iBuyer Market Update: Opendoor and OfferPad in Phoenix
iBuyer Market Update:
OfferPad in Phoenix
31 July 2017
Prepared by Mike DelPrete
The barriers to entry for the iBuyer business
model are low.
Last year, we said:
“Ultimately, we believe a major long-term risk to Opendoor
is that the key elements of its seller customer experience --
a fast and well-priced offer -- are replicable.”
And Opendoor recently had this to say:
“The increase in the number of companies building a similar
experience to Opendoor further validates the customer
demand for an online, instant sale.” – Eric Wu, CEO
Instant offers marketplace
Phoenix, Tampa, Las Vegas,
Orlando, Salt Lake City
San Diego, Inland Empire
In 2017, a number of iBuyers raised significant
money and launched.
What impact is increased competition having?
In Phoenix, the overall iBuyer market share of
sales grew 48% from 2016 to 2017 YTD.
iBuyer Market Share
The market is growing. No matter your
personal opinion of the model, consumers are
drawn to iBuyers in increasing numbers.
Market share is defined as total units bought and sold.
iBuyer market share of total transactions
fluctuates by month and is growing. Slowly.
iBuyer Market Share (Phoenix)
Opendoor OfferPad Combined Linear (Combined)
Opendoor Activity Per Month (Phoenix)
Opendoor’s home buying and selling activity in
Phoenix saw a sharp drop earlier in the year.
The drop in activity was a result of a fee change,
and is not necessarily a negative event.
The drop in purchases corresponds to a fee increase by
Opendoor during that time. The fees have since been
normalized and activity levels for June are strong.
Adjusting fees is a key component of Opendoor’s
business. It allows them to hedge risk (in case of a
market slowdown) and reduce inventory.
It is not a bad event; it is Opendoor actively managing
the business and its inventory levels. But we are still
unsure as to the reason why fees changed.
Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Home Sales Per Month (Dallas)
After a strong ramp up, home sales in Dallas have
Don’t expect a hockey stick growth curve.
Resulting in a drop in overall home selling activity
across both of Opendoor’s major markets.
Home Sales (Phoenix and Dallas)
Compared to the same period in 2016, average
home purchases per month are up 57%.
H1 2016 H1 2017
Average Home Purchases Per
While average monthly home sales are up 129%,
with the market share of both iBuyers growing.
H1 2016 H1 2017
Average Home Sales Per
The iBuyer market is growing.
It’s clear that the overall market in Phoenix is
growing. The addition of new competition
(OfferPad) is growing the overall market, not
taking market share away from Opendoor.
Aside from the recent dip, Opendoor is seeing
strong sales compared to last year.
Opendoor Home Sales (Phoenix)
And even with the Q1 dip, the number of homes
purchased by Opendoor is up over last year.
Q1 Q2 Q3 Q4
Opendoor's Average Home
Purchases Per Month (Phoenix)
Opendoor’s early 2017 sales lift corresponded to a
drop in overall market share.
Opendoor Sales and Market Share
Sales Market Share
Opendoor’s Q1 sales were strong and reflective of an
especially strong market.
Only a small portion of Opendoor’s sales occur
off the MLS, in part by emailing homes to agents.
Non-MLS sales are in part driven by Opendoor emailing
new homes to agents to give their buyers early access.
Lastly, it’s interesting to note that the iBuyer
marketing message is saving money and time.
A note on data sources and accuracy.
The original data sources for this analysis are the
Phoenix (Pinal and Maricopa) County Recorders, which
record all property transactions that occur both on and
off the MLS, in addition to MLS sources for Dallas.
Accuracy is not guaranteed, of course, but the public
records are generally trusted and accurate.
Mike is a former tech entrepreneur, strategy
director, and head of corporate development with
broad expertise in online real estate tech.
He has travelled the world talking to and working
with leading property portals and real estate tech
startups, gathering first-hand knowledge and
insights on industry trends and themes. He enjoys
working with startups, advising founders and
executives, and working on challenging
About the author: Mike DelPrete