Opendoor Is Speeding Up Plans to Digitize Home Buying
Not too long ago, a common way to find your dream home would be to drive around the neighborhood until you saw a “For Sale” sign. But a 2019 report found that half of all buyers discovered their future homes on the internet.
The rest of the home-buying process, though, remains largely analog: Home shoppers still spend an average of 10 weeks searching for their next spot, and visit an average of 10 homes before finally pulling the trigger on one.
And almost everyone still uses a real estate agent.
“You can buy just about anything by pushing a button on your mobile device. Why not real estate?”
At least, the team behind Opendoor thinks so. The startup launched in 2014 to give home-sellers algorithmically generated, near-instant cash offers for their homes. Lately, the company has expanded into listing and financing homes as well.
“You can buy just about anything by pushing a button on your mobile device. Why not real estate?” said Tom Willerer, Opendoor’s chief product officer, said. “We’re trying to take an e-commerce approach of simplifying it, making it much more seamless and bringing certainty to it.”
In a recent conversation with Built In, Willerer explained how the company tweaked its products in response to the pandemic and how it’s trying to differentiate itself in the emerging property tech market.
This interview has been edited for length and clarity.
How has Opendoor adapted its product to the pandemic?
We eventually have to assess a seller’s home, and don’t want to just send someone there — in some markets you couldn’t, and it might not be safe to do so. So now we have a virtual home assessment.
After we purchase a home, people come and tour those homes using a self-touring system. We built hardware and software that allows someone to use our app, walk up to a house that we own, push a button, answer a few questions and go right in the house. And we created scheduled time slots of 30 minutes, so when someone is approaching, you get a text message saying: “Hey, someone’s approaching. Might be a good time to finish up.”
We also added the ability for people to do live video tours, so if they didn’t want to leave their couch, they can do a live video tour of our homes with an agent walking through using videoconferencing.
We actually think most of these are things we’ll keep forever.
Until recently, Opendoor’s focus has been on making quick cash offers. Is your new option to list a home on your platform something customers said they wanted?
Yeah. We would see a lot of customers come get an offer from us and then choose to list their home elsewhere. In some of those cases, they were able to sell their homes for more than what we came up with. Not all, but some. So it seemed like a logical extension for us.
That became the suite of products on the seller side: Come in and get an all-cash offer from us, or we can help you buy your next home while we list your current home, or you can just list your home with us. We become a one-stop shop.
Who is the target audience for Opendoor?
I think our product appeals to a broad set of sellers, and not just, for instance, Millennials — although certainly Millennials have adopted a lot of digital-first approaches.
Our value proposition isn’t like, “Hey, come use Opendoor because we’re digital first.” The value proposition is “Come use Opendoor because we have a convenient and certain way for you to sell your home.” Those are universally desired value propositions. We might enable it through a digital-first approach, but that’s not the driving force for why people choose Opendoor.
Now that someone can browse and buy homes through Opendoor, how do you differentiate from competitors who offer the same thing?
We’re merging technology and operations in the physical world. You can get an agent, but they don’t have technology. You can use technology to browse for homes, but they don’t have the operational side. So we’re trying to do both, which is very hard to get right.
We’re also setting up a multi-product experience as simply and coherently as possible. We allow someone to come in and sell, buy, trade in and finance. That is not a thing that really exists under one roof anywhere else. So becoming that seamless way for you to go through the entire transaction is very important.
How does Opendoor ensure the accuracy of how it prices homes? You’re putting real money on the line, so I imagine it’s important to get that number right.
We hire some of the best data scientists in the world. And our model takes into account tons of information, which we update constantly — home prices, time to sell, macroeconomic trends, what nearby home sales had been, what the surrounding area looks like. This is a huge focus for us.
We’re trying to be accurate on what we think the value is. We’re not trying to go too low. We’re not trying to go too high. We’re just trying to hit it right where it is. That’s our goal. And when we do that well, we buy homes.