Opendoor

Last updated
Opendoor Technologies Inc.
Company type Public
Industry
FoundedMarch 2014;10 years ago (2014-03)
Founders
Headquarters San Francisco, California, U.S.
Key people
RevenueDecrease2.svg US$6.95 billion (2023)
Increase Negative.svgUS$−386 million (2023)
Increase Negative.svgUS$−275 million (2023)
Total assets Decrease2.svgUS$3.57 billion (2023)
Total equity Decrease2.svgUS$967 million (2023)
Number of employees
1,982 (2023)
Website opendoor.com
Footnotes /references
[1] [2]

Opendoor Technologies Inc. is an online company that buys and sells residential real estate. Headquartered in San Francisco, it makes instant cash offers on homes through an online process, makes repairs on the properties it purchases and relists them for sale. [2] It also provides mobile application-based home buying services along with financing. As of November 2021, the company operates in 44 markets in the US. [3]

Contents

History

The company was founded in March 2014 by serial entrepreneurs Keith Rabois, Eric Wu, who previously founded Movity, a real-estate startup acquired by Trulia, [4] and JD Ross, now a general partner at Atomic. After raising a $9.95m venture capital round led by Khosla Ventures in May 2014, the company began operations. [2] In 2018, Opendoor raised $400m in funding from the SoftBank Group Vision Fund. [5] In 2019, it raised $300m in a funding round led by General Atlantic. At the time, the enterprise valuation was $3.8b. [6]

In August 2019, Opendoor launched mortgage services through Opendoor Home Loans, an in-house mortgage business. [7] In September 2019, it acquired national title and escrow company OS National, allowing integration of title, escrow and closing services under its business offerings. [8]

In early 2020, Opendoor expanded services to more cities in partnership with Redfin. [9] Later, the company laid off 600 employees, which made up 35% of its team, partially due to business impact from the COVID-19 shutdown. [10] In March, Opendoor announced they would suspend home buying during the COVID-19 pandemic out of concerns for the safety of their customers. [11] The company resumed its operations in May 2020 by introducing a contact-free platform to help people buy and sell homes digitally. [12] [13]

On April 27, 2020, Social Capital Hedosophia Holdings Corp II, a special-purpose acquisition company steered by Chamath Palihapitiya, commenced trading on the New York Stock Exchange. [14]

On September 15, 2020, Social Capital Hedosophia Holdings Corp II announced its intention to merge with Opendoor. [15] The deal valued Opendoor at an enterprise value of $4.8 billion. [16] [17]

On December 17, 2020, shareholders of Social Capital Hedosophia Holdings Corp II approved the merger. [18] On December 21, 2020, the merger was finalized and the company began trading on the NASDAQ stock exchange under its new name, Opendoor. [19]

In 2021, the company bought 37,000 homes. [20]

In the beginning of 2022 the company began buying houses in the Bay Area. [21]

On August 1, 2022, the Federal Trade Commission reported that Opendoor has agreed to pay a settlement of $62 million over charges of misleading potential home sellers in its marketing campaigns. [22] [23]

In the fourth quarter of 2022, Opendoor sold around 7,500 homes at an average loss of $28,000 each, compared to an average gain of $16,000 for each sale a year earlier. [24]

In late 2022 co-founder Eric Wu remained CEO. [25] After losses, he was replaced in the post by Carrie Wheeler in early 2023. [24] Opendoor reported a loss of $1.4bn in 2022, after a loss of $662 million in 2021. Sales in 2022 were $15.6 billion. [20] In November 2022 Opendoor cut 18% of its workforce, or 550 jobs. [20]

Ahead of its 2020 IPO, the company's market cap was around $18 bn. That cap in early 2023 was slightly above $1 billion. [26]

Opendoor cut 22% of its workforce in April of 2023, or roughly 560 positions mostly in the company's operations unit, citing a declining housing market. The company said new listings had dropped by around 30% since their 2022 peak due in part to rising mortgage interest rates. [20]

Opendoor began collaborating with Zillow in Colorado in June 2023. At that time Opendoor was the largest "iBuyer" in the United States. [27]

Business model

Property owners bid to sell their properties on the online platform. When a bid is accepted, Opendoor purchases the property as-is, charging a fee comparable to the commissions real estate agents collect in return for the convenience of closing a sale quickly without home showings. [28]

Opendoor then makes necessary repairs before relisting the property. By following this process, the company is known as an "iBuyer” in the real estate industry. [29] Through this process, Opendoor carries an inventory of homes. In 2019, the company reported that the average time a property is held by the company is 90 days. [6] The company has considered renting properties to make use of excess inventory. [30]

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References

  1. ↑ "Opendoor Technologies, Inc. 2023 Annual Report". U.S. Securities and Exchange Commission. 15 February 2024.
  2. 1 2 3 "With $10M and a long list of big-name investors, Opendoor is almost open for business". Venturebeat. 29 May 2014. Retrieved 2020-05-16.
  3. ↑ "Opendoor Announces Third Quarter 2021 Financial Results". Opendoor.com. Nov 10, 2021. Retrieved January 4, 2021.
  4. ↑ Huddleston, Tom Jr. (2019-05-22). "This millennial used scholarship money to buy property in college—now his real estate company is worth $3.8 billion". CNBC. Retrieved 2022-04-13.
  5. ↑ "Opendoor just raised $400 million in funding from SoftBank's Vision Fund". Techcrunch. Retrieved 2020-05-16.
  6. 1 2 "Opendoor raises $300M on a $3.8B valuation for its home marketplace". Techcrunch. Retrieved 2020-05-16.
  7. ↑ Lane, Ben (29 August 2019). "Opendoor is now a mortgage lender, launches Opendoor Home Loans". HousingWire.
  8. ↑ Rosenbaum, Eric (5 September 2019). "Opendoor buys title company OS National in bid to own more of residential real estate market". CNBC .
  9. ↑ Falcon, Julia (13 February 2020). "Opendoor and Redfin expand homebuying partnership to nine new cities". HousingWire.
  10. ↑ "SoftBank-backed Opendoor has announced a massive layoff, cutting 35% of its employees". Techcrunch. Retrieved 2020-05-16.
  11. ↑ "Opendoor, Zillow begin pausing homebuying, citing coronavirus concerns". HousingWire. 2020-03-20. Retrieved 2020-06-08.
  12. ↑ "Opendoor returns to homebuying with contact-free selling". Inman. Retrieved 2020-06-08.
  13. ↑ Writer (August 18, 2020). "Opendoor resumes iBuying in all pre-pandemic markets". Inman.
  14. ↑ "Social Capital Hedosophia Holdings Corp. II Announces Pricing of Upsized $360 Million Initial Public Offering". www.sec.gov. Retrieved 2023-07-11.
  15. ↑ "Opendoor, a Leading Digital Platform for Residential Real Estate, Announces Plans to Become Publicly-traded via Merger with Social Capital Hedosophia". www.sec.gov. Retrieved 2023-07-11.
  16. ↑ Kirsch, Noah (September 15, 2020). "Home Buyer Opendoor Is Going Public In $4.8 Billion Merger". Forbes .
  17. ↑ Picker, Leslie (15 September 2020). "Palihapitiya finds next '10x idea' with $4.8 billion SPAC deal for real estate start-up Opendoor". CNBC .
  18. ↑ "Social Capital Hedosophia Holdings Corp. II". www.sec.gov. Retrieved 2023-07-11.
  19. ↑ "Opendoor's Market Debut Caps Roller Coaster Year in Housing". Bloomberg.com. 2020-12-21. Retrieved 2020-12-30.
  20. 1 2 3 4 "Online US real estate firm Opendoor cuts 22% of workforce". reuters.com. 2023. Retrieved 2023-07-11.
  21. ↑ "San Francisco-based real estate darling Opendoor lays off 22% of its workforce". SFGate . 2023.
  22. ↑ Herbert, Amy (1 August 2022). "Closing the door on home buying company Opendoor's false claims". Federal Trade Commission.
  23. ↑ Clark, Patrick (1 August 2022). "Opendoor to pay $62 million to settle FTC claims it misled home sellers" . Los Angeles Times .
  24. 1 2 "Opendoor cuts 22% of staff". 2023. Retrieved 2023-07-11.
  25. ↑ "Opendoor lays off about 550 employees, or 18% of its workforce". 2022. Retrieved 2023-07-11.
  26. ↑ "Opendoor loses $400M as home sales tank". 2023. Retrieved 2023-07-11.
  27. ↑ "Former real estate rivals Opendoor and Zillow now partners in Colorado". 2023. Retrieved 2023-07-11.
  28. ↑ "Home-flipping giant Opendoor says it's time to resume buying". Bloomberg.com. Bloomberg. 4 May 2020. Retrieved 2020-05-16.
  29. ↑ "What Is an iBuyer? (And Should I Sell My House to One)". Clever Real Estate. 24 September 2020. Retrieved 2021-07-13.
  30. ↑ "OpenDoor back open for business". Daily Beat NY. 6 May 2020. Retrieved 2020-05-16.
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