How Opendoor did what Zillow couldn't

Plus, 10 cities with incredible deals

Grace Townsley
May 10, 2022

Never count yourself out

James here! Something you may not know about me is that I actually got expelled from nine different schools as a kid. I had absolutely extreme ADHD (and still do) so I just couldn’t focus in class or finish my work. I also got caught for everything. If my friends did something bad, somehow they would get away with it. Me however? Whenever I stepped across the line, BAM, I was in the headmaster's office. I spent almost as much time there as I did in my classrooms!

Why am I telling you this story? I think it’s important to remember that just because you weren’t good at school or maybe struggled to find your footing in past jobs, that doesn’t mean you aren’t meant to be successful. 

It’s all about finding what motivates you and leaning into that with all you’ve got. If you’re driven and you figure out what you’re passionate about, I can promise you’ll make something of yourself. 

- James

The Tale of Two iBuyers

Source: Unsplash

Zillow may have failed in the iBuying market, but that doesn’t mean other companies haven’t been successful. In fact, notable iBuyer Opendoor just marked its first profitable quarter ever, turning $28 million in profit. The company reported $5.2 billion in revenue in Q1, a 7x-increase from a year ago.

Why did Opendoor succeed where Zillow couldn’t? The company says it:

  • Reworked its estimate tools to respond quicker to the fluctuating market 
  • Took a "conservative" approach to valuing homes 
  • Improved its systems so they could respond to different conditions across the 48 markets in which they operate

Our take 

Many critics wanted to write off iBuying, but Opendoor is proving that it's likely here to stay. Technology is going to have a place in this industry, regardless if it’s coming from Zillow, Opendoor, or a new competitor down the line. However, we always say this about iBuying–there are certain aspects of selling homes that technology can’t replace. Human beings can provide support, guidance, and experience, and that alone makes our service a valued asset to any client.

A consequence of rising rates

Source: Wells Fargo

Wells Fargo is the latest company to be impacted by slowing mortgage activity. Over the past few weeks, the company has laid off hundreds of employees in its home lending department. Other mortgage-related companies–including Flagstar Bank, Rocket Mortgage, and startups Better and Blend–have collectively laid off thousands of employees as rising interest rates have caused their market to dry up. 

Over the past year, the number of people in mortgage and loan-related roles has increased 8%. While these companies are used to cyclical activity, record-setting rate adjustments have forced them to cut costs and staff more quickly than expected.

Our take

Layoffs like this are a sad reality in every single industry. In periods of adjustment like we’re seeing now, there just aren’t as many mortgage applications coming through. But we do think these layoffs are a bit premature. There’s still an incredible need for real estate. Once inventory bounces back and the interest rate shock wears off, these skeleton crews will be too busy and will come calling for help!

10 cities where your dollar stretches further

Source: Unsplash

With the average new home sale price now sitting at $436,700, many buyers are looking for more affordable cities. That begs the question: where will your housing budget stretch the furthest? Point2, a real estate data company, has the answer. 

They ranked the Top 10 cities where you can score the most square footage for $400,000.

Here’s their list: 

  • Detroit, MI - 5,882 sq. ft.
  • Cleveland, OH - 5,128 sq. ft
  • Toledo, OH - 4,444 sq. ft.
  • Wichita, KS - 3,846 sq. ft.
  • Fort Wayne, IN - 3,540 sq. ft.
  • Buffalo, NY - 3,361 sq. ft.
  • Milwaukee, WI - 3,279 sq. ft.
  • Indianapolis, IN - 3,252 sq. ft.
  • Tulsa, OK - 3,200 sq. ft.
  • Lubbock, TX - 3,175 sq. ft.

Our take

With prices still on the rise, it’s good to know there are still great deals to be made out there, especially in these emerging cities. If space is a priority for your client, help them find a place further out of town where prices are more reasonable, or encourage them to consider a fixer-upper where they can put in some sweat equity to create what they want.

Schematics 

The news that just missed the cut

Source: Twitter

Foundation Plans

Advice from James and David to win the day

We talk a lot about how to succeed in this business, but sometimes your success can actually turn into a roadblock. We’ve seen so many agents with promise get a taste of success and then let their ego get the best of them. Remember:

  • We’re in the service industry. No matter where you are in your business or how many deals you’ve closed, our job is to serve the client.
  • It’s okay to ask for help. Asking for help isn’t a sign of weakness. It shows that you’re trainable and willing to learn. If you need something, ask! 
  • You can be confident without being cocky. Confidence sells, but nobody wants to be around a cocky agent. Always check your ego at the door before you walk in. 

For more tips like this, check out the Broke Agent podcast here.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

Source: Rocket Mortgage

Who can you follow up with this week? Who’s in your leads pipeline right now who might be ready to make a move, or introduce you to someone who’s ready? Today, take some time to reconnect with the leads you haven’t talked to in a while. Remember, the work you do this week will feed your business for months and years to come. So get out there and make it happen! 

- James and David

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