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Yeah. There is a paywall. You need an Inman subscription to read the full article.
"The “reinvention of real estate” comes with a staggering price tag. In 2020, the two largest iBuyers, Opendoor and Zillow, lost a total of $607 million buying and selling houses. That’s a loss of about $40,000 on each home bought and resold — about $1.6 million every single day or $1,100 per minute in 2020."
...
"As expected, Opendoor’s decision to pause listing new homes for sale in late 2020 led to a dramatic drop in home sales in Q4 2020. Without a corresponding drop in corporate overhead expenses, Opendoor’s financial metrics reached a new milestone: a net loss of over $100,000 per home."
And, basically, he notes that Opendoor is doing better at monetizing iBuying transactions than Z is. Additional services' revenue, etc.
Haha! I was wondering when you were going to post this. Are you not a member of NAR? I got an email yesterday with the electronic version of REALTOR Magazine and this was one of the articles:
Anyway . . . leave it to Zillow and OpenDoor to somehow lose money selling houses in a red hot market. They even charge a ridiculous "service fee" that's way higher than most real estate agent's commission for the privilege of selling them your home. Not sure how they can charge a fee like that, have prices skyrocketing around them, and still manage to lose money on the sale.
Haha! I was wondering when you were going to post this. Are you not a member of NAR? I got an email yesterday with the electronic version of REALTOR Magazine and this was one of the articles:
Anyway . . . leave it to Zillow and OpenDoor to somehow lose money selling houses in a red hot market. They even charge a ridiculous "service fee" that's way higher than most real estate agent's commission for the privilege of selling them your home. Not sure how they can charge a fee like that, have prices skyrocketing around them, and still manage to lose money on the sale.
Good for you!
I probably should look harder at Realtor Mag.
But, the Inman article is a much deeper dive into DelPrete's work, with graphs and stats.
Last edited by MikeJaquish; 03-12-2021 at 02:43 PM..
Good for you!
I probably should look harder at Realtor Mag.
But, the Inman article is a much deeper dive into DelPrete's work, with graphs and stats.
Don't give me too much credit. I probably delete more of those emails than I actually look at.
I guess they have to make it look pretty to justify the subscription fee. Personally, I think Inman is the equivalent of the National Enquirer for the real estate industry.
Haha! I was wondering when you were going to post this. Are you not a member of NAR? I got an email yesterday with the electronic version of REALTOR Magazine and this was one of the articles:
Anyway . . . leave it to Zillow and OpenDoor to somehow lose money selling houses in a red hot market. They even charge a ridiculous "service fee" that's way higher than most real estate agent's commission for the privilege of selling them your home. Not sure how they can charge a fee like that, have prices skyrocketing around them, and still manage to lose money on the sale.
The entire premise of it self selects for getting the worst houses in any given area. If you've got an in style house that is well cared for you aren't going to fire sale your house to them so they get the bad ones. Then they try to resell into a market where the buyers don't give a hoot about what the algorithm says it's worth. Buying a house especially is a deeply personal thing. It's about falling in love for most buyers.
In the meantime they are eating holding costs and paying to maintain stuff that their competitors (regular homeowners selling) either don't have to pay or don't really consider to be costs. By being a middle man they double the overall transaction costs.
Honestly homes are about the worst thing to use this system for. Land banking development property or ag land would have been a better use of capital. Even commercial would work better.
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