Good news for Zillow Group — the industry has found a new scapegoat: Opendoor. Agents are spending so much time knocking this new model and berating anyone who may have considered the service.
- Of the valid reasons why Opendoor's model could benefit certain segments of the market, most boil down to one word: control.
Good news for Zillow Group — the industry has found a new scapegoat: Opendoor.
Agents are spending so much time knocking this new model and berating anyone who may have considered the service.
I am less concerned with the Opendoor model (and similar models by new competitors on the scene, like OfferPad) and more concerned with the short-sightedness of practitioners in our industry.
It seems 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.
If you are unable to come up with a reason that someone would choose to do business with Opendoor, other than “they’re lazy,” you might consider reevaluating your profession.
As Realtors, it’s our job to look out for our client’s best interest. That may or may not be Opendoor, but name-calling the consumer base that would consider it probably won’t make friends and influence people.
There are many valid reasons why Opendoor’s model could benefit certain segments of the market. Most of those will boil down to one word: 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, 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 significantly Type A client can attest to this.
Where Opendoor will excel is in returning that purchase/sale to its roots as a business deal. It’ll take the personality out of the situations and facilitate a buy/sell transaction.
Investors. 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.
Millennials. The Opendoor model will appeal to a sector of the millennial market, a group that outsources to specialty fields more often than they opt for the DIY approach.
They tend to pay more attention to the time-money balance. The millennial seller could go through the dog-and-pony show and potentially earn higher proceeds from the sale, but he or she will be at the whim of everyone else involved in the transaction and there is no guarantee the house will sell.
Millennials, the ones everyone loves to hate, may not feel like the gamble is worth it. You may disagree, but that doesn’t change the fact that this demographic tends to think that way.
Job transfers. The obvious group to benefit from Opendoor’s system: Those on a tight schedule. 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.
Estate sales. This is a situation in which an already difficult circumstance might be made a little easier. 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 an upfront cost that someone will have to provide.
Opendoor offers a solution.
Buyers. They may be ready to pull the trigger on the next property, but what if their current home hasn’t sold, or they are in a competitive market where including a home sale contingency makes for a weak offer?
What if that DTI (debt-to-income) ratio needs to come down before they can get past underwriting?
Being able to quickly remove their mortgage from their household ledger could be a key factor. Opendoor solves that problem.
Divorce. If ever there was a case for an abbreviated sale process, it would be the legal battle over and dissolution of a marriage. Taking the personality out of the sale and bringing it back to a business transaction can be of great consumer benefit.
The reality is that, while money is an important consideration, it is not the only consideration, and we would be well advised to remember that.
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, 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.
Some agents have taken so little time to understand their purpose and establish their value, that control — there’s that word again — of the 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.
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.