Source: Opendoor Lost Close to $1B in 3Q | Florida Realtors
By Kerry Smith
The RE market changed quickly as the Fed raised interest rates, and Opendoor’s CEO blamed that “once-in-forty-years market transition” for its $928M loss.
Opendoor Lost Close to $1B in 3Q
Source: Opendoor Lost Close to $1B in 3Q | Florida Realtors
The RE market changed quickly as the Fed raised interest rates, and Opendoor’s CEO blamed that “once-in-forty-years market transition” for its $928M loss.
SAN FRANCISCO – iBuyer Opendoor announced major losses of $928 million in the third quarter of 2022, and some observers see similarities to Zillow Offers, the Zillow iBuyer program that closed its doors last year. One year earlier in 3Q 2021, Opendoor reported a loss of $57 million.
“Navigating a once-in-forty-years market transition has required us to operate with urgency and discipline to manage risk and overall inventory health,” Eric Wu, co-founder and CEO of Opendoor said in a statement. “In the third quarter, we accelerated the resale velocity of our existing inventory and have significantly increased spreads on new acquisitions.” He says the company is “well-capitalized with the balance sheet to weather this rapid market transition and emerge even stronger.”
A recent study by BusinessDen reported by the Denver Post found that some properties sold as expected with Opendoor, with the company buying the home, charging the seller a fee, making repairs and relisting the home at a profit.
However, Opendoor lost money on many sales: “A BusinessDen review of public records found that 36 Opendoor home sales were recorded by Denver County between June 1 and Oct. 21,” the Denver Post reports. “On 19 of those sales, or just over half, the company sold the home for less than it paid.”
In one example cited, Opendoor paid $779,000 for a Denver home on April 20 and, six months later, sold it for $625,000 – $154,000 less, minus any costs to get the home ready for market but also not including any fees paid by the seller.
According to Inman News, Opendoor said $573 million of its net loss – about 62% – was due to lowering home values in its inventory. “Excluding this forward-looking adjustment, adjusted net loss was $328 million, compared to $18 million a year ago.”
According to Bloomberg, research from YipitData found that Opendoor lost money on 42% of its August transactions nationally.
“Opendoor’s metrics are in the danger zone,” according to Mike DelPrete with the University of Colorado Boulder. “They are very close to where Zillow was in its worst moments,” he told Bloomberg.
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