Opendoor: One Realtor’s Perspective
As it happens, the ability to opine is unilateral and the internet is open to all. I am no exception. To be clear, these ponderings are a result of seeing Opendoor appear more frequently in industry articles and headlines, becoming a more frequent topic of conversation and, today, appearing on stage at ICNY. I have no stake in the company’s success or failure, this is not a plug and I can’t even six-degrees-of-Kevin-Bacon my way into knowing anyone who works there. This company is staking a claim to a corner of my industry and I find it’s evolution to be very interesting -almost as interesting as the reactions of some of my colleagues out here in the trenches. So, I’m chatting about it and I hope others will, too. With that said…
It seems the Opendoor concept has a bit of negativity swirling around it. Many of the articles and discussions lately, regarding the fledgling firm, range from skeptical to borderline mockery of the idea. The reasoning for these reactions, however, isn’t readily apparent, which begs the question, “why?”. Applied in the right circumstance, the basics seem to be thoroughly beneficial to the consumer.
For those unfamiliar with the company, (A) this post will probably be very dull and, (B) by way of background, take a quick look at the Opendoor process here. It’s simple, it’s streamlined and it offers the convenience and control that some consumers want and other consumers need.
The key word here is control.
When homeowners go through the listing and selling process, so much is out of their control. The market value, the showing schedule (to an extent), the buyer’s offer (and whether they agree with the seller’s definition of “reasonable”), the inspection dates, the appraisal appointment, the closing process and probably 50 other things are not up to the seller.
Some people need to be in control. Anyone who has ever had an engineer, pilot or other significantly Type A client can attest to this. Considering the varied clientele Realtors serve, the question posed to the panel on the main stage at Inman Connect NY today was, “Who would just click and buy?” and, by extension, click and sell.
The Opendoor model is ideal for investors; it breaks the process down to exactly what it is: a business transaction. There is no personality involved, it doesn’t matter that it was your first house or that your kids wrote their names in the concrete sidewalk. It’s real property. A commodity. This streamlined process is perfect for those who don’t need or want to negotiate, or who don’t want their five year plan held up by sentimentality.
The Opendoor model will appeal to a sector of the millennial market, a group that outsources to specialty fields more often than they DIY. For example, a local friend and millennial, is a busy dude. He has a beautiful family and a fancypants job. He’s well rounded and is more than capable of basic home maintenance and repairs. However, he recently paid a guy $200 to install a toilet. He could have completed the task himself, but someone who does home repair for a living can do it faster/better/more efficiently and my friend gets the afternoon to go to the park with his kids or watch football or skulk around a coffee shop… whatever millennials do in their spare time. His time is valuable.
This $200 example of convenience applies to selling a home, albeit on a much larger scale. (Everything’s “scalable” these days, right?) The seller could go through the dog and pony show described previously and potentially earn higher proceeds from the sale, but they’ll be at the whim of everyone else involved in the transaction and there is no guarantee the house will sell. Millennials, the ones you love to hate, may not feel like the gamble is worth it.
Moving on to those with a tight timeline, the obvious group to benefit from Opendoor’s system. Timing issues go beyond job transfers, though it seems that there would be great benefit to relo companies, once they do a cost analysis of the referral and possible buy-back situation already in play. I can see Opendoor dedicating a team solely to developing this market sector, if they haven’t already. Moving into other possible situations, what about estate sales? When several siblings from across the country, with busy lives of their own, have to deal with the sale of a deceased parent’s property, it can get messy, time-consuming and there may be up front cost that someone will have to provide. Opendoor offers a solution. What about people who need to clear up their DTI before they can get a clear-to-close on a new purchase? How about divorce situations? If ever there was a case for an abbreviated sale process, it would be the legal battle and dissolution of marriage. Again, taking the personality out of the sale and bringing it back to a business transaction can be of great consumer benefit.
Sidenote: This is not necessarily hypothetical. I currently have clients who are less concerned with the almighty “top dollar” and more concerned with a reasonable price and a quick sale. They are tired of being landlords and cannot infinitely pay two mortgages, while the house sits on the market. For some people, money is not the bottom line.
So, the naysayers…
I have a feeling that the majority of the grumbling is coming from the residential resale side of the industry. Commercial agents and agents who work primarily with investors are likely to already see the benefits of the Opendoor model and are probably irritated they didn’t think of the concept first.
In most markets, you’ll hear agents say things like, “There’s enough pie for everyone, I just want my piece.” However, this lip service doesn’t seem to apply to innovation. Once again, there seems to be a rising fear -at a near-Zillowesque level- that Big, Bad Tech is coming for all the jobs.
It’s not, so enough already.
Too often, residential agents are stuck in the mindset that they control the engineering of the American Dream, never pausing to wonder if that dream may have changed. These traditional agents have taken so little time to understand their purpose and establish their value, that control -there’s that word again- of the buy/sell transaction is all they have left. They spend as much time justifying their cost and explaining how expensive their dues are, as they do changing the AAA batteries in their camera so they can take pictures of the new listing. These agents seem to think that a person couldn’t possibly buy or sell a home without someone to hold their hand through the process. The consumer agrees to move forward into an intimidating, laborious and expensive process and has nothing standing between them and certain doom on Craigslist, except their Super Realtor!
When did martyrdom become a career goal?
Obviously, there are some amazing Realtors who bring tremendous value to the consumer and the marketplace, regardless of whether they think Opendoor is a good idea. Moreover, there are certainly negatives to consider, when evaluating the ease of this new platform. Whether a buyer or seller chooses to work with tradition or tech, neither side is flawless.
To wager a guess, it would seem that the bulk of the real estate industry is not adapting well to the needs of the consumer, regardless of age. Not all consumers want or need someone to hold their hand. Though not exclusively, many of those consumer needs are tied to tech. Being able to post an exterior shot of your new listing to Instagram does not count as being up to speed. Believe it or not, it’s not a millennial-specific issue; there are Grandmas surfing the web. Effectively.
One facet of the business that hasn’t been discussed by Opendoor team, is dealing with potentially distressed markets at some point. It would be good to consider building solid relationships with national lenders, now, because the reality no one wants to admit is this: history repeats itself. By the time the next “market correction” appears, Opendoor should be well established in their current paradigm and would be wise to understand the short sale process. They have the potential to alleviate an incredible amount of consumer heartbreak, not to mention financial struggle, by making a very difficult process a little simpler. That would be an incredible service to offer the industry.
With that said, there appears to be a slice of pie, just waiting for Opendoor, but it is not going to replace traditional, residential real estate agents. What the Opendoor model offers simply will not work for, or appeal to, the broad scope of the market. Furthermore, their service is currently available in exactly two markets, so no need to dust off a resume just yet. Still, who knows what they’ll come up with as they grow? Do they have a system in place for referrals? Wouldn’t it be nice to have a connection to a backup plan, just in case a traditionally listed property just won’t sell? Maybe some new idea, format or technology, originating from these forward-thinkers, will be applicable to, helpful in and revenue generating for everyone’s business. Working together is the key.
“That’s how things have always been done” is no longer an acceptable answer, when change is suggested. Instead of being resistant to change, maybe the collective, making up the front lines of the industry could, if not be excited about it, at least be interested in it?
Something to consider-