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Phoenix iBuyer Report Teaser

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Introducing the Phoenix iBuyer Report: the definitive source of data for iBuyers (Opendoor, OfferPad, Zillow) in their biggest market, Phoenix.

The data in this report represents 100% of the market, not just what is recorded through the MLS. That’s over 7,600 individual transactions since January 2017, tracking over 60 buying and selling entities used by Opendoor, Offerpad, and Zillow. It will track volumes, buy prices, sale prices, holding time, gross margins, and market share — all in real time.

Published in: Technology
  • Interesting to see what ultimately happens as margins must compress even further as inventory becomes lower. The "need for speed" feature and turn ratio is compelling, but I assume that market gets diluted quickly.
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Phoenix iBuyer Report Teaser

  1. 1. PHOENIX iBUYER REPORTPrepared by Mike DelPrete, June 2018 Preview
  2. 2. The definitive guide to iBuyer activity in the Phoenix market 100% market coverage; not just MLS listings or sampling
  3. 3. Over 7,600 individual transactions since January 2017 Tracking over 60 buying and selling entities used by Opendoor, Offerpad, and Zillow
  4. 4. This upcoming report will primarily cover data and intelligence around the following metrics… • Overall buy and sell volumes • Average and median purchase prices • Average and median sale prices • Gross margins (the difference between buy and sell prices) • Average holding times • Overall and segmented market share All data is presented on a monthly basis, but is available on a daily basis.
  5. 5. Here’s a sample…
  6. 6. Overall iBuyer activity is up, with Opendoor pulling away from the competition. Note: Activity includes all homes purchased and homes sold in a given month.
  7. 7. Offerpad’s gross margins are higher, but both are being pushed down over time. Note: Gross margin is the difference between what an iBuyer buys a home for and subsequently sells it for. It excludes all holding costs.
  8. 8. Opendoor is seeing significant improvements in hold time, averaging around 75 days.
  9. 9. The overall market is seeing good growth, with most market share going to Opendoor.
  10. 10. Market share can be defined a number of ways. This report takes the following approach. Included Excluded Single-family detached, townhouse and condos New homes Short sales and pre-foreclosures Mobile and manufactured homes Normal sales through MLS and outside MLS Bank-owned homes Investor purchases and sales GSE-owned homes Maricopa and Pinal counties HUD-owned homes All price ranges Trustee sales Sheriff sales IRS sales Sales under eminent domain Bulk sales (e.g. investor to investor) Defining the market: Transactions included and excluded
  11. 11. Opendoor’s recent acceleration coincides with a drop and settling of gross margin.
  12. 12. Conversely, Offerpad’s activity has slowed with a drop in gross margin (but still higher than OD).
  13. 13. Data collected for one day in Phoenix shows a very low margin business model. Gross sales proceeds $3,718,000 Less purchase cost $3,628,800 Less buyer concessions $24,815 Less buyer’s agent commissions $98,430 Net cash (loss) -$34,045 Sample based on 14 homes that closed on one day; 12 for Opendoor, 2 for Offerpad. Buyer’s commissions were paid in 12 of the 14 transactions. Simplified Profit and Loss: 14 completed transactions Gross revenues do not include service fees. Expenses do not include all holding costs (repairs, finance).
  14. 14. Zillow’s start as an iBuyer
  15. 15. Zillow has purchased five homes since it launched its iBuyer service.
  16. 16. Only one of the homes is currently listed for sale, with the others coming soon. Home Location Purchase Price Zestimate List Price Status Chandler $410,000 $410,532 $425,000 For Sale Sun City West $312,000 $314,700 $320,000 Coming Soon Glendale $220,000 $212,696 $229,900 Coming Soon Mesa $180,000 $174,749 $195,000 Coming Soon Peoria $375,000 $379,287 $379,900 Coming Soon Zillow’s First Five Homes as iBuyer
  17. 17. From a small, initial data set, we can begin tracking a few interesting trends. • Zillow has paid slightly more than its Zestimate (100.3%). By comparison, Opendoor has paid 96.9% and Offerpad 94.5% of Zestimate over the past three weeks. • Zillow is listing at a 3.5% gross margin – lower than its competitors (see next slide). • Based on the average ratio of selling price to asking price (98.5%) this would indicate an estimated 2% gross margin will probably be achieved.
  18. 18. Zillow will achieve lower gross margins than its competitors -- but this is based on a small sample.
  19. 19. Interested in more?
  20. 20. The report will be released in two versions. • A free report with high-level market stats showing general trends and insights. • A much deeper, paid version which will cover more data points and insights. Custom reporting is also available. How much traction will Zillow get in the market, and will it be able to hit its stated assumptions? We’ll know — without having to wait for its quarterly reports and (potentially) selective reporting. Interested? Drop me a line at mdelprete@gmail.com

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