OfferPad
Some of you may have heard about an Opendoor competitor that recently raised $260 million in financing (equity + debt).
They are smaller than Opendoor:
Revenues to date – which come from an average 9% fee that includes 6% that’s equivalent to the typical real estate brokerage commission and a risk-based fee that ranges from 1% to 7% – are in the neighborhood of $20 million.
How many other similar models will emerge in the coming 12-18 months? I’m betting it’ll be more than a few. Keep in mind, these models are really just modern versions of We Buy Ugly Houses. I’d be curious to hear what they view as defensible about their businesses (aka their moat) other than money and brand.
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Bryn Kaufman
Posted at 12:00h, 30 JanuaryI think there will be a certain small segment of the market that is willing to take less money for the convenience of selling fast.
Whether this segment is large enough to create a profitable company that will give investors a return on their money is yet to be seen.
My guess is the investors feel this is a game changer, just like Redfin’s investors and many others who have tried to change the current home selling model.
Ritesh
Posted at 00:03h, 31 JanuaryI would speculate, based on browsing Offerpad’s website and their team page that they are bidding based on their local market knowledge. This approach, if true, would be in marked contrast to the Open door who are pioneering a machine learning data-driven AVM model.
Joe Manna
Posted at 14:45h, 13 MarchThanks for the write-up, Drew. I think that OfferPad is attractive to homeowners because they offer flexible close dates and a high-touch customer success team to ensure their sale and move goes smoothly. One of the advantages we have is that our team is comprised of real estate experts who understand their local markets so we can make the best offer we can for homeowners and become a financially-sustainable company.
Joe Manna
Social Media at OfferPad
Drew Meyers
Posted at 15:06h, 13 MarchWhat do you view as the defensibility/moat for the company?
Joe Manna
Posted at 15:42h, 13 MarchI’d say it’s our brand and our ground game, which includes a smooth customer experience and a strong regional focus. I know it’s a bit cliché, but our leadership blends a tremendous amount of experience in real estate and building great teams. Money helps, but it also spends quickly.