10% of the homes on market in my area are owned by Opendoor
I'm an RE agent in the Phoenix East valley area. Today I was looking into opendoor and realized they have a 10% market share here. We currently have about 18,000 homes on market and Opendoor has about 1,800 homes listed (the numbers go up and down daily).
Most of their homes for sale have been sitting and they're all listed at or below what Opendoor paid for them. This has created tons of opportunity for buyers. You no longer have to buy a property in a matter of hours like we did a few months ago.
We are literally able to write offers and when sellers counter I tell them to find a different buyer and all of the sudden they accept our original offer.
How are you taking advantage of this opportunity and are you seeing similar situations in your market where one or two massive institutional buyers are just selling?
The crazy thing is 1,800 homes would've been half the homes on market for us just a few months ago.
@Matt Greer
Many are saying phoenix will be ground zero for some serious price drops because of companies like this. Be interested to see what happens
Absent operational challenges, the ibuyers will make more money on the way up and less or go negative on the way down. It's just inherent in the business model...and the business model is still untested.
Opendoor just got slapped with a $62 million dollar fine from the FTC for deceptive business practices. On the flip side of the coin, they just inked a partnership with Zillow, which expands their reach in a big way.
One thing to keep in mind with open door is that they do charge a service fee when they buy the house (What I saw was 5%) and then almost always come back with $20k or more in repair credits after their inspection. These charges are shown on the settlement statement as credits and won't appear on the tax records
I agree though it's pretty nuts. I've been sending a lot of lowball offers recently and I'm getting a good chunk of them accepted. There are some opportunities out there
A lot of these large institutional buyers have term debt that comes due at 3-5-10 year intervals and has to be rolled over. It will be interesting to see if they have trouble rolling over their debt.
I remember during the great recession how companies with term debt coming due were scrambling to get refinancing, often at MUCH higher rates. If the funding for these companies dries up or gets more expensive it could create a large amount of supply in the market.
Quote from @Bob E.:
A lot of these large institutional buyers have term debt that comes due at 3-5-10 year intervals and has to be rolled over. It will be interesting to see if they have trouble rolling over their debt.
I remember during the great recession how companies with term debt coming due were scrambling to get refinancing, often at MUCH higher rates. If the funding for these companies dries up or gets more expensive it could create a large amount of supply in the market.
That is something I am very interested to see as well. With interest rates much higher than they were just a few months ago we could see some liquidation coming up.