Real estate investing - market data

19 Replies

As a real estate investor what market data would you like to see? I am pulling local MLS data and curious as an investor what metrics, numbers, averages would you love to have access too?

Since you asked... How many properties does Opendoor own in Jacksonville FL? What is their average square footage and purchase price? How long does it take them to sell their 'flips' when they buy? What is the average and mean selling time? What is the difference between their purchase price and sales price? 

I asked these questions in BP topic Opendoor & Offerpad; What's Their Angle? in response to a Jacksonville agent who posted lots of speculation but not much for facts about the topic. 

Before you blow me off as a nut case, I've discovered that the largest 'wholesaler', by far, in the Raleigh area is Opendoor. They literally (no pun intended) blow the doors off the 'wholesalers' in my area. They have sold 250 +/- houses this year, so it would be nice to know if Jacksonville FL is similar. As an investor, I want to know as much as I can about their game plan. 

i know that open door began purchasing about 9 months ago in our market.  I can tell you they have purchased over 300 homes in that short time.  I can't speak as to how many have sold or how many they are holding onto.  I will see if I can't dig up some numbers but they are offering way more than what a typical investor or wholesaler is offering.  Our local people can't compete with their offers right now.  Maybe that bit of info helps.  But I would have to pull raw data to answer your questions.  

@Chris Martin thanks! I am going to try and start pulling data and putting out a monthly market report. Not sure how to dive into open door but some of the other stuff I can pull easily. Open door is working it's way into jax.

This company (Opendoor) reminds me somewhat of the hedge fund infiltration in the post GR era, like 2010-2012 timeframe. They own 223 properties here (as of 6/1/19) and turn them over quickly. Opendoor is not a REIT like the AH4R types, they are a brokerage, but their business model and scale is unlike anything we've seen in the Raleigh area. BTW, here they hold property like the REITs, as in …

OPENDOOR PROPERTY D LLC
OPENDOOR PROPERTY N LLC

where each LLC buys/sells a certain number of properties (probably based on $ basis amounts) and then they increment their tranche. They are pre-IPO so I can't provide an SEC link to their public documents and I'm not 'in' with investors who are/have participated in any funding rounds, so I don't have access to a PPM or S-11.

For the moment, this company looks like a classic industry disrupter. I see what @Matthew Miller sees, in that here (Raleigh area) they have dominated the middleman market. 

Updated about 1 month ago

Just to clarify, the 223 properties I mentioned as "here", means in Wake county NC. I don't know what they own in the other 19 cities/areas where they operate.

@Chris Martin Hi, I’m in the Raleigh mkt as well and have wondered about Opendoor. I became very curious when my neighbors suddenly sold their house to them. I don’t know if I really agree they are a Wholesaler in the traditional sense. From what I understand/saw they pay a fairly high price for properties but actually charge the seller(original owner) a bunch of fees. Then do some cosmetic renovations and resell at about market price maybe a couple points below. It seems to me it’s all about the volume and I think they are very vulnerable to any market slowdown. I feel their model is very much dependent on the market being strong with low inventories.

This is not a deep data driven conclusion but based on what I’ve heard from various brokers and by looking at some of the purchase and sold prices.

BTW: RE Brokers hate dealing with them as they are not very responsive, I suspect just due to the volume. But again if the market gets a bit squeezed I feel like they could face some challenges if they can’t keep up the pace and are left holding a lot of inventory.

Would love to hear what you think.

@ Aaron Cooper Apart from the MLS data, technological advancements play a vital role where you can leverage real estate data sources to inform investments. These include home flipping reports; gross yield data; sales data and foreclosure reports.
Originally posted by @Christian Hansen :

@Chris Martin Hi, I’m in the Raleigh mkt as well and have wondered about Opendoor. I became very curious when my neighbors suddenly sold their house to them. I don’t know if I really agree they are a Wholesaler in the traditional sense. From what I understand/saw they pay a fairly high price for properties but actually charge the seller(original owner) a bunch of fees. Then do some cosmetic renovations and resell at about market price maybe a couple points below. It seems to me it’s all about the volume and I think they are very vulnerable to any market slowdown. I feel their model is very much dependent on the market being strong with low inventories.

This is not a deep data driven conclusion but based on what I’ve heard from various brokers and by looking at some of the purchase and sold prices.

BTW: RE Brokers hate dealing with them as they are not very responsive, I suspect just due to the volume. But again if the market gets a bit squeezed I feel like they could face some challenges if they can’t keep up the pace and are left holding a lot of inventory.

Would love to hear what you think.

 As far as what they are, you tell me. I've read probably 1000 posts on BP where posters contend that virtually the only difference between a 'wholesaler' and a licensed broker is that a wholesaler uses a contract to purchase and has 'at risk' capital at play and a broker just lists the property. I consider most people who call themselves 'wholesaler' on BP, those with no money with their only asset being a business card, as unlicensed brokers. They put together a buyer and seller and (in NC) hold the property for short times (using bridge loans) if at all. From the Opendoor web site:

"Sell your home to Opendoor so you can skip the hassle of listing, showings, and months of uncertainty." 

Opendoor is differentiating themselves from a brokerage, yet search on North Carolina Real Estate Commission and you will find:

C28655 OPENDOOR BROKERAGE LLC

with a BIC in Raleigh and Charlotte. Man, sounds like a real estate brokerage. Yet, unlike a real brokerage, they buy and own the properties. Maybe sounds more like an institutional 'flipper'. Maybe a 'wholesaler'. Anyway, what they call themselves or we call them is kind of irrelevant. The guy in the white robe may care since some 'wholesalers' are selling real estate contracts, which in NC are not real property (the contract is tangible personal property). I contend 99% or more of them are violating NCGS 75-29. Unfair and deceptive trade names; use of term "wholesale" in advertising, etc. but that's for some other post. 

As for the Opendoor business model, they seem to combine brokerage and 'easy' flipping into one operation. I say easy because they seem to buy "MLS ready" property. The questions I pose are: Can brokerages make money in a slowdown? Can flippers make money in a slowdown? Why can't Opendoor? I don't know what their operating margins are, but they very quickly became the biggest broker in the Raleigh area by sales volume. We know that they receive as you say "a bunch of fees" and also from my post on another Opendoor BP topic, using a very small sample set, a modest 4.6% spread on their resale of property. 

My conclusion is different from yours. I think a slowdown and longer DOM for traditional broker sales will bode well for Opendoor. Unlike brokers, they own and control the asset and have the opportunity to adjust/improve assets to compete more favorably in the open market. Traditional brokers will not fund improvements to listed property, even when involving small financial items that are required for traditional loan underwriting. 

But time will tell. I remember well when hedge funds like American Homes for Rent started buying, in 2012, all property in their wheelhouse in Wake county. They currently own over 2000 rentals here and are by far the largest landlord in the area. I wrote about it here on BP in early 2013. So it's not like a big player hasn't come in and upended the local market. It's happened before. I think Opendoor may be around for a while. And in the big picture I think it may be a good thing.

Chris, good points. Yes, what they really are is a flipper I guess with a RE lic, “wholesaler” has, to me, always meant buying at a very low price and that’s not really what they do. That was my main objection to “wholesaler”. But your right they are really just a very large broker/flipping operation. 

That’s my concern with the model, if there is a slowdown I would think their holding costs or purchase price would be an issue. Yes they have control to improve etc. But that’s just putting more $ in the game that has to come back out. 

I think it’s really interesting that we have opposite views on what would happen. It’s really the reason why deals can still be found in the market. 

The process I experienced 2nd hand at my neighbors house didn’t instill much confidence in their model. Obviously super tiny sample size(one house) but a decent neighborhood in Cary so not an outlier in terms of property type. They paid $283k 

New roof

Entirely new plumbing (was polybutylene, but with the copper connections so not bad re: leaking)

Lots of Sheetrock/painting work cause of plumbing. 

Replaced kitchen cabinets and appliances (Cabinets are not very current, very odd)

BUT

Then did not update the master bath(1995), nor the 2nd bath.? The eye catching rooms!

Back “yard” was and still is a disaster,

Listed for $315k  

I know someone offered full price, then asked for 8k in repair $. They said No, it sat another 5 months and various subs would show up randomly to do stuff, more $ spent, finally sold for $310k. 

I’m thinking if rates went up or economy dipped they might’ve had to sell at $290k and I have to think that would have been a significant money loser, especially factoring in holding costs.

I guess the difference in our thinking is that you feel they may have an advantage in a slower longer DOM scenario by being the owner of the property. 

I think that would be a problem for them. They can’t decide to just take it off the market and keep it like an actual resident homeowner. From what I saw there were clear signs of inefficiency due to scale. They are competing with residential homeowners but are a huge operation that might have more operational costs/$ leakage than they are seeing in a hot market like this.

Anyway, I am not trying to convince you or prove I’m right. Just clarifying my thinking. I don’t have a direct stake in the game, but they are such a big force now and whatever happens it will have a significant impact on the market. As you said, time will tell! 

Cheers!

@Chris Martin I'm sure you already located this information by now, but I have located 62 properties owned by Opendoor (purchase price, date acquired and much more). Please let me know if you want me send you the excel file. 

Off topic - Is that a redfish or a largemouth bass in your profile picture. Nice catch! 

Originally posted by @Christian Hansen :

Chris, good points. Yes, what they really are is a flipper I guess with a RE lic, “wholesaler” has, to me, always meant buying at a very low price and that’s not really what they do. That was my main objection to “wholesaler”. But your right they are really just a very large broker/flipping operation. 

That’s my concern with the model, if there is a slowdown I would think their holding costs or purchase price would be an issue. Yes they have control to improve etc. But that’s just putting more $ in the game that has to come back out. 

I think it’s really interesting that we have opposite views on what would happen. It’s really the reason why deals can still be found in the market. 

The process I experienced 2nd hand at my neighbors house didn’t instill much confidence in their model. Obviously super tiny sample size(one house) but a decent neighborhood in Cary so not an outlier in terms of property type. They paid $283k 

New roof

Entirely new plumbing (was polybutylene, but with the copper connections so not bad re: leaking)

Lots of Sheetrock/painting work cause of plumbing. 

Replaced kitchen cabinets and appliances (Cabinets are not very current, very odd)

BUT

Then did not update the master bath(1995), nor the 2nd bath.? The eye catching rooms!

Back “yard” was and still is a disaster,

Listed for $315k  

I know someone offered full price, then asked for 8k in repair $. They said No, it sat another 5 months and various subs would show up randomly to do stuff, more $ spent, finally sold for $310k. 

I’m thinking if rates went up or economy dipped they might’ve had to sell at $290k and I have to think that would have been a significant money loser, especially factoring in holding costs.

I guess the difference in our thinking is that you feel they may have an advantage in a slower longer DOM scenario by being the owner of the property. 

I think that would be a problem for them. They can’t decide to just take it off the market and keep it like an actual resident homeowner. From what I saw there were clear signs of inefficiency due to scale. They are competing with residential homeowners but are a huge operation that might have more operational costs/$ leakage than they are seeing in a hot market like this.

Anyway, I am not trying to convince you or prove I’m right. Just clarifying my thinking. I don’t have a direct stake in the game, but they are such a big force now and whatever happens it will have a significant impact on the market. As you said, time will tell! 

Cheers!

It's a numbers game. Some deals will be + some -, but their idea (I am speculating some because I don't have their PPM to read) is over time the +s will outweigh the losers. My thinking is that if there is a slowdown, that they can adjust fees and acquisition price accordingly. Yes, their current inventory may be impacted and hold times may increase. They act as listing broker for what they sell and their website also has the same detail as MLS. On the buy side they rely on customers coming to them. My point is their round trip MLS commission paid is about 2.4% (40% of 6% total) whereas fees collected and slightly lower price are where they make up for some of the market risk. They have about $60M in Wake county assets (by their basis, based on county transfer records I have) as of 6/1/19, so @90 days for a mean (not average) turn, that's $240M basis... and if there are 6% in fees and a few % of gross gain on sale, it still seems like a substantial operation, albeit with potentially lower margins that a serial flipper. Long tail sales should have lower acquisition prices by Opendoor, and it's up to their operations people to have a finger on the pulse of every transaction in their respective markets.

It's interesting all the way around. If you go to their web site, and focus on Cary/Holly Springs/Fuquay, then play with the three status buttons (For Sale, Pending, and Sold) you'll see they are just starting out... with quite a chunk of Pending relative to Sold, and about equivalent number of For Sale as Pending. I looked at about 10-12 sold properties... the biggest spread I saw was $25,500 with 6 week hold on a $300K property. The bottom line for me is they are just playing the odds, with smaller numbers that are on their side most of the time. 

Originally posted by @Evan Greenfield :

@Chris Martin I'm sure you already located this information by now, but I have located 62 properties owned by Opendoor (purchase price, date acquired and much more). Please let me know if you want me send you the excel file. 

Off topic - Is that a redfish or a largemouth bass in your profile picture. Nice catch! 

Evan, please post a summary here. That's kind of the theme of this topic. 

Here's the thing. If we, collectively as BP Nation, can have access to and analyze the same kind of market data as the (theoretically) smart guys and gals running places like Opendoor… we should be able to "see" markets and adjust (or take advantage of) just like the big dawgs. 

Walleye. Lake Erie, 6 Mi from Canadian border. 

@Chris Martin Hmmm, yes I see your point. If they are on top of their game then yes I guess they can probably keep it going. I remain skeptical but it's more of gut feeling.

BTW: Thats a fat Walleye! I caught a bunch way back in the Boundary Waters, (?) miles from Canadian border, maybe across it ;-) But they weren't that fat. Good times up there!

Have a nice weekend!

Gents,  Fun discussion.  we have worked, rehabbed for,  Opendoor, Offerpad and now Zillow.  We worked with Opendoor in RDU as well.  Zillow is coming to RDU before long I suspect and will hand the other two their heads, like they have done in CLT.  Zillow has zero marketing cost, the other two have substantial cost so Zillow can offer even more.  The goal for these companies is not to make money on the flip, or not much, they will make money on the other channels of service they provide or will provide like, title insurance, financing, realty fees etc.  That is the bigger goal. They are all limited in what they will buy and they try to keep the rehabs low so they really won't typically buy older homes or homes in non-homogenous communities(their analysts struggle).  Jim Kramer issued a negative buy on Zillow a few months ago because of how much inventory they were sitting on post rehab, I can't say if that is still the case.  These players will force the small true wholesaler to look for the older and more degraded properties in these markets or to go into markets that are too small for the big ones.  I think Zillow will swallow these other two over time.  The real question is how will they fare when the market is not in an upward trajectory.

Originally posted by @Brent Zande :

Gents,  Fun discussion.  we have worked, rehabbed for,  Opendoor, Offerpad and now Zillow.  We worked with Opendoor in RDU as well.  Zillow is coming to RDU before long I suspect and will hand the other two their heads, like they have done in CLT.  Zillow has zero marketing cost, the other two have substantial cost so Zillow can offer even more.  The goal for these companies is not to make money on the flip, or not much, they will make money on the other channels of service they provide or will provide like, title insurance, financing, realty fees etc.  That is the bigger goal. They are all limited in what they will buy and they try to keep the rehabs low so they really won't typically buy older homes or homes in non-homogenous communities(their analysts struggle).  Jim Kramer issued a negative buy on Zillow a few months ago because of how much inventory they were sitting on post rehab, I can't say if that is still the case.  These players will force the small true wholesaler to look for the older and more degraded properties in these markets or to go into markets that are too small for the big ones.  I think Zillow will swallow these other two over time.  The real question is how will they fare when the market is not in an upward trajectory.

This topic is all about data. 

Where are you getting your information? Much of it looks flawed. Your statement: "Zillow is coming to RDU before long I suspect..." They say they are here per the Zillow Group press release January 14, 2019. You continue "...and will hand the other two their heads, like they have done in CLT." Please post the numbers. Opendoor has 197 properties today in Charlotte. They hold them in their company name. Knock has 14. Zillow doesn't appear to have any. Maybe they hold them in an anonymous company name, but under owner starting with "Zillow" there are no properties. Please post the number of zillow sales and current inventory in Charlotte. 

In Wake county, there are zero (0) recorded documents with the word "zillow" as grantor or grantee. The NC Secretary of State shows "Zillow, Inc." filed as a corporation in NC (put zillow in the search box) on 11/9/2018 and "Zillow Closing Services, LLC" filed as a corporation in NC one week ago on 6/10/2019. In Wake county (Raleigh) Knock owns 5 homes, Public record shows 12 deed transfers from Knock to homebuyers so far in 2019. Opendoor owns over 200 properties (maximum search limit), and there are 467 DEED type Records returned since 1/1/2019, meaning Opendoor deed transfers (as in sales). Some of the records are duplicates, but Opendoor has SOLD in excess of 280 houses this year alone. 

I don't see that zillow has handed any heads in Wake county, quite the opposite. 

Regarding "Zillow has zero marketing cost..." Really? Based on what? In their 'Homes Segment', latest SEC quarterly report, page 34
"Sales and Marketing. Sales and marketing expenses were $20.9 million for the three months ended March 31, 2019 compared to $0.3 million for the three months ended March 31, 2018, an increase of $20.6 million. The increase in sales and marketing expenses was primarily attributable to a $7.6 million increase in headcount-related expenses, including share-based compensation expense, a $5.5 million increase in selling expenses directly attributable to the resale of homes, a $2.8 million increase in holding costs, a $2.8 million increase in marketing and advertising expenses and a $1.9 million increase in miscellaneous expenses. We expect our sales and marketing expenses to increase in absolute dollars in future periods as we continue to expand the Homes segment." Under Technology and Development, same page, "...an $8.2 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams to support the Homes segment."

Zillow will incur about $60M in annual expenses just because of Zillow Offers (not counting Homes Segment sales expenses) at their current rate, which will certainly increase. 

Jim Cramer's observation is correct. Inventory exceeds sales by a significant amount. It's all in the 10-Q. 

The rest of your post is speculation, and time will tell. I tend to agree with your comments after the Cramer sentence but can't back anything with facts. 

The rest of my post is based on being a bit of an insider as I have been in a number of meetings with all of them and we do work with them.  Take it for what you wish.

When a buyer or seller does not have access to the mls where do they typically go to see what their home is worth?  Zillow!  Thus a target market comes directly to Zillow and there they will see Zillow offers.  What did that cost Zillow.  If not zero I would guess pretty close to it.  Now do the others have traffic coming to them, no they do not, so they have to spend substantially more to get a client than Zillow does.  

Originally posted by @Brent Zande :

When a buyer or seller does not have access to the mls where do they typically go to see what their home is worth?  Zillow!  Thus a target market comes directly to Zillow and there they will see Zillow offers.  What did that cost Zillow.  If not zero I would guess pretty close to it.  Now do the others have traffic coming to them, no they do not, so they have to spend substantially more to get a client than Zillow does.  

Read the 10-Q. Your statements of zero costs are false. Post the sales numbers for Zillow in Raleigh and Charlotte. As an insider, as you say you are, you will know how Zillow holds their properties. It is painfully clear they don't hold them in their own name. 

You say that Opendoor spends substantially more to get a client than Zillow does, and I'd like to see your published data. I have not seen a PPM from Opendoor, so I can't compare apples to apples. Until I can see that Zillow is actually holding properties in Wake county, I'd say Opendoor has a clear market leadership position. 

Chris I would not be able to provide you with the data you desire.  Must be a UNC grad. : ).  This is info direct from the folks in this market in those companies.  Eventually you will find your data points but I have neither the time nor inclination to provide them.  Best of luck

Funny stuff, @Brent Zande . I have my answer in county and state records. Zillow is just getting started. No doubt they will buy their first property here soon and I'll have some data to analyze. 

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