Inman Select
Member Exclusive
Edition #

2
The Wrap
Opendoor Sesame
By Carl Franzen, June 16, 2018

[[image1]]

Welcome to The Wrap, a free new Inman Select subscriber benefit where we go inside the newsroom every Saturday morning and get an editor's look at the stories behind the stories.

Good morning, and happy Father's Day weekend.

My local Realtor here in Brooklyn tells me that June and July are the slower months when it comes to real estate sales.

But there was nothing slow on the real estate news front nationally this week. The big story for us was Opendoor's gargantuan $325 million funding round. Earlier reports had suggested the 4-year-old iBuyer startup was raising $200 million on a $2 billion valuation, but both the actual funds and the valuation turned out to be higher than that, and more funding from Softbank's Vision Fund may be on the way.

Are investors that bullish on the San Francisco-startup's tech and expansion plans (50 markets in the next two-and-a-half years, up from 10 today), or is this a case of herd mentality? Our reporting and the independent analysis we publish suggests that so far, iBuyer transactions (instant cash offers online with quick closes), only make up a small percent of the total market. But by the same token, the automated showings tech and ease-of-use make Opendoor and its competitors extremely compelling for sellers far beyond those who are financially distressed or in a pickle and need to close quick.

It seems like Opendoor's big VC backers including Andreessen Horowitz, Khosla Ventures and even former Uber CEO Travis Kalanick's new fund are all betting that the tech and business models of iBuyers are not only here to stay, but have lots of room for growth. Whether that's groupthink or genuine foresight, there is now probably enough money to make it happen.

I went on a tweetstorm right after the Opendoor news came out because the number was so jaw-dropping to me, showing that we are witnessing the start of an extremely well-funded battle between Opendoor, similar iBuyer startups, like Offerpad and Knock, and of course, the latest entrant, Zillow, to decide whose "instant offer" technology will come to be synonymous in America with the idea of selling your home licketty split online. The "Uber of iBuyers," if you will. Or, to quote an even older story, the "Opendoor Sesame."

Right now, all of them are cruising along on private equity and saying that they aren't worried about a winner-take-all scenario. But my big question is: what about when the next housing market downturn happens?

People in real estate don't like a party pooper, so I don't dwell on this too much, but I was at the inaugural LAB Future of Real Estate conference in Miami earlier this week, and I found myself in several conversations with people (including my cab driver) who all seemed to think a recession in 2020 was a given.

Will VC funding be enough to sustain the iBuyers in a downturn when they have a bunch of overvalued homes sitting on their books? Whatever happens, you can be certain Inman will be reporting on them through all their ups and downs. And remember: whenever one door closes, another one well, you know.

Inman

UnsubscribeManage your email preferences  |  Contact Inman Customer Service

Was this email forwarded to you? Subscribe here

More ways to connect with Inman:

{if select_status=="active"}Log in to your Inman Select account{else}Get full access with Inman Select{/if}  |  Attend an event  |  Our newsletters

Copyright ©{date("yyyy")} Inman Group, LLC. All rights reserved. View our privacy policy.
1400 Village Square Blvd, Suite #3-80368, Tallahassee, FL 32312.