do what you desire, get an agent that is not reluctant to do what you desire.

Good luck
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
3y
Quote from @Chris Seveney:

@V.G Jason
We have made some offers on properties and they were rejected. They countered back but really the price they countered at was probably closer to new market value so we have yet to see any distress in them selling for steep discount

Thought that might be the case. I'm sure it's region specific, too, with how vulnerable they may get.
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Chris Martin
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
3y
At least in my market (Raleigh NC) they (Opendoor) are not yet desperate to unload inventory at a discount. I looked at 30 or so properties that they sold recently and posted the dozen or so (since 11/1/2022) of their sales in this BP post. The more I dig into their SEC filings, the more I think it is premature to talk bankruptcy. Even with two more bad quarters, most likely they have enough cash, liquidity of inventory, and credit lines to stay afloat. There is a possibility, though, their next few quarters will be worse than last (ending 9/30/22). A key metric to follow is the Homes Sold to Homes Purchased ratio, which should be closer to 2 in 2022Q4 and 2023Q1. At 9/30/22, they had roughly six months of inventory per SEC filings. Here is a page list of their latest Letter to Shareholders which is split up into individual pages. I don't know why they didn't just make one file.
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
Quote from @Chris Martin:

At least in my market (Raleigh NC) they (Opendoor) are not yet desperate to unload inventory at a discount. I looked at 30 or so properties that they sold recently and posted the dozen or so (since 11/1/2022) of their sales in this BP post. The more I dig into their SEC filings, the more I think it is premature to talk bankruptcy. Even with two more bad quarters, most likely they have enough cash, liquidity of inventory, and credit lines to stay afloat. There is a possibility, though, their next few quarters will be worse than last (ending 9/30/22). A key metric to follow is the Homes Sold to Homes Purchased ratio, which should be closer to 2 in 2022Q4 and 2023Q1. At 9/30/22, they had roughly six months of inventory per SEC filings. Here is a page list of their latest Letter to Shareholders which is split up into individual pages. I don't know why they didn't just make one file.
They are now in the triangle.

I waited for this post. We were too early, but I think this is the start of some cracks. Again no crashes, just some correction & falling.
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