Opendoor Struggling to Maintain iBuying Dominance
The pandemic’s social distancing rules seem ideal for iBuyers’ success, but in today’s sellers’ market, many homeowners think they’ll make more money listing in the MLS.
NEW YORK – iBuyers offer a contactless method for selling a home, so why aren’t they booming during a pandemic that has made social distancing the norm?
Sales for several iBuying platforms are way down. Opendoor, which started trading publicly on the stock market in December 2020, has seen its revenue fall by nearly half in the past year and doesn’t expect a full recovery for its business until 2022, The Wall Street Journal reports.
At the start of the pandemic last spring, most iBuyers – companies that buy and resell homes electronically – halted their businesses. By summer, they had come back online and resumed making instant cash offers to sellers enticed by the idea of bypassing the traditional home selling process.
However, with high demand from buyers flooding the market who are enticed by low interest rates and a new option to work remotely, more home sellers are deciding to list their home in the MLS and sell it on the open market.
Many think it’s a financially better decision. Traditional transactions don’t take too long to close, and low inventory has made bidding wars common. Since iBuyers often make offers below fair market value, sellers seem more likely to work with a real estate professional to earn top dollar during the current buyer frenzy.
Opendoor, which launched in 2014, remains a leader in the iBuying space, though it has faced challenges recently. While the company’s revenue surged 158% to $4.7 billion in 2019, Opendoor cut more than a third of its workforce in April 2020 due to economic hardship during the pandemic.
iBuyers have also sold off a significant amount of their property portfolios amid the pandemic. Opendoor’s portfolio shrunk about 80% in the first six months of 2020. That has allowed other iBuyers, like Zillow Offers and RedfinNow, to gain market share.
However, Opendoor doesn’t view other iBuyers as its chief competition, according to the Journal. The company sees traditional brokerages as its main rivals.
Source: “Opendoor’s Window Appears to Be Closing,” The Wall Street Journal (Jan. 13, 2021)
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