Eric Wu is the CEO of Opendoor, an iBuyer that touts a quick and certain sale by using technology to buy and sell homes.
In response to email questions, Wu spoke to Inman about plans to ultimately make home-buying and selling free and a wide range of potential service options to consumers, including brokerage services. It’s near-term focus, he said, will be on making the purchase of a home “as easy as hailing a ride.”
And despite fierce competition from newer iBuyers, including Zillow Offers, Wu believes Opendoor can dominate the iBuyer category and emerge as a “winner-take-most company.”
Read the interview below, edited lightly for clarity.
Can you offer us a preview of some of what you’re hoping to discuss on stage at Connect Las Vegas?
Per usual, I’m excited to chat about the shifts and trends we are seeing with consumer pain points and needs and what we are currently building to address those needs. Even though we are in 20 markets and have worked with close to 50,000 buyers and sellers over these past five years, I’m still seeing tremendous opportunities to continue to push the experience forward.
What do you make of the entrance of new iBuyer services competing with Opendoor directly in many markets, such as Zillow Offers, Bungalow Homes, Realogy/NRT Coldwell Banker’s CataLIST, the forthcoming Keller Offers, and more?
It demonstrates we have invented something important and of value to consumers. At Opendoor, we believe every homeowner wants more convenience, ease and certainty when they buy and sell a home, so we’re not surprised there are more services entering the market. Competition is a byproduct of building something that matters, something that customers choose.
Can multiple iBuyers co-exist, or will it be a ‘winner-take-all’ scenario and why?
Very few companies today are winner-take-all, but many are winner-take-most at least in terms of value created. The classic example is Amazon. Though it’s hard to imagine that they get to a winner-take-all position given how many e-commerce competitors exist, Amazon certainly has and will capture the vast majority of value in the ecosystem. Real estate is a highly fragmented, multi-trillion dollar industry with dozens of customer personas. This makes it more difficult to win the entire category. Specific to “iBuyers” there are also natural constraints to the amount of marketshare an individual company can acquire, such as debt financing and risk.
That being said, our vision for Opendoor goes beyond buying a home from a seller — our goal is to be the platform for the transaction that buyers and sellers love and choose. This is our north star and if we continue to deliver a superior experience at the lowest cost, I do see a world where we can be a winner-take-most company.
What do you think was Opendoor’s biggest achievement in the last year and why?
Each year, we aim to make multiple bold bets. But I would say last year we demonstrated that our product is needed in all markets and all conditions and that we can scale nationwide. I’m particularly proud of the team for working tirelessly to iterate and improve our customer experience, invest in the platform and infrastructure to scale, and invent new products for consumers this past year.
What is the biggest lesson Opendoor has learned since launching, and how is it acting on that lesson today?
All the lessons seem large at the time, but a lesson we have learned and are still learning is that important, impactful products take time to grow. For example, we met with [Lennar President] Jon Jaffe and [Lennar Chairman] Stuart Miller three years ago and brainstormed on ways to work together. It was obvious that customers had huge pain points around having to list and sell a home before they could buy a new Lennar home. This was not only a massive logistical challenge but for most, not financially feasible.
We came up with the Trade-up idea where a buyer could buy and sell a home in one seamless transaction. This was in 2016, we failed across many dimensions and iterations but believed in the vision and continued to make improvements. Our Trade-Up program is still not perfect but it’s starting to feel like a mainstream way to buy a new home, we are doing over $1 billion in annual revenue through our homebuilder partnerships, and excited about how we can help more customers seamlessly move. This has been the case for many of our product lines including our investor platform, title and escrow experience, and Self-Tour buyer experience.
We are making new bets and planting new seeds that will become the next generation of customer experiences and going to launch, learn, iterate, and break through walls until they work.
Can you offer any insight into new projects or services that Opendoor is working on?
Our goal is to walk into work every day and make it better, easier, and more affordable to buy, sell, or trade-in a home. This is our focus and will be our focus for years to come. Tangible, we are investing and spending lots of mindshare on our home shopping and buying experience, aiming to make that a world-class experience and as easy as hailing a ride, buying something online, or booking a flight. There are a number of products we are building, and you’ll be hearing about them soon.
What percentage of all home sellers do you think will ultimately choose to sell their homes to iBuyers? What kind of services will the remainder use?
Selling a home is a massive life disruption and most sellers do not understand their purchasing power until they’ve secured an offer on their current home. This problem exists for the vast majority of home sellers. What Opendoor is able to offer is a vastly more convenient experience giving the customer control of their timeline, which we feel appeals to everyone. The lower we are able to set our fees, the more people will choose Opendoor.
Does Opendoor still plan to eventually make its home selling service free? If so, how and when?
Our mission is to empower everyone with the freedom to move and we are focused on building the best experience at the lowest cost. Will we reach a free transaction in the future. We certainly will put all our energy and effort into making that dream a reality. Can I guarantee it will happen in the next few years? Certainly not.
Can you offer any insights into how Opendoor plans to develop its brokerage service offers, such as Open Listings, and how the company plans to develop its partnerships with other agents?
I’ve known Judd Schoenholtz, the CEO of Open Listings, for years. When we discussed a partnership, it was clear that our visions for the future aligned and we both wanted to make buying a home a delightful, on-demand experience. This hasn’t changed now that we are working together.
Our goal is to give customers as much choice as possible, whether it’s through brokerage services or agent partnerships. And with agents, earlier this year, we announced an Opendoor Agent Partner Program, which pairs buyers and sellers with highly-rated, trusted agents when it is the customer’s best option. The program gives agents a way to grow their businesses through high-intent, high-converting referrals to homebuyers and sellers. We plan to explore every opportunity to bring simplicity and certainty to the process.
One consistent fear of iBuyers raised by some industry critics is that you are going to be left with too much unsellable inventory during the next downturn. How are you guarding against that?
Our business is designed to operate in up markets, down markets, and flat markets. During a slowdown, it becomes increasingly more painful to sell a home, which impacts mobility for homeowners and increases the need for reliable home sales through products like Opendoor.
Ultimately it’s our responsibility to manage the risk and account for volatility in the market. It’s something that we pay close attention to.
Do you plan to take Opendoor public, and if so, when?
We’re focused on building the best home buying and selling experience at the lowest cost for the customer. And we will always do what is best for customers and shareholders. That could lead to a number of paths in the future, but we’re concentrating on the work at hand today.
How many homes is Opendoor buying and selling on average across all its markets nowadays?
We currently service close to 3,500 customers each month who are buying or selling a home in our 20+ markets.
You’ve stated that you plan to have Opendoor in 50 markets by the end of next year. Do you still intend to hit that goal? After that, how many markets do you ultimately want Opendoor to be available in?
We’re continually evaluating market opportunities, and we will continue to scale to additional markets throughout 2019 and 2020. We are investing in the right technology, systems, and operational structure to ensure we can serve all buyers and sellers nationwide over the next decade.
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