Opendoor Struggles to Maintain iBuying Dominance
January 14, 2021
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 who wanted to bypass the traditional homeselling process.
However, with high demand from buyers flooding the market—enticed by low interest rates and the remote work phenomenon—selling a home on the open market is appealing to many sellers. Traditional transactions aren’t taking long to close, and low inventory has made bidding wars common. Since iBuyers often make offers below fair market value, sellers may be more likely to work with a real estate professional to earn top dollar during this 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 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. Instead, the company sees traditional brokerages as its main rivals.
“Opendoor’s Window Appears to Be Closing,” The Wall Street Journal (Jan. 13, 2021) [Log-in required.]
Updated: March 02, 2021