Where Real Estate Gets Its Dirt

Welcome, Zillow. Seriously.

I had to chuckle when I read this recent press release from Zillow.

Selling made easier: Zillow customers can now choose between a cash offer from Opendoor or selling with an agent

“Customers who start their selling journey with Zillow can now simultaneously request both a cash offer from Opendoor and an estimate of what their home could sell for on the open market with a local Zillow Premier Agent partner.”

It reminded me of what we launched waaaaay back in 2018, called iBuyer Connect:

Cloud CMA will now include all-cash offers from Opendoor

“Agents using Cloud CMA, a comparative market analysis tool for listing presentations from W+R Studios, can now present listing clients with an all-cash offer from iBuying giant Opendoor alongside the traditional listing information.”

This integration in Cloud CMA has helped agents sell tens of millions of dollars of real estate without charging a 35% referral fee. And a majority of those sellers still wanted to be represented by the agent.

But hey Zillow. You, do, you.

Eric Wu, CEO of Opendoor steps down for new role, CFO Carrie Wheeler named new CEO

New leadership structure

“To my Opendoor community,

I’ve decided to transition from my role as CEO to President of Marketplace, and we are naming Carrie Wheeler as our new CEO. First, I believe that an important driver of shareholder value is the discovery and refinement of product market fit, and I want to spend my days, nights, and weekends delivering products that address consumer needs. Second, and more importantly, I’ve spent countless hours with Carrie, and I know she is the leader and executive Opendoor needs. ” 

Great letter. I’m a big fan of Opendoor and of the iBuying model. It’s going to be interesting to see what Eric does now that he will be singularly focused on their new “Exclusives” initiative. If Opendoor successfully creates a portal that consumers will always check alongside Zillow, they will have changed the game. Best of luck to Eric, Carrie and the entire Opendoor team.

Podcast roundup

Two great podcast episodes to listen to for anyone in organized real estate

Stratechery
An Interview with Opendoor CEO Eric Wu About Building a Marketplace in a Real Estate Slowdown

“I had a chance to talk to Wu about both his and Opendoor’s origin story, competing and now partnering with Zillow, why the speed of the current slowdown caught Opendoor by surprise, acquiring customers for an infrequent transaction, and how the company will get a marketplace off of the ground.”

Ben Thompson’s Stratechery is must listen. Some of the content is behind a paywall, but do yourself a favor and subscribe.

This Week on Startups
Managing a recession, housing market insights & more with Redfin’s Glenn Kelman + OK Boomer | E1616

“Jason Calacanis and Molly Wood cover startups, tech, markets, media, crypto, and all the hottest topics in business and technology. They also interview the world’s greatest founders, operators, investors, and innovators.”

Great interview of one of my favorite CEOs in real estate, GFK, Glenn Fucking Kelman. Keep grinding Glenn we are all rooting for you.

Strange bedfellows

Zillow and Opendoor team up to provide cash offers to consumers

“Opendoor offers will be available on Zillow, and customers will be able to use the service as a standalone offering or package it with other Zillow home shopping services such as financing, closing and agent selection,” the statement adds. “Additionally, Zillow customers will be able to work with a licensed Zillow advisor who will serve as a helpful guide in understanding these options.”

Got back from Inman Connect Las Vegas and my head is still spinning. And it’s not because of the Tanqueray and Tonics.

Back in the day I was skeptical when the rumors were being floated that Zillow was buying Trulia (they were fierce rivals) and now this news. Rich Barton, Zillow’s co-founder, and current CEO once called Opendoor an “existential threat” to Zillow, and then proceed to get into the iBuying business with Zillow Offers. Then Zillow promptly exited the iBuying business, and now less than a year later has partnered with Opendoor to handle iBuying for the portal.

“Strong opinions, loosely held”?

Opendoor settles with FTC for $62M over claims of “false advertising”

FTC Takes Action to Stop Online Home Buying Firm Opendoor Labs, Inc. from Cheating Potential Sellers with Misleading Claims about its Home-Buying Service

“Opendoor’s marketing materials included charts comparing their consumers’ net proceeds from selling to Opendoor versus on the market. Those charts almost always showed that consumers would make thousands of dollars more by selling to Opendoor. In fact, the complaint states, the vast majority of consumers who sold to Opendoor actually lost thousands of dollars compared with selling on the traditional market, because the company’s offers have been below market value on average and its costs have been higher than what consumers typically pay when using a traditional realtor”

So wait, the FTC now wants everyone to use a REALTOR? #PlotTwist

Opendoor responds

“While we strongly disagree with the FTC’s allegations, our decision to settle with the Commission will allow us to resolve the matter and focus on helping consumers buy, sell and move with simplicity, certainty and speed.

Importantly, the allegations raised by the FTC are related to activity that occurred between 2017 and 2019 and target marketing messages the company modified years ago. We are pleased to put this matter behind us and look forward to continuing to provide consumers with a modern real estate experience.”

Not a good look for Opendoor and the timing is terrible, being the week of Inman Connect in Las Vegas. And the fine? Settling a case like this is not unusual, remember when Zillow settled with Move for $130M? There are some hills you don’t want to die on, sometimes it’s just a math exercise.

But, the whole thing is a bit of a head-scratcher to me.

First, Opendoor’s value proposition has always been all about “certainty and convenience”, not you get more money if you sell to Opendoor. In fact, the whole industry narrative around Opendoor (especially in the 2017-2019 time frame) was that iBuyers (including Opendoor) had “low-ball” offers. I mean take a look at Opendoor’s homepage in mid-2017, there is absolutely nothing about how you’ll “make more money” selling to them. Just words like “simple” and “smooth”.

Meanwhile Wall Street has always classified iBuyers as “flippers”. The very definition of a “flipper” is to buy low and sell high, right?

Joe Rand had a funny take on Twitter on all this

My takeaway is that maybe some aggressive sales tactics got out of control. While this will be fodder for the lobby bar crowd (including me) at ICLV I think Opendoor will take the hit and move on.

iBuying and Opendoor are here to stay.

Join Rhett Damon and Tyler Hixson of Opendoor and myself on a webinar talking about our Cloud CMA integration

Opendoor + Cloud CMA Webinar Registration

“Join us for a webinar with industry experts Tyler Hixson and Rhett Damon of Opendoor and Greg Robertson of Cloud CMA to learn about how you can serve more clients and win more business!

We announced this integration over a year ago and it’s only gotten better. I excited to talk with Rhett at his new gig and reconnect with Tyler. I wrote an entire chapter in my book, The Art of the CMA, on why agents should be embracing iBuyers as an option for their sellers.

The webinar is Tuesday, May 18th.

Click this link to register => Opendoor + Cloud CMA Webinar Registration

Rhett Damon joins Opendoor

Looks like Rhett has joined Opendoor as Head of Industry Relations, which I believe is a new position for the company.

I’m hearing that his main focus will be MLS. He will report to industry vet, Kerry Melcher, who is head of Brokerage and Sales. Rhett is a great choice for Opendoor and glad he found a new home after spending over 6 years at realtor.com. Congrats Rhett and Opendoor!

Industry Relations Episode 51: We Don’t Know What to Call Zillow Anymore!

Zillow started out as a listing portal or syndication site. But the company has evolved to become… Well, we’re actually not sure what to call it anymore. Perhaps ‘the Amazon of real estate’ is most appropriate. And on September 23, 2020, the company announced that it’s hiring employee-agents to streamline the iBuyer process. So, if Zillow is a brokerage now, what does that mean for the industry?

On this episode of the podcast, Rob and Greg are discussing Zillow’s decision to take its iBuyer operations in-house and how that move will impact other aspects of organized real estate. Our hosts explore how MLSs might respond to having Zillow as members and describe how access to MLS data could change the consumer experience on the Zillow site.

Rob and Greg go on to consider the impact of Zillow being part of NAR and state and local associations, weighing in on how their participation can be seen as a win for the industry. Listen in for insight on how Zillow’s announcement demonstrates their commitment to becoming an iBuyer-brokerage and learn how Zillow entering the system might lead to an improvement for everyone—or a ‘horror show.’

What’s Discussed: 

The evolution of listing portals into brokerage and iBuyer hybrid models

How Rob and Greg define brokerages differently

Zillow’s decision to use employee-agents to bring its iBuyer operations in-house

How MLSs are likely to respond to having Zillow as members

Rob’s theory on how Zillow might reposition its Industry Relations team

The potential impact of Zillow being part of NAR as well as state and local associations

How access to MLS IDX data and VOW rules could transform the consumer experience on Zillow

The leverage Zillow has in getting information from smaller MLSs

What makes Zillow’s shift a WIN for humans (and organized real estate)

Connect with Rob and Greg:

Rob’s Website

Greg’s Website

Resources:

Opendoor vs. Zillow on Industry Relations EP050

Greg’s Blog Post on BPP

Rob’s Blog Post on Zillow

Stop Zillow Campaign

Greg on Twitter

CLAW’s Delay to Syndication Feeds

REALTOR Political Action Committee

NAR’s Rules on Virtual Office Website

The 2008 DOJ-NAR Settlement Agreement

‘It’s a Good Life’ Episode of Twilight Zone

‘A Trifecta! NAR Sued Again Over Buyer-Broker Commissions’ in The Real Deal

Thomas Jefferson’s Quote on Change in Laws and Institutions

Collateral Analytics

Greg’s Blog Post on Zillow

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Opendoor announces merger, first step in going public

Opendoor announces merger with Social Capital Hedosophia Holdings Corp. in bid to go public

“iBuying platform Opendoor said it will merge with Social Capital Hedosophia Holdings Corp. II. to become a public company using the special purchase acquisition company in a deal that values Opendoor at $4.8 billion and provides it with up to $1 billion in cash proceeds. 
The transaction announced on Tuesday is also supported by a $600 million so-called private investment in public equity, or PIPE, at $10 per share, with $200 million from entities affiliated with Social Capital, including $100 million from Chamath Palihapitiya, founder and CEO of Social Equity, $58 million from Hedosophia, and the remainder from existing Opendoor shareholders, Access Industries and Lennar, along with Opendoor management, the release said.
The company said the transaction will allow Opendoor to continue to invest in growth, market expansion and new products to accelerate its overall plan to become a digital one-stop-shop for homeowners.”

If you get a chance listen to their investor presentation, which really gives you a good perspective of how Opendoor perceives the market.

Now that Opendoor is going to have access to capital from the public markets this battle between Zillow and Opendoor is going to have massive (and disruptive) benefits.

We are going to see a lot of innovation take place due to their competition and that is going to be great for consumers and I think real estate as a whole.

Opendoor might go public via merger with Social Capital II

Report: One of Social Capital’s newest blank-check companies is looking to reverse merge with Opendoor

“According to a new report in Bloomberg, Opendoor, the San Francisco-based company that aims to help people buy and sell homes with the “push of a button,” is in advanced talks to go public through a merger with Social Capital Hedosophia Holdings Corp. II.
The outlet says the blank-check company, which raised $360 million in April and is led by Palihapitiya, is “discussing raising fresh equity to help fund the transaction with prospective investors,” and that the combined company would be valued at around $5 billion in the deal.”

Never heard of a “blank-check” company” before. But this move makes sense. Opendoor has a concept that people can easily understand, people also understand that real estate is hot and seems to not only be “pandemic proof”, but thrive. Opendoor’s concept of buying a home “at the push of a button” seems to be a perfect model for the current environment.

This also gives Opendoor an easier way to go public (and quickly) to raise the necessary capital they need to execute on their vision.

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