Opendoor launches… a brokerage? – HousingWire


The line between traditional iBuyer and brokerage is getting ever-so-blurry for venture-backed startup Opendoor.

The company, armed with $4.3 billion in debt and equity funding, is looking to bring aboard real estate agents in Phoenix, Arizona, to support its “Home Reserve” iBuying platform, according to Inman, which spotted a jobs posting Friday morning.

A spokesperson for Opendoor told HousingWire that the company is looking to staff its Home Reserve platform with independent contract agents, not salaried agents. The firm is testing two different models with agents in Phoenix, the spokesperson said.

Home Reserve, launched in May, enables Opendoor to list sellers’ homes while purchasing and reserving their next home with all-cash offers. Under such a model, traditional agents hired by Opendoor will be listing and selling the home.

Opendoor’s agent play comes as iBuyers integrate elements of traditional brokerages, and traditional brokerages begin to incorporate components of iBuying, all in the quest to have a hand in every stage of the real estate transaction.

In its pitch to Phoenix-area agents on the job listing, Opendoor touts a steady feed of deals to help them bank commissions.

“Hanging your license with Opendoor Brokerage as an independent contractor means you are eligible for a consistent, steady stream of highly motivated seller & buyer clients,” the job post reads. “You will be able to service more buyers and sellers every year by being able to offer products no other brokerage can.”

While Opendoor is hiring a yet-to-be-determined number of 1099 agents, it already has an in-house staff to sell scores of homes across the U.S. In 2018, the firm acquired Los Angeles-based discount brokerage Open Listings for an undisclosed sum.

In June, Opendoor competitor Offerpad announced that it would allow users to list their homes with Offerpad’s own agents, in addition to using concierge services.

Meanwhile, Zillow Group quietly became a corporate broker in New York and Arizona. However, Zillow says it doesn’t plan to fashion itself into an iBuying platform with a brokerage arm. In August 2018, the company said it was not looking to cut brokers out of the transaction and would not be using its license to operate as a “traditional brokerage.”

Correction: An earlier version of this story said Open Listings was Dallas-based; it was based out of Los Angeles.



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Zillow announces partnership with homebuilder D.R. Horton


Zillow has announced a partnership with homebuilder D.R. Horton, allowing buyers of new construction homes to sell their current homes directly to Zillow through its iBuying solution, Zillow Offers.

D.R. Horton customers selling their current home through Zillow Offers receive an extended closing timeline of up to eight months, and the flexibility to modify the closing date to better align both transactions, the iBuyer said.

“We are excited to partner with Zillow to bring more convenience and flexibility to the home-buying experience,” said Donald R. Horton, chairman of D.R. Horton, in a statement. “This is a great opportunity to provide our customers with new options to streamline the process of selling their existing home, and help them move into their new D.R. Horton home more efficiently.”

With Zillow Offers, sellers can avoid prepping their home for sale and hosting open houses or showings. Sellers start the process by answering a few questions about their home, upload photos and receive an offer in about 48 hours.

D.R. Horton homebuyers who sell their home via Zillow Offers may also be eligible to receive cash credits at closing on top of free local moving services.

This partnership will be marketed on all D.R. Horton home listings on Zillow.

“Buying a new home is an exciting time, and we’re proud to collaborate with the nation’s largest home builder to help people unlock life’s next chapter,” said Arik Prawer, president of the Zillow Homes Division in a statement.



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Zillow Offers announces expansion to Cincinnati


Zillow Offers has expanded yet again, and launched in the Cincinnati market.

The Ohio market is the 24th market that Zillow Offers has branched out to, and the company says it still has plans to expand Jacksonville and Oklahoma City this year.

“Sellers across the country have shown that they’re looking for more certainty, control and convenience during one of the most stressful experiences they’ll go through,” said Zillow President Jeremy Wacksman. “We’re thrilled to introduce this type of service to the greater Cincinnati area and help sellers find a new, simpler way to sell their home and move on to the next chapter of their lives.”

Through the Zillow Offers program, if the home qualifies, the owner will receive an initial cash offer from Zillow within 48 hours. In this case, a Cincinnati-based broker will also be assisting customers during their transactions.

If the homeowner accepts the offer, the seller gets to choose a date to move out, and not worry about cleaning or repairs. Zillow then makes the necessary repairs and/or improvements and sells the house back into the market. (For more on what, exactly, is an iBuyer, read this.)

In 2019 alone, more than 6,500 homeowners sold their homes to Zillow, the company said.

By bringing Zillow Offers to Cincinnati, Zillow says it is expanding its local presence as an employer, with around a dozen new positions and plans to hire more in the future as Zillow Offers grows, the company said.

There are 160 employees currently based in the Cincinnati office, where dotloop, a Zillow Group brand, has been headquartered since 2009.



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Can these mortgage startups change the world, or will Zillow and Opendoor take it all?


Venture capital-backed home lending startups fill key first-time homebuyer, cash-out and investor niches. But will they really change the world, or just be niches? It’s a little of both. Let’s take a look.  

Startups Love Giant Mortgage Stats

Like all venture capitalist pitches, fintech and proptech startup pitches begin with total addressable market (TAM). 

Julian Hebron, Columnist

Why? Because mortgage and housing TAM is super sexy to entrepreneurs hunting for an opportunity as the economic cycle matures. 

The U.S. housing market is worth $30.7 trillion, of which $11 trillion is loans on the homes and $19.7 trillion is equity owned by homeowners. And there are about 6 million homes sold and $1.6 trillion in first mortgages made each year.

If we get just 2% mortgage market share within our three-year plan, that’s $32 billion in fundings!

Laughable, I know. But this is how some startups rationalize. 

In reality, it’s way harder than it looks to fund even $5 billion. It gets exponentially harder when you go above $10 billion, and then again for $20 billion.

Then if you almost double that again, you’re in the nation’s top 10 mortgage lenders, all of which took one to three decades to build organically and through mergers and acquisitions.

Startups Must Be Worth $5 to 10 Billion & Change The World 

Most lenders aren’t giants, and this clashes with today’s aggressive VC quest for unicorns, which are private companies worth $1 billion or more. 

The most vocal of unicorn-or-bust VCs is the indomitable Keith Rabois of Founders Fund. He’s Harvard, Stanford, PayPal Mafia, and has served as an investor and executive at LinkedIn, Square, Yelp, YouTube, Yammer, Palantir, Lyft, Airbnb, Eventbrite, Quora and more (as you’ll see below).

With that record, he’s hard to ignore when he browbeats his winner-take-all unicorn vision into you, which is: 

Your startup must change an industry or the world and be worth $10 billion or more. Maybe it can be worth as little as $5 billion, but below that, you haven’t changed either. 

This ethos has led to a record 199 U.S. unicorns today, up from an already high 117 just two years ago according to CB Insights and PwC.

Which VC-Backed Mortgage Models Work Best? 

So which VC-backed home lending models work right now? Are they unicorns in the making? 

  • Non-owner-occupied models put a fintech spin on hard money, helping investors buy, fix and flip homes. Relevant product, some good brands, but a niche that doesn’t change the industry.
  • Rent-to-own models keep popping up but it’s very capital-intensive to buy the homes and fund scale marketing. And nine-figure valuations given to firms focused on limited geographies don’t pencil. I’m open to being proven wrong here, but this also looks like a niche. 
  • Shared appreciation models are the most consumer-relevant so far. To summarize all the math, these companies give homebuyers up to half of their down payment with no interest or loan payments in exchange for about one-third of the home’s appreciation later on.

Unison and Andreesen Horowitz-backed Point are the two leading players, but Unison is the OG. They were founded as FirstRex in 2004 and rebranded to Unison in 2016.  

Capital markets participants understand how Unison fits within the traditional mortgage mix, and they’re entrenched with lender salesforces, which helps control consumer-direct marketing spend. 

Which VC-Backed Housing Models Will Change The World?

Shared appreciation is relevant stuff for the right consumer profiles, but not the stuff of world-changing unicorns. 

Happy to eat those words later, but I stand by them now for two reasons:  

  • Niches matter. I disagree with Rabois that companies must be unicorns to change lives. Also maturing unicorns will need great niche companies to buy.
  • Shared appreciation is smarter than a reverse mortgage for cash out as the home-owning population ages. Maybe still a niche, but a great one. 

Niches won’t change our housing finance world, but let’s bring it home with a VC-backed model that might. 

One-Stop-Shop Homeownership Will Indeed Change The World

Now back to Rabois for what may be his magnum opus: Opendoor, the pioneer of the instant-buyer (iBuyer) model. 

Now worth roughly $4 billion, Opendoor is on it’s way to becoming a one-stop-shop for home buying, owning and selling. 

The company he co-founded is making home buying and selling like trading your car.

It’s not just about mortgage or real estate fees, it’s monetizing the whole homeownership lifecycle. Despite the monetization complexity, the story plays by offering a one-stop-shop experience consumers demand. 

Opendoor is a key reason Zillow pivoted last year to go “down funnel” from providing leads to buying, selling, and financing homes themselves. 

Zillow currently has a market cap of $9.8 billion, and is telling Wall Street it intends to grow revenue from $1.3 billion now to $20 billion in the next four years.  

Mortgage Scale Unproven For Opendoor & Zillow 

Skeptics say tech unicorns differ from mortgage and housing plays because mortgage and housing touch the real world. 

Other real world-touching unicorns have struggled, most notably WeWork in commercial real estate. And like commercial, housing goes way beyond software and apps. There are humans involved at every step. 

So far, Opendoor (and Zillow) are proving resourceful with ground teams to fix up the homes they buy, and agents to help consumers. Scaling mortgage remains unproven for both firms. 

But my joke for Opendoor here in San Francisco is that it’s Goldman Sachs West – because of it’s highly sophisticated capital markets team. Between that and having such an aggressive and connected co-founder, they might just show us the future of housing finance.

We will see. In the meantime, the consumer wins as the one-stop-shop vision takes shape.



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