17 Aug Interview with OpenDoor’s Tyler Hixson
Tyler Hixson with OpenDoor shares how they’ve acquired 10,000 properties already in AZ.
Video Replay of Interview with Tyler Hixson
Podcast Replay of Interview with Tyler Hixson
00:00:03 Hey everybody, thanks for joining us for today’s episode of real estate disruptors. Today we have Tyler Hickson with open door and he’s here to share how open doors, already purchased over 10,000 homes in Arizona and almost 2000 year to date. This is your first time tuning in. I’m Steve Trang broker, owner of stunning Homes Realty, and I help people become real estate entrepreneurs. We’re excited for today’s show. Please give me some ways. Give me some hearts, and before we get started I just started to show because I want to give back to the community. We have struggled before and you know, we talked a little bit about your guys’ process. There was a struggle and you guys as parts, and we want to shortcut that struggle for as many young leaders as possible. I don’t charge a dime for this show. I don’t make any money doing this.
00:00:44 So here’s all I ask, like this is the cost to you guys. If you get value out of this show, please tell a friend. Either she had this episode. Now tag a friend below or to tell your friend your best takeaway from the show later on, that way we can all grow together. Uh, and don’t forget this is a live show. So while we’re doing a q and a sessions, please post your questions and we can and Tyler, we would love to answer them for you. All right, you ready? Certainly. Let’s do that. Okay. So we’ll start really simple. Yeah. How did open door come to be?
00:01:16 Uh, so open door came to be because there was a gap in sort of the experience that was needed in the, in the, in the industry. So we know what are, what are the three biggest pain points for, for our seller and the traditional process. And then how can we essentially like flip those on their head and make that our highest value proposition. Right? So originally comes down to transparency. There’s a lot of lack of transparency within the industry, especially within the costs and sellers particularly a lot of times you, like, there’s so many moving pieces. You don’t know how much you’re actually walking away with. So you get to the end of the line, right, there’s so many obstacles you have to own that process in and of itself, right? A certainty of execution, right? Which we still see today, you know, anywhere from 15 to 20 plus percent of transactions in a year or fall throughs in due to buyer financing, contingencies, whatever it is, a and then simplicity. It’s a very complicated long process that in a stable market can take 90 plus days on average. Uh, and so how do we then take all those and create a new experience that we can eliminate those issues. Right? So one providing transparency and all the fees up front, putting the seller in the driver seat, giving them control over the timeline, uh, allowing them to cancel it anytime penalty free. So making it as risk free as possible, and then being able to do it simply with, with one experience in a few clicks of a button.
00:02:38 Okay. So the pain was people walking through our or the uncertainty yet the net, I was a third thing.
00:02:44 Yup. Transparency and simplicity. Okay. Simplicity. Convenience.
00:02:48 So do you think then that, you know, of an agent was able to convey or maybe even guarantee and amount in the original a consultation that would help
00:03:01 solve the, the, the, the, the need for open door, just just throwing this out there. Yeah. So in terms of like if I put on like my realtor hat, like step outside of opendoor and look at how we’re different, what are different ways I can, uh, change the paradigm, right? And so, uh, one of those is to be able to provide a guaranteed option, which is not a new phenomenon, right? The question is how many can do it at the ability, uh, that we can in terms the scale that the minimal costs associated with it. Uh, and so that’s one. And we know with convenience people will pay a premium, right? Like we all do, you know, we all have Amazon prime memberships, like we all take. Uber’s like, yeah, you’re happy to pay one or two percent more for something that is like an infinitely better experience.
00:03:48 The convenience factor is a huge one in which is going to be the hardest one for a traditional agent to solve, right? How many traditional agents can list a home on the mls but eliminate showings while also providing a market value offer. And so like there’s, there’s ways in which, uh, hopefully as we sort of paved the way for a lot of this, that new companies, new technologies, new opportunities come out that help everyone in that process to be able to provide an overall better experience for sellers and buyers. Yeah, we can’t argue necessarily the simplicity, simplicity, simplicity. People want to pay value for it or premium for it. But it’s interesting the transparency part because, and a certainty part because those are two things that we’ve talked a lot about. The coaching program now met with Craig proctor and, and we’ll, we’ll go into later on.
00:04:35 But it’s interesting that that’s, you guys went in there with these are the two pain points or multiple pain points people were experiencing. So how did you become affiliated with opendoor nearly by accident? Uh, I had recently moved to Arizona from North Carolina and I got on a selling new homes with a builder and the first home I sold for the builder open door was on the other end, so North Carolina it know in Arizona, in Phoenix. And so this was early 2016, so we had a move in ready Spec, had a family come in. They really loved the home but they still had their current home. So I was walking them through the options like, look, we can either help you get in touch with an agent, we can get them on the market, we can build this home on another lot and we can sync it all up or come back to me in a few weeks once your homes under contract, hopefully this is still here.
00:05:24 It was just, it was a very uncertain like value proposition for these people who just desperately wanted this home. And they said, well we’ve heard about this thing called open door. And I go, I’ve no idea what you’re talking about. So it was already up and running before you. It was up and running with a very small, still at that point bind about maybe 40, 45 houses a month. They had heard about it on the radio or have gotten a mailer a. So they showed me the website and I was like, this is either great or it’s a total scam. So I told him to go ahead and get an offer, a icon to their home and sort of gave him a range on where we thought the value should, should come in at, is it go ahead and get an offer like this to see what happens.
00:06:02 Uh, the offer came back right on the money, the total fee for them, it was only seven and a half percent. They signed with the builder and signed with opendoor on the same day in 28 days later. They just moved from one house to the next. And so from, as soon as they walked out the door, I’ve started trying to figure out how can I, how can I be a part of this? So there’s something that you saw that you’re like, man, this really cool company that I want to work with and yeah, it for me, coming from a small town in North Carolina where it was very easy to know, uh, sort of the stack ranking of agents, right? There’s only a few, a major brokerages, smaller agent pool, you know, for instance, they had like 40 new listings come on the market last month or this town and looking at myself, moving out to Phoenix, I spent a lot of time trying to research who are, who was sort of changing the game or doing something that’s new and innovative and how do I as a consumer moving into Phoenix, I don’t know anybody, no connections if I need to, if I want to hire an agent, how can I possibly find, um, a great service or great a great person because it’s everybody’s independent brokerages.
00:07:06 You know, there’s a 45,000 agents in Maricopa county alone. Uh, and sort of in that process to discover an open door and was like, this is, this is what I’ve been looking for a. and just sort of stumbled in the door right place, right time. All right. So one thing you mentioned earlier was phoenix. Why are you guys in Phoenix? Why’s everyone starting? Yeah, in the Mecca of everybody. Just airdropping in. I mean, I would think the bay area where all the tech companies are at, that’s where they should start. So why, why does that one start in? Phoenix? Phoenix is great because it’s a representative like, like 80 percent, uh, phoenix represents most other, mid two major size markets in the country. So Phoenix is one where you’ve got a lot of transactions happening. It’s a very healthy economy. Medium price point is still in a, in a normal band that, that mimics most of the rest of the country.
00:08:00 So it’s a great starting ground for that. Demographic wise is very much like other major metropolitan, correct? Yeah. When you’re looking at tens of thousands of transaction size happening a year and happening in that like 200 to 3:50 price band, uh, they’ll give you a good indicator of what’s going to happen in a, in another similar market across the country. Uh, which we’ve seen sort of going into Atlanta and places like that that are very similar and it also helped our CEO grew up in Glendale, a town loved there. Um, okay. So I actually, uh, I’ve talked about this, a couple of other investors as well. Um, and I have my own theory on this. Uh, it’s that if you look at Phoenix, uh, unlike most markets, if you have, let’s just say today, right, I’m going to write right in the studio right now. We’re in tempe where we finished it as to get out, look at my phone and someone’s like, Hey, I wanna sell my house in Glendale. Right? I can say
00:08:56 with certainty I’ll be there in 45 minutes, but if I’m in California then that 30 minutes can be four hours or it could be 30 minutes or I don’t know how it is the rest of the country. Um, but I could run a team that services the whole valley pretty well with one like location, right? Right. Uh, with one building. Whereas I think the rest of the, um, uh, the country, you don’t have that flexibility because you look at real trasy pay attention to real trends at all. If you look at like the top 1000, I don’t know what the number is, but I think it’s like, I feel like 20 percent are in Arizona and I think like traditional real estate teams start that way. I think that’s probably the convenience for you guys too. Anyway, that’s, that’s my theory. Uh, so what were some of you guys are early struggles, uh, when you guys opened up here? Yeah,
00:09:44 we start a new one. I think like ignoring or not outreaching to like the traditional real estate community early enough. So it was kind of adversarial. Beginning, semi somewhat adversarial. Not Utilized. So when I started, um, prior to that where you weren’t operating within the traditional industry at all in terms of we weren’t making offers on homes that were represented by an agent, uh, primarily because we were trying to still figure out what we call proof of concept. Right? So could we, is there a there, there? Can we buy a home directly from a homeowner using our platform, but then all of a sudden when you have 100 listings pop on the board, everyone sort of goes like, well where did this come from? Who are you? And there’s sort of two assumptions that come out of that right out of sort of like the fear in the unknown is either a, a, you’re, you’re taking advantage of homeowners, they’re leaving tons of equity on the table, you know, you’re making flash offers and like bulking them over the head during the inspection period and then, you know, catching them in a vulnerable position, a or B, you’re making great offers to sellers and you’re out to eliminate real estate agents.
00:10:54 Neither of which were true and thankfully, and it’s sort of, it’s very much evolved over time in terms of like the sentiment in the reaction we get now. The most common question I get is like, you’re not making money on these houses. Like how does this actually work as a question later on, they’re going to get to. So one I think like we definitely misstepped a. It could. We have done it any different, I don’t know, right, like a, we sort of came together when we did and everything sort of fell into place and we learned a lot of those lessons. But uh, what could have learned more from the industry I think early on in like having more, almost like advisors, right? So looking at it as something we think about a lot, like having advisors in markets and you know, I spend a lot of time talking to agents and Phoenix and all over the country and looking for ways to develop new ideas for agents.
00:11:40 The other was like a technology and security, like things like that, like, you know, we are homes used to be open 24 hours a day and if you did the text to enter it, like came to our cell phones and we were the ones at 3:00 AM trying to like, oh, people are getting. Yeah, like people, you know. So we were, it was like very hacky. It was always a very happy in the beginning. Uh, and so, uh, as we’ve hired on just like world class talent and just like learn lessons the hard ways. I mean the, you know, the quickest way to success is to fail 100 times, right? So we could spend three hours just talking through, through all those. But luckily we learned quickly, we moved quickly, um, in, and from there we just want to keep leveraging that. So some of the complaints that you guys had in the beginning, you said that, um, or one of the things you said was that people were asking, how do you, you know, you’re taking these people’s equity, you don’t get this question anymore, not in.
00:12:31 Well, we still hear a lot of the rumblings, right? And, and I do, you know, so you go in the facebook forum, right? So you’d see a, you know, that you can, that sellers are leaving money on the table and they, and they don’t even know. It was just one that I take issue with because they go, that’s very patronizing to your consumer, right? Like consumers are smarter now than they ever have been before. Like, um, you can run a net sheet pretty easily as a seller, right? There’s like three sort of options. There’s either like the Phizzbo option, which is like the worst experience, the longest time, but potentially the most money. There’s like the traditional option, which is a cost some money but can like maximize your, uh, your market value, right? Uh, and then there’s our option which is becoming more of like the better experience and maybe costs a little more to do so.
00:13:19 But you’re getting the trade off of time uncertainty for that. So you were saying like, between the traditional. I mean, I think everyone agrees physical sex, right? So we’re talking between the traditional and opendoor opendoor. Um, it’s costs a little bit more for the homeowner, but it’s worth it in the homeowner’s mine, right? The experience justifies the premium that they’re paying. Yeah. And it, everything’s fluid, right? And so the spectrum is always shifting. So two years ago when our average fee was like 11 percent, then we were very much a niche product for somebody who needed, like was relocating, needed the certainty of execution and the speed of which we could move, right? Um, and then now when our average fee is like six and a half percent and we’re achieving parity within the market, then it comes down to a how aggressive our valuation can be, right?
00:14:09 Can we strive to make market value offers. The debate can come into like what is market value, right? And so when we look at homes, we’re looking at like what is the true value of the home as it stands today? Presently closed comps in its present condition, right? As the listing agent, my job is to speculate, right? It’s to ride the wave of the actives and pendings in the market and like find that marriage between time and dollars and there’s a tradeoff for everything, right? Uh, but just because somebody sells for a higher purchase price doesn’t mean they’re walking away with more money, right? Like that also can come with additional costs because you spent money like prepping your home, right? Repainting, carpet, like storage, decluttering, whatever it is, mortgage, mortgage payments during that time, you’re then like going on the market, you’re still facing the inspection and the benzer and everything else.
00:15:00 And so by the end of the day, even if you sell your home for like four to six percent more on the market, the average difference is less than two and a half percent in terms of what sellers are actually walking away with a. and then if you’re a seller who’s a buyer and you’re just like, all your proceeds are really just mortgage dollars, you’re amortizing out like it. It’s all about achieving the need, right? Like we don’t sell houses because we want to, as consumers, right? We sell houses because we need to because we want to like accomplish a goal. Uh, so the, the more that we can help put consumers in the driver’s seat and have control over that situation and if they can accomplish that goal in 30 days as opposed to 120 days, by the time they have these two escrows, then there’s real traction that happens there.
00:15:43 So there’s two things that came up there. So let me ask them if I can remember both of them. Uh, the first thing we’re talking about the inspection, because you know, whether you go traditionally opendoor there’s still going to run into the inspection thing. Correct? Do you guys have like an estimate at estimated like binzer, uh, repairs costs? Yeah. Um, I mean every house is unique, right? And so we will come in, we’ll do an inspection, will present a repair ask like a traditional buyer a. and what we’re asking for is what we anticipate the end buyer to ask us for giving the same information. So you guys don’t have like, you know, here’s the budget or here’s what to ask for, like, you know, usually it’s between two to three percent. It’s just you guys do an inspection. And then you guys get a bid and then that’s what you turned into the homeowner, correct?
00:16:24 Yeah. So it doesn’t, it doesn’t need to fall within some sort of like specific range. Um, and there, there are times in which like a high repair ask isn’t always a bad thing for a homeowner who is cash strapped but has equity when they’re looking at the two options and we come in and say, Hey, uh, it’s indisputable, right? That you need a new roof in a new HVAC, right? Which alone can be 15, $16,000 a [inaudible]. The agent is going to tell them the same thing and every buyer is going to ask and expect the same thing, right? In a retail sense that, that seller may not have cash to complete those repairs. And with us, we will provide the ability for them to just provide, to give us a credit in lieu of doing the repairs in which we are like, we get steep vendor discounts.
00:17:12 We, we don’t put any fluff on our repair ass because we don’t make money on repairs. Uh, and so when you have the ability to provide that sort of service or to somebody that can be a huge win for the seller and for the agent who’s like working with that seller. Uh, so let me ask a second question to that right now. So I work with a lot of wholesalers and investors flippers in the area. Uh, and one of the greatest challenge is buying the property, right? Right. If you bought the property wrong, if you’re underwriting was off your skirt, right? Yeah. So with the amount of volume you guys buy, who’s underwriting these properties? Who’s estimating what the property, what the after repair value is? Yep. So we can sort of walk through. It all starts with the initial evaluation, right? Because for us with having like minimal to no margins you’re at, you’re walking a tight rope and if we overvalue, we buy a ton of houses that we then lose money on and if we undervalue, nobody’s going to sell their home to us.
00:18:06 Uh, so we use traditional cma approach when we value homes, we have an initial. Is, is automated, right? Or is it not? No. Oh, so everything is done correct with like either in house or everything’s humans. Yeah. So we have an initial offer is a person came up with a number. Yep. People. Yep. So we have a, we do have an algorithm which I’ll talk about. We have an in house team, we call them our evaluation leads. They’re local in every market we operate in. These are primarily made up of former real estate agents and appraisers, our people, the strong analytic backgrounds. And so we built our own CMA tooling, right? So we pull in all the information the homeowners giving us for pulling in mls info, zillow, uh, etc. Uh, and with that, the valleys are able to, uh, control and find the best comps.
00:18:55 They’re able to see all the pictUres and information like side by side, we’re making granular adjustments for every feature in item like in that home. And so every home is comped against three to eight a comps and there’s anywhere from one to three separate cma evaluations done per property before somebody kind of takes those together and like determines the market value of that home. Well, let me take an ask another question, how many organic inquiry here is getting a day? A lot, hundreds, tens, thousands, and we’ve done in phoenix on and say we’ve probably done, you know, we’ve done a few hundred thousand valuations in phoenix alone over the course of the last four years. So if I submit an inquiry today, I can expect to see an estimated value tomorrow that one to three people looked at my property and gave me a number. Correct. Impressive. So yeah, we do, we, we have an algorithm, a of course like in uses, machine learning to get smarter as it goes.
00:19:56 And so it’s sort of working alongside the, the human and the human is, is training the algorithm essentially. so the best way to think about it is uh, in the beginning say had one calculation for price per square foot for a lot. but like you and I know the difference in scottsdale in queen creek in glendale, it’s different. So as we’re doing our evaluations, no overriding it, the algorithms like learning from that. Um, and so it’ll do it side by side with everything and then it helps us be able to, to run like predictions and like overall like forecasting and stuff. Okay. So you got the people that start with the initial offer and so we’ve got one, two, three people doing it and you go on machine learning and then you guys do the inspection afterwards. And then once we go into, once we go into contract we’ll do an inspection.
00:20:43 So the memory you guys come up with initially is before meeting the homeowner, seeing the house. correct. And then you see the house, is there an adjustment made or is it not an adjustment? There’s not an adjustment made on the purchase price with an asterix. So The only time it will change is if the seller provided incorrect information. Okay. So if somebody comes in and says I have all these, you know, I have x features and we go in and find out as actually like why features that will say hey, this was misrepresented to us. And like here’s what we believe the true value of the home is based on the correct information. Okay, but now when we come in and do an inspection, uh, we will, uh, that’s when we sort of do our underwriting process, right? So we’re looking at a what is the value of the home and his present condition, what are the repairs that are needed, uh, and then any potential like renovation type items we can do out of our own pocket rights, like paint, carpet, landscaping, we do very minor things, just get it marketable.
00:21:34 Uh, and then we review the property again right before we listed to visit to see how the comps have changed, you know, over the course of like the 20 to 90 days since we first saw it. You can’t do anything about that. Underwriting is on, is on the purchase. So a has got a couple of questions. So do you guys take into consideration to finish? So I guess for example, you know, it was granite tile versus. Absolutely. Yeah. So granted versus korean formica butcher block, whatever it is, we’re, we’re accounting for all of this. Okay. Yup. Um, and then let’s see, we think opendoor offers creep up near home will be worth after rehab. Do you guys ask for credit for finish? Like I say, like the house needs, like it’s laminated, right? I mean it’s 19 seventies in every other comp has been upgraded, right?
00:22:20 Uh, no. So anything that’s like a renovation type costs that built into the original. Right. So that’s comes out of our bucket of money. So us as principal and the transaction, right? we, we buy the home. If we choose to spend money on renovations, we think it’s gonna get a return on it and bring it up to value in the community. That’s our cost and our risk. So we won’t come in to a seller and say, hey, your house is way outdated and you’re four neighbors all have had done renovations in the last 10 years. We’re going to need you to do those. Uh, we don’t. We’re not looking for that, looking for that, but it’s adjusted in the offer. Yeah. So, I mean, it’s accounted for if, if, if that house is, is, uh, obviously not as upgraded or renovated as like the closed comps in the neighborhood, then yeah, we’re certainly going to account for a home that, you know, every agent should write like for my converses granted, et cetera. Okay. Um, so let’s see. We already talked about some of the struggles. So knowing what you know today, is there anything you guys would do differently?
00:23:19 It’s a tough question. Uh, mainly because we’re growing so quickly. Right? So it’s been, we’re, we’re still a very young company. I think that’s one that is a tough misconception is that people thinking they were this big corporate deep pockets thing, right? Whereas a unicorn company where we are a unicorn company, uh, there, there is a difference in like valuation and like, yeah, depth of pockets, right? So there’s a, you know, we’re a young company, we’re growing quickly, like we make mistakes, you know, we learned from those mistakes we are constantly trying to build, we’re trying to build a world class customer experience and with that is building a world class operations. And so, uh, being able to continue to operate smarter and more efficient and drive down that cost so that we can reduce our fee and put more money in salaries pockets. Like that’s our ultimate goal.
00:24:04 And it’s been great to see going from, you know, when I started there was 12 of us in phoenix and now in phoenix alone, there’s 185 of us, right? And we’ve brought that many jobs like strictly to our office, like that’s been sort of our contribution. We spend over a million dollars a month with local companies like local contractors. Uh, so seeing that sort of growth and the way it’s sort of that small cycle, it is a continuous growth has been really wonderful to see a. And we know we have the problems are infinite, right? Like w with a million problems to solve and it’s just fun getting to like tackle each one each day. All right, I can definitely empathize with that. uh, so what Nathan Clark wants to know, what are you guys gonna do when the market shifts? People are always going to need to sell homes, right?
00:24:48 We want to be there at that point, but would you guys, I mean if the, if the whole time right. And today I think it takes about 35 days to sell a home, right? Right. Less than that. If you price it right the first time, um, but eventually we’re going to have a six month hold time. YeAh. nine month hold time. Like you guys have to make some sort of changes. If nothing else, the convenience. He’s got to go up. Correct. That’s going to do most of the fee is like ours. Calculating our holding costs. So. Right. So our job is essentially to meet that seller at the point in which they’re ready to transact, predict how they’re homeless, going to perform on the market and then go ahead and meet them at that net proceeds upfront and getting liquidity to go ahead and make that next move.
00:25:27 So for us, as long as we can see it happening in real time and we see the days on market extending a, as long as we’re calculating for the appropriate holding costs for that, then we will be okay. The seller is still getting value in that when the market turns down, the value of certainty increases exponentially. Right? So, uh, you know, looking at in a, the bottom of the recession, you know, when you’re looking at your, your value is tanking month over month and you’re going, I could easily spend 12 to 18 months on market, right? But I need to move and I can’t, I either pay for two mortgages or I or I was like, all right, I just dropped the price super low. But if we’re able to come in at eight, nine percent in a falling market, right, to go ahead and be able to provide that certainty and say we can close in two weeks.
00:26:16 Right? Then that changes. That changes the game. So this is actually a topic that came up. I was on a panel a couple of weeks ago and this exact topic came up. And, uh, I’m wondering if by the time we have a situation where it’s like a six to nine month hold time or you know, there’s a market and your offers have to be adjusted for holding costs me, it makes business sense. Why would you not? Then the, uh, working with an agency was a lot more competitive. Right? It seems, it seems make more sense at that point to go with an agent then not to go with an agent. Do you have any thoughts on that? Have you guys ponder that at all? I think about that, right? In terms of like where I sit within the company and like within the industry. So I think about that continually.
00:26:56 Um, for me it doesn’t really change because I believe like our mission statement as a company is we want to empower everyone with the freedom to move. Right? Right. Ninety five percent of the market doesn’t use our type of product right now. Right. It’s like the agent is still king. And the path to providing every seller with every opportunity is like keeping the agent at the center of the transaction. Right? so if we, and if like if I’m doing my job appropriately right now, equipping agents with the power to provide like I list option at sal option and like help, uh, provide those pathways then whether the market is shifting up or down, like we’re going to be there. Right? And so if we, if our, our pricing and our product is in line with the market and where it should be and we can remain in business and then the agent could be more competitive and ultimately we want what’s best for the homeowner.
00:27:49 Right? So if they take our offer, great. if the agent sells the house, great, right there. The is a very large pie and mec right now we typically in phoenix have hover around 700, 700 plus active listings. Like were, those are buyer’s agents all day long, right? Like buyer’s agents love us, right? A listing agents. It’s, it’s a work in progress depending on, depending on the agent. Um, but eventually the, I definitely see like us being in complete cohesion with, with the agent community because we’re really just a product for agents if you frame it right. Oh, that makes sense. Uh, and then jamila damn, she wants to know, uh, how long do you think open door is gonna how long do you guys feel this current market market’s gonna stay this way? The conditions who, uh, you guys must have some internal economists predicting something.
00:28:44 We do have a lot of world class economist. I, uh, I tend to just rely on jim sexton, former dba group across from them and just kind of pester him all day. He’s not really an economist though. He just really, really smart brokers just for reference when I need to know phoenix. I talked to jim. Yeah. Uh, you know, honestly, I don’t know. I’m not going to be the best one to answer. I mean I think we’re, what are we looking at in terms of the. Everything’s very healthy right now, but it’s sort of like, I don’t see it like dropping out, but I do see a plateau going right there. There we are sort of reaching a threshold when, uh, like income isn’t rising as fast as prices within, like rents are also increasing. We’re just sort of like hitting this weird. Can I wear leveling off, right?
00:29:27 Like, it’s got, it’s got to have room to breathe here soon. Okay. Uh, and then, uh, Nathan Clark Wants to know, do you see, you know, companies like zillow, instant offers, I think redfin there’s something I want to say like eight, 10 months, maybe even longer ago. Do you guys see the impact of that? Is that effecting you guys in any way? It’s like, it’s great validation for one, right? Sort of, to have zillow laugh at you in 2015 and then now like join the party in 2018 and imitation is the greatest flaws. It’s great. I’m sort of like the, you know, mac to ibm a welcome and the in the eighties. So yeah, it definitely like gives us validation like we have no proven there’s a demand from consumers, right? They want the experience and the more that other players come into the space, the more it’s going to keep pushing us and everyone, like you have to deliver a great experience and provide a great product and you have to do it at a great cost.
00:30:25 Uh, and so all that’s going to do is like help us keep our nose to the grind and keep pushing to build that, that consumer and operational excellence. So it’s on the back of your mind, but it’s not a major concern. So what I’m hearing, yeah, I mean if you spend your time too much time looking at the other guy, like where are you going to go? Yeah, sort of thing. Oh, that’s a very good point. Uh, so this kind of leads to my next question. Uh, so you guys took my idea that I was already doing many, many years ago and you guys took it the next level. So I’m super jealous about the whole thing. Um, but let’s just say today, you know, I was like, man, I had a great meeting with tyler. I’m inspired. I want to go make this thing happen for myself.
00:31:01 How would I do that? Uh, you want to actually start providing the drumbeat? Oh, I want to open door. You want to be open door to, um, you’re going to need cash, right? Right. Like we purchased some cash so we’re not coming in as a, as a, as a finance buyer. A, and you’re gonna need a really strong operational force behind you. Yeah. So we have built a very, uh, like tightly knit process. We have great control over, uh, how we manage the, like underwrite and manage the repairs and renovations of those homes. It’s very, uh, heavy operationally. So it’s not something that you can come in and just do on your own. Right. You need a, you need a great team, a great local presence, right? Yeah. To be able to have a shot at. So lots of money. Yep. So we’ve got to go raise some funds.
00:31:51 Yep. Who go raise some funds, get somebody really good at valuing homes and then somebody really good at fixing homes. And then a good underwriter. Eric. Great agent. Good contractors, good agents. Yeah, because I mean there are obviously a lot of people doing this right now, right? Like, what’d you guys aren’t doing is a brand new isn’t a brand new cost now it’s just doing it different. Not at all. Yeah. We just sort of found a way to carve a space between like your traditional investor and your retail agent, right? And so instead we don’t need, because we’re not a true flipper and that we’re not trying to come in and maximize the return on a single property, it allows us to sort of sit in a new space where, uh, we can do it at a cheaper cost because we’re not trying to make a large margin on the home, uh, but the ability to then like balance out, right, is you can do your small group or one person who can do, you know for a year, say very well, right. And, and make a good income and like provide a good service and run a good team. Right? But then if you’re looking at it us, right? We’ve done 2000 homes in phoenix this year. Uh, you can’t do that as a small like, or not like, it’d be pretty sorry, well oiled machine. Right?
00:32:58 And that’s sleeping if you are. Yeah. Okay. So let’s walk through what an opendoor offer looks like. Right? So I’m in my house, right? I’m on my computer typing it and having to address what happens then.
00:33:11 Okay. So you type in your address, you’re going to tell us information about the interior features and conditions of your home primarily, right? Uh, what type of flooring is your main living area? Like what’s the condition of your interior pain, your cabinets, appliances, bathrooms, landscaping, et cetera. The whole night we, we forced you to tell us the most important information, but we give you the opportunity to tell us as much information as you want to provide the more information the better, right? Because the more information we have, the more aggressive and certain we can be in our evaluation and we allow sellers to upload pictures as well, which is a huge help. Uh, so from there the home goes through its valuation process and within 24 hours for sending a purchase agreement over a, at that point, the, we present the offer, the offer prices at what is, what our evaluation is a.
00:33:55 And then for that there’s a service fee charged to be able to purchase the home. And so say the service fee, for example, in your home at seven percent, the way that fee actually breaks out, it’s three percent of that is the cobra joke that we’re going to collect from the seller to provide the buyer’s agent who’s going to bring the into buyer. Right? So it’s a similar structure to a commission and that there is sort of like our side and then there’s the coburg side. Uh, so if we’re collect, we’re going to hold three percent for the buyer’s agent. That four percent. Yeah. The remainder that we’re actually using to, to provide this service. The majority of it is the holding costs. Right? So for the, for the predicted days on market that we’re going to own the home in your place and then, you know, you and I have the same cost, right? Like lock lockboxes photography, the, you know, sort of like brokerage costs. Um, and then at the end of the day, if there’s like a hair leftover, then that’s where we, that’s where we walk away.
00:34:48 Okay. So really not a lot of margin. No. Okay. And then a german wants to know, do you guys consider yourself a wholesaler? No. Okay. Um, all right. So let’s see what else I get. All right. So I’m going to go through some of the questions that people ask in the facebook forum earlier. I posted this a couple of days ago, so we got a lot of interaction and guy is still, you know, ask your questions. I’m still, I think tyler still happy to answer them. Uh, so the first question, I mean at gordon higman, uh, how do you guys plan on making money in a downside? I think you guys probably talked about a little bit already. You guys can just gonna adjust your convenience. It’s
00:35:22 v right? So in, in adjusting the, like if you see it happening in real time and you’re adjusting the fee accordingly, right? We cAn, we can still, you know, mirror our existing surface. Uh, luckily the question I don’t have to like, I don’t get to think about it, it’s like once we own all of that inventory and in a slow market, like what do we do with it? Um, insurance claims, right? Fire insurance form of giant property management company. I don’t know. Uh, so, but yeah, so in a, in a down market, it’s all about accuracy. Everything for us is accuracy, the accuracy of the home, you know, the accuracy of the market, like really understanding it from a microscopic to a macroscopic view at all times. It’s like critical to our success.
00:36:02 Do you guys don’t really have like a lot of holding costs as far as like a regular homeowner, right? Like regular homeowner, they’ve got their mortgage, right that 1500 a month or wherever, whatever that number is that’s going on every month. I’ve got no choice. Right? But you guys are buying these. You mean you guys have raised hundreds of millions of dollars and that’s not an exaggeration. That’s a real hundreds of millions of dollars. So your shareholders aren’t charging you interest obviously. So your holding costs are fairly minimal, right?
00:36:26 In terms of like Physical costs still hold. Yeah. Yeah. And so, I mean that is, you know, you look at the, as an investor, like we’re looking at it the same way you are, right? So we are, we have to pay like 13 percent on my money. You don’t have to pay 30 percent on their money. I don’t, I don’t know what our, what our interest rate is on those being a. But we’re looking at like utility costs, costs of service, we’re looking at any sort of like we have people who were like visiting all these homes during the setup and the breakdown of the access technology, all of that. So we’re, we’re factoring all that in. And so in a way it is like, it is very much mirrors, like a traditional investors process in terms of the holding costs.
00:37:02 Okay. Uh, let’s see. So, um, so Nathan Clark wants them to have you guys planning on expanding outside of Arizona and uh, are you guys planning to coming to Rhode Island? Anytime? Seeing which is a great question because nathan lives in Rhode Island.
00:37:15 Okay. In 12 markets currently. All right. Uh, we probably been about 18 by the end of the year. Okay. So we’re starting to expand quickly. We’re in phoenix, dallas, fort worth, las vegas, atlanta, nashville, raleigh, charlotte, tampa, orlando, minneapolis, houston, san antonio. There’s a lot of markets, it’s a lot of markets at this point and is one of you guys, was one of you and each one of those markets? The agent representative? Yeah. So the way. Yep. Yeah, yep. Okay, so they just got it. How would they find, you know, their local guy? If I have like a guy in nashville listening to this right now, how would he feel? So primarily through our website, opendoor.com/agents. And so that’s the site for any, any agent who wants to be able to get an offer for their seller. you can do so as soon as you have that listing agreement signed, we can get you an offer within 24 hours to be able to come back and look like an all star.
00:38:13 Everything starts there like central to that website. And so the way our structure is in, in phoenix, it’s the most mature margaret has. So I serve as the buying and listing agent for opendoor as the agent of opendoor homes, our brokerage. And then I have a team of agents who handle sort of our acquisition offers with listing agents. And then a team of agents that handle all of our resales with buyer agents, uh, and so in throughout the country, we have similar setups in a new market. Say houston just launched last week, then we’ve got like one agent there versus in phoenix where I’ve got like 15 for that, for that size. But yeah, everything starts to the website. You just come in, put in the address, tell us all the information about the home and then we send the offer to the agent. we don’t get any contact info for the seller.
00:39:04 uh, and then the agents delivered a purchase contract in less than 48 hours. Okay. And Aaron Alvarado wants somebody goes, does it make sense for you guys ever do subject to. No, no, I don’t think so. Okay. And then, uh, logan has. Maria wants to know what’s the single trade has helped opendoor become so successful so quickly. Uh, it’s being customer first. Yeah. Hands down. Like that’s, that’s all we think of that is starting and ending with the customer. So how do we create a inexPerience that’s world class? Uh, that is simple and stress free as possible and if you can figure out how to deliver on that at a cost that nobody else has been able to do before, like that’s true success. Um, it’s, it’s not about like making money per customer, it’s about like providing service per customer. So really like at the end of the day, all we care about and all we think about is the experience.
00:39:55 Yeah. When I think that’s what it takes today to win in any industry, not even just real estate. Uh, alright. And um, let’s see, we get patty, patty knutsen wants to know if you guys are selling homes, usually saw the client’s homes are low value. How do you still stay in business? I don’t think has really selling the houses are a low values. You feel that way at all? No, in like I said, like all of our sales are in the mls. So the most frequent question I get is an agent who’s like, I don’t get it. You bought my client’s house for 200 and then you sold it for two. Oh eight. And you paid a three percent commission, like, okay. So yeah, uh, for us, like especially when we’re selling homes, um, you know, we’re, we’re pricing with the market so we’re not, we’re not underselling ourselves is even hard to do that right now in today’s market.
00:40:46 Right. So angela came, wants to know how do you guys plan to implement better communication and processes with your title company because that they seem to get dropped the ball. Great question. Uh, and so like our title company, so it was like new growing, like we all experienced those growing pains as well. So things we’ve done, we’ve done recently is implement some new like automation processes that removes a lot of the busy work from these operators. uh, and with that we’ve also tripled the size of the, the talent escrow team within that. So in combination with removing a lot of the busy work plus tripling the manpower that we’re quickly seeing a difference here to catch up with, with the volume and like the experience in like the threshold that we set for ourselves in terms of our expectations. What are Some of the busy work you guys are eliminating a, so the ability and, and I’m not as tied in to the title portion in terms of lIke building that a day to day, uh, but so we’re always looking for ways, especially, you know, the biggest thing going back and forth.
00:41:48 It’s like just emailing pdfs and things, right? So one, and I’m not saying we’ve, we’ve done this. When I think about it, it’s like a one of the great features with something like that loop, right as he butcher, just like a central hub that you can like upload it in and everybody is alerted like there’s ways through technology to like streamline that process to eliminate a lot of the back and forth. Right? So how can we as a, a home sort of moves through the life cycle of that process? Where do you find points of automation that you can remove that, that manual process from an operator or even from a, from a consumer? Uh, so through technology like building ways to streamline the process and at the same time growing out the team and being able to provide a higher service to agents and clients.
00:42:34 Uh, or is there an open door title? Is there any plans to open and opendoor title?
00:42:39 So we use a ostp national through there and it’s a joint venture.
00:42:43 Okay. Um, so going back to these questions, um, so already talks about how do you start planning the second part of. So, I mean we kind of touched on a little bit like you’ve got zillow and a couple of other guys imitating your business models. Um, Is there any plan right now to stay competitive with them or are you guys just pretend they’re not even there?
00:43:07 It’s not so much pertaining. They’re not there, right. It’s the, you know, the threat that ends up like the predator that ends up beating you as the one you never see coming. Right. So there’s like all these people there, you know, if we’re all in this like drag race to the finish line and you’re racing a car at 200 miles an hour, like if you spend all your time looking out the window, like you’re going to crash, right? Like you always stay focused on the finish line. And so for us it’s like being aware obviously if, what, what’s happening, right? Like um, you know, we’re, we’re looking at market share just like everyone else, but for us like we’ve built like moats, right? Through technology and operations and everything else that like we have such a huge runway, right? So it’s really like ours to own and to keep building more modes and promotes to be able to like keep that runway we have.
00:43:54 Okay. Um, does david masking what’s known as open opendoor cover all of arizona’s counties?
00:44:00 No. Right now we’ve always primarily operating in maricopa county and parts of our county. So in st vrain valley, uh, we recently just opened a city of maricopa and so we will now purchase homes in the city of America. But outside of metro phoenix, we don’t operate in Arizona.
00:44:17 Okay. Um, and then bob hurts. So wants to know, are you guys concerned at all about the agent or consumer safety with the ease of access you guys provide?
00:44:23 Yeah, we think about that everyday and that’s one of our, our, uh, like constant, like worries and like progress that we’ll want to make a through like proprietary technology, right? So, uh, building, uh, we’ve, we’ve presented on this in men, right? We show them the code stacks and everything for our, what we call our nox system. So all of our homes have proprietary security in there. They have motion sensors, we have the ability to, you know, set and trigger alarms, lock and unlock doors. We can tell how long that person has been in a home, which provides lots of great, like fun data facts, right? If somebody is in a home for 12 minutes there, 40 percent more likely to make an offer. If they’re in there for 18 minutes, they’re much more likely to be up to no good. We’ve also partnered with a private security company that has an immediate response to all of our listings that our markets.
00:45:09 Um, and so yeah, we’re very, very much in last month we had 80,000 home visits across 12 markets. Right. And so the rate of incident is like a fraction, you know, it’s like a tiny percent in the most common type thing though always would like hear about is like high school kids trying to get in somewhere to drink beer, you know, enterprise. I really come. I didn’t know that. That’s interesting. It’s at least in the early, in the, in the early days when it was much more like the text enter. But now we have all these like different pieces in place with the app, the proprietary security, you know, the contracted out like third party security companies like everything there is very much in real time. Uh, and we very much care about the safety of like agents and consumers. And so we produce all the in ar like safety guidelines and tips.
00:45:58 Like we provide those to agents and sellers. You can go to opendoor.com/safety if you want to learn more about like our safety protocol, like the guy has been there for 30 minutes, it’s time to send the emergency team over there so we have the ability like we can call them, right, like they use their phone to get in and so we have that ability to go in and be able to like one make contact with the customer too. We Can always like trigger the alarm if we need to. And then three be able to like a call security or police if we, we have reason to believe there’s an issue in a home. Okay. Because I see that complaint come up multiple times in our farm. Yeah. It’s a part of that is like having, even from show in time, right? Like you have to go and show feature, right?
00:46:40 You allow overlapping appointments. Uh, the great majority, like an agent coming to see a home and there’s somebody else in the home, it’s more likely to be another agent than it is like a visitor, right? Yeah. Okay. Um, and then Nathan Clark wantS and nobody can buy an opendoor location. We’re not a franchise company. I asked you. Yeah. Um, okay. So we’ll go to opendoor.com/jobs if you’re, I don’t think you’d want to work as a job. I know him pretty well. Uh, okay. So maximum is, wants to know. So you said opendoor is not a wholesale operation, but uh, you, your, your work is very similar. So what makes you different than we buy homes at 94 percent of value, not 70 percent of value, right? We’re not looking to go from 70 to 1:20. We’re looking to go from 94 to [inaudible]. Right. So it’s extending your margins. Yeah, much skinnier, right? We’re not, we’re not in there like renovating or changing the major condition of the home. Right. So like I said, we live between the wholesale investor and linked the retail buyer. And so the process is similar, right? Yeah. We make a cash offer on a home. We can close quickly, but we do, do not function like our underlying function is different. Yeah.
00:47:56 Okay. Uh, let’s see, what else are there? So we’re talking about hiding the obvious safety issues or addressing the hobbyists safety issues. Uh, so layla woodward wants to know what her wants to know, like you guys are buying a one price and selling at a price, but there’s service fees and everything else, right? Built into the offer. And I’ve heard this complaint from multiple realtors really about, you know, like what you guys are buying at doesn’t reflect what you guys actually buying it for, right? Because if you pat in seven percent convenience fee and you pat in 12 grand for repair, you’re not really buying it for that price. What he had to say about that.
00:48:31 Yeah. It’s funny because it’s like how do you make everybody happy? Right? So when I first started in structure of the contract, especially with agents, right, we wanted to create as a traditional feeling as possible, right? So it’s structured the offer where they, it was a cash offer at the net price and we would send the offer out and it was just very clean, right? Um, agents continually, hey, can you please stop doing that? Like you’re, you’re incrementally dragging down the comps month after month within these communities by purchasing where the purchase price is that right, 93 percent of value instead of 100 percent of value. And so we restructured it and so guess in late 2016 and we restructured it. So we’re writing the purchase price is what the valuation of the home was and taking the fee as a concession. Uh, and so, uh, the, uh, I’m not sure I understand the frustration there. It’s like if I buy a house at 200 and we’d sell it at two, oh, six, um, uh, where it seems like the, you know, I, I get, they want to see like how much do they actually pay minus the fees. They want the transparency. So they want the transparency there. Um, but it’s like, you know, then do you, would you rather have
00:49:43 calm, slow, like it’s like how do we find that middle ground where we can provide the transparency while also maintaining a, the value within the communities in which we’re purchasing. I’m totally with you. Yeah, because when you buy them at low prices and you’re buying tens or hundreds at a time or in a period of time killing the cops. So I’m with you. But that is a complaint that’s, that’s out there. Um, so we talked about, you know, so it was a mind painting convenience for what you guys offer. So I think he has done a really good job of giving this a, this value, right? Um, for a cost. And so there’s a good friend of mine, Paul Bass store, and he’s always talking about, uh, you agents are undervaluing how much value or how much consumers are willing to pay for value because you guys are worried, you know, can you get, you know, you see a lot of people offering all this jazz, four percent or five percent flat fee.
00:50:35 Flat fee is a really hot topic right now that got purple bricks and whatever homie staking some heat off me, then that’s good. Good for you. Um, but these guys are looking all wrong because they’re not seeing value or selling value because instead of going more value, they’re just reducing costs. And you guys are saying we’re not reducing costs, we’re charging more for value. so I thought that was really interesting, um, experiment that we’ve been able to see. And like I was saying earlier, I do a lot of the coaching with craig proctor and a lot of the guys. A lot of your meSsages are the same messages that we have. You guys make it look better because I have a lot more money than we do. So really good designers to. Yeah. So I wasn’t really a question. I just thought that was an interesting agents.
00:51:20 You know, you can’t have one product. Yeah, right. We’re heading into 2019, right? This is not the 19 nineties. Right. We’ve got to like evolve with it. And I told agents all across the country and I love hearing how different agents structure their businesses. And I talked to an agent. It’s like, yeah, of course I could have like a seven. I have a like, you know, have a low, a mid and high program essentially. He’s like, I do a seven percent listing all day, but you get your carpets professionally, steam clean, your house gets pressure wash, like you get all of these additional, like true services for that, for that cost, uh, and it’s, uh, it’s a great option. Right? And so it shouldn’t just be a, as an independent agent who isn’t part of a flat rate or like, you know, discount type brokerage in itself, but you’re trying to figure out how to compete, right?
00:52:13 Uh, and so you should have a, like more self service, like a, you’re gonna be able to save some money, but you’re going to get less like valuable offerings from that. Uh, you have your sort of middle of the road, like traditional offering and then you have your premium services, concierge services plus the ability to present offers from investor buyers and everything else. Like the key to the agent is to be the one stop shop, right? And so like, where’s there’s two evolutions happening, um, one is, is you have to be able to provide a, like list option and the sell option as an agent. And then the other is looking at more, uh, the evolution from like the agent to the team and then what is happening next? It’s like the expansion team, right? So being able to now take it, not just have a high producing team in one market, but in four markets in four different states across the country, um, which has been a really cool thing to see in the last, like really take off in the last like 18 months and now, you know, all these agents I knew last year, you know, call me there.
00:53:17 Hey, I’m going to be here next, I’m going here, I’m going here. Uh, and we’re seeing that start to pop up and people really finding ways to like build true business models of that. Yup. Uh, so a brand commonly asked an interesting question, uh, how can he be your listing agent and listing agent listing agent? Did you take that back? Yeah, I’ll watch stick. There was a. Who was it? Was it jackie? What was jacqueline more? Yeah, yeah, yeah. So I will sort of trade around jacqueline, uh, uh, still with us. That’s it. Sits right next to me, a on more of our brokerage operations handle. Brent wants your job, is what your son was. My job. Is that available? Is that on the table right now? You know, as a, we, I believe we still might be hiring for what we call the equivalent of like a coalescing agent.
00:54:05 So yeah, we opened.com complex jobs for anybody who’s, who’s interested. Yeah, I know what brands, I don’t think it’s going to work for him. Yeah, we definitely have situations where will we hire agents to sell our homes? Right. So, uh, I had one a few weeks back where we bought this home. It had this like custom german front door on it. It was just like really beautiful and like awesome. But we couldn’t put our access technology on it. We couldn’t change out the lock and we didn’t want to take it apart just to make it open access. So instead of making it part of like the opendoor platform, uh, I called uh, korean when, and it was like literally a couple streets over from where korean lives and had her listed for us. Uh, so we, we do that all the time where we either have houses that are either a, like tough for us to sell because of our open access or b, it’s like unique circumstance for the home, in which case we’ll go find a great local agent to sell that home for us.
00:54:57 all right, so that’s a great point. I’m sure a lot of agents love hearing that you proBably just got blown up on your yourself. So what do you plan on listing with all the listing leads you create? Like what you guys do with them? Trash. We, we respect the privacy of our, of our consumers. Certainly there’s a huge, like it’s a huge puzzle, right? So one, like what are the most common question I get from asians, right? Is can I have your leads from, In places like phoenix, you know, it’s very tough. Like if you talk to a home seller, right? Neither of like they’re outside of our box or like our fee is too high or whatever it is. And we’ll, we’ll ask them like, hey, like if you need an introduction to an agent, we work with hundreds of agents every month, right? Like we’ll happily introduce and make a referral in that Situation.
00:55:45 A sellers in phoenix, we know like there’s one agent for every 154 people in this metro. So like everybody knows an agent, buyers, we do a lot of buyer referrals. Like we had so many home people visiting our homes. Any other situations where a, they’re like a high intent buyer who needs additional help, right? They either need longer work with a lender or like they have found an area they like, they’ve seen all of our homes in that neighborhood, but they want to go see that homesmart listing. We can call an agent and help them make that introduction because for us, like, you know, the likelihood of somebody walking into our home and buying it that day is the same as an open house. Right? It’s like less than two percent. Right. But overall, if we can help that person and whether that’s purchasing from us or purchasing with an agent personally and other home, like we want that person to succeed.
00:56:36 Um, so yeah, we make, we make local referrals and all of our markets all the time. Okay, cool. Like I said, I think you can get blown up, um, what do you guys do when someone’s upside down or their eQuity? Just there’s just not enough equity for you guys by, uh, you know, unfortunately at this stage that we Can’t help everybody. So there’s lots of situations that we would love to be able to solve. Right? So on that end, like helpinG somebody who’s upside down, um, in being able to do that, but unfortunately, like I can’t just pay more for a house because somebody doesn’t have enough equity, should step up, you know, on the other end. And that we look at it like I’ve always, like jokingly offered, like any agent that can figure out how to break the fha flip role. Like, you know, we’re, we’re subject to all the same things that everyone else is talking about illegally or um, okay.
00:57:30 So right now if you either don’t have enough equity buyers, we don’t do, we don’t do seller financing so it’s not like we can take somebody and we’re not, we’re not the lender on that where we can work with them on like a, a lease purchase or a rental own type type situation. So there’s, there’s a million opportunities and problems out there to solve. Right. But like we can’t get distracted by trying to solve all of them at once. Right. So we have like a core set of things we’re trying to solve for and like build right now and then as we get to like running very quickly and like that rove road repaving is smoother than we can start like branching out and trying to figure out how to address other needs. Right. Yeah. So, so, um, do you have a short sale person that you recommend?
00:58:17 Right now? I do not. Uh, in the we will do, like experimented with working with short sale. So being able to make offers on people who are in a short sale situation, whether they have like a bank approval or not, I’m like we’re, we’re happy to try and go down that, go down that path and provide a service and a short sale. Agents like it especially because we have the ability to present an offer. We’re flexible on the timeline, um, and we’re sort of willing to hang in there with it to see if we can provide a solution and if we can, you know, it’s unfortunate, but we’re happy to try and help with that. Certainly. Um, and then I heard you, you mentioned earlier like high intent buyers. They are dealing with credit challenges or whatever it is. They’re a lender or credit repair company you guys work with. We were, we were selling hundreds of homes every month and so we interact with a lot of lenders and so I have like a few lenders that like I can always recommend, recommend personally. I’m awesome. Bates had a vip did, did by just bought a house a few months ago. He did my loan was great. I would highly recommend him, ryan oakland with movement mortgage, Ryan Hall at, at vip, uh, in so just, but we don’t necessarily have like a, uh, as a stance today, like a primary like lender funnel particularly.
00:59:43 Um, and then let’s see, this might sound little personal. Uh, why does opendoor field, they don’t need to follow the contract when it comes to completing repairs?
00:59:54 It is a good question. So I would assume they’re referring to like a resale type situation. Uh, we absolutely want to follow the contract and to follow the contract. Yeah. So in a situation where this repair that’s outstanding and say that can’t be completed prior to close, we can either a, like happily extend closing a or b, provide a letter of intent, you know, we’ll see it on things where it’s either a, like a, an hvac part or something or like for like a furnace or I had suddenly you’re like windows something that, something that is going to take weeks to production or whatever to get the actual like or piece. Um, it’s, we’re always, we’re always flexible and so we absolutely use the ar purchase contract. And like abide by the terms of that purchase contract and want to be as flexible as possible and that experience.
01:00:45 So when you were talking earlier about you guys don’t provide the ultimate customer service experience for the sellers because have the same thing for buyers on your properties.
01:00:53 Yeah. Wow. Of course we would love to write. It’s like the goal is how do you build a transformative like selling and buying experience. Right? So with buyers looking at it starts with ease of access, right? So, uh, an unlocking the ability for, for buyers to be able to, to visit properties on their own time and their own schedule for me, like when I moved to phoenix, it was great. Like I knew I was going and me being in the industry, right? I knew I was going to rent for like six months to a year, uh, coming from a small town to this, like I’ve literally lived like two blocks from here when I first moved here. Uh, and, but I wanted to start kind of like exploring the valley, but I didn’t want to take up an agent’s time because I knew I was still like six to 12 months out.
01:01:33 So I would go see opendoor homes and started like getting closer and closer and knowing like, okay, great. By the time I’m ready to purchase a, I can call an agent. I’ve already sort of like self nurtured myself into like the area I want. And so then the value, like the value of the time that I’m using with that agent is going to be much higher than had I just said like, hey, I just moved here, like show me the best three to 1500 square foot house under 300,000. like um, so it starts there, right? like a building an inexperience. It’s, it’s easy to shop for homes. And then from there it’s like, how do you continually start building in each of the other processes from a like pricing and offers and negotiations to them like inspection and repair and like getting the home and like I’m predictable, uh, in terms of when you walk into an open door home, you should, you should have an understanding of like what condition that home is going to be in either like they should feel similar to each other, right?
01:02:32 Either from a or like physical marketing and like the experience, right? If going into an open door home, uh, to especially for agents knowing like, here’s the, like we can guarantee that they’ve always done this type of work or we know they’re going to be a flexible on the bins are negotiations. Uh, and then whatever they agree tO there, they’re going to follow through on a. And so there’s like, it’s easiest in theory, right? And then it’s like the, the challenges everyday waking up and getting better at executing it, especially when you depend on the repairs is depending on like outside vendors and services and like managing hundreds of transactions and trying to figure out, okay, how can I continually be able to execute at a high level on that many projects at the same time? Uh, and just getting like a little bit better every everyday.
01:03:17 Uh, So that, you know, we look at a year or two from now. Uh, that question isn’t like thought of. Right? Right. Uh, what were you say are like, we were talking about branding a little bit, like what would you say are like two or three things are key to your branding success? Uh, let’s see. One like the experience, right? So whether it’s in particular thing of like the visiting experience, right? The ability to like find the home on your app, get directions to it, you pull up to the house and you can press one button on your app and that home unlocks it, knows you’re there. Uh, the future, right of being able to potentially like personalized experiences would be, would be amazing. But right now it stands apart like the physical experience of finding and seeing a show like touring and opendoor home is the biggest differentiator in terms of our, our marketing, you know, we’ve, we’ve tried a thousand things from, you know, we do a lot of the most traditional things like mailers, right?
01:04:13 Yeah. We’ve gotten into radio. We recently did, um, our first video, like commercial, uh, in a, in a long time since like the very early days and we kind of tested with it. Um, and so really about a differentiating the experience. Right? And so having the consumer understand what is different about selling your home to opendoor than it is like going down any other pathway into creating a physical experience that nobody’s ever created before. Right. okay. Um, and then the. See we were talking about the business models. Do you guys have a goal of percent margin or dollar amount for every transaction you guys do? Is there a target? We make an average of less than one percent on, on any home that we sell, which you guys are profitable. Uh, there’s a difference in like making an average of less than one percent. Uh, it’s, it’s when you start looking at like a company, right?
01:05:12 There’s growing very quickly and like expanding a new markets and then you start slicing and dicing. Like when and where do, does money go to help subsidize like growth and new markets comparatively. I mean, you look at, uh, you know, amazon went with 22 years before they ever turned a profit because they just kept reinvesting. Right? Um, again, like not a problem I get paid to think about. It has been, you know, my, my dad was, my realtor had on figuring out how to work with real estate agents. Yep. And then general wants to know that you ultimately buy an open door home. I did not buy an open door home. Yeah. I looked at many homes. No. A rj cushing with jk realty was the listing agent for the home that I purchased. He was great. I would use them for myself. I needed to like sell my own home and didn’t want, it wasn’t me, but no, no, I bought a, I bought a market home.
01:06:01 I would definitely be an open door home, but where I was looking for very particular like location and price point and also like we just didn’t have a, we didn’t have a house there. Okay. Now what you just mentioned radio and video. So where are you guys advertising right now? A social. So like online we do a lot of that. We still do like facebook, instagram, us on facebook if you like, if you go to opendoor.com and you’ll see us, you know, throughout your, your future browsing, uh, beyond that. Uh, but yeah, we do a lot. We’ve gotten into like the facebook and the social game within the last year or so. Um, and in the very beginning we did like a ton of mailers and stuff. I wAs very traditional farming techniques in which now we can in phoenix and we do mailers quite as often because now we were more of a household name.
01:06:53 It’s not as much of a reminder game. So mailers starting tv, right? Yeah, we ran, we did a video commercial. we actually maybe even just only published it online. Um, I don’t really watch tv though. So actually we could have 100 commercials and I wouldn’t know. I’ve heard stories and I had no idea as our radio ads. Pandora. Yeah. Uh, so we got you guys. Do you guys do in paperclip for a while? He goes doing paperclick. Um, I would assume so. Okay. So yeah. Do you guys track like where’s your top two or three lead sources for a long time? Like radio was or was like our biggest converter mailers of course are great like awareness tool essentially. Um, that’s a difficult space, right? Especially in phoenix where everybody’s getting like yellow letters and all the like investor mailers and then looking at like, well what is this?
01:07:55 It’s all up to this point. You know, it just becomes, it becomes noise, right? Yeah. The biggest thing is like, of course like word of mouth and for sale signs, right? So people start seeing for opendoor, for sale signs on their drive to work everyday. Like when they go to southern home, they’re gonna, they’re gonna think of this. Right? But they’re at least going to have like seen in orlando home. Um, you know, homeowners love to go check out open houses, right. Because I always wonder what their neighbor’s house looks like. Capturing them there. Right. So they can hear every time I open door home comes to sale. Like how many neighborS do you think are like walking by an icon? Oh, I was wondering what that house looks like and they can actually just go in and see it. Right. So yeah, at this point a word of mouth and like physical signage along with, with radio or are probably our biggest.
01:08:38 I just need a credible of science out there next to yours. You need a lot of science. Uh, when is opendoor coming to charlotte? We’re in charlotte. you’re in charlotte? yep. Alright, justin. Hope we’re live. Keep an hour for that. All right. So if there’s one message you would want to leave everybody with, what would you want to leave them with in the real estate community? Particularly like we were just another tool in your tool belt, right? Like we’re, we’re local buyer where your local seller. And so the ability to approach every seller with multiple opportunities, right? We believe that every seller deserves every opportunity to sell their home because there’s no longer one path, right? It used to be like you listed your home or you sold it yourself, right? And now there’s a, a myriad of different ways to sell your homes. Uh, and it’s important that the agent is still like the expert.
01:09:28 They’re right and they’re at the center of that transaction. They’re providing all those opportunities, right? So listening that home or the ability to come back and bring an offer and come to our website, it’ll take you three minutes, right? Like, what’s the least you can do for your seller, right? Like bring them an offer very quickly. And if it works, great. We have lots of value propositions, especially in today’s market and all of these markets we’re in. And I guarantee pretty muCh every person listening right now is in a seller market, right? So if you have a seller who also needs to buy and you can eliminate the stress and the uncertainty of that home sale, you can go make an offer on that next home today. Right? You cAn get an offer from us, they can sign it and you can worry about finding that next grade home and not have to worry about what do we do with this current home.
01:10:09 We had an agent last week who did that. The agent, the buyer called her in a panic that I have to have this house. They weren’t set to list his house for another two weeks and so we were able to present an offer and he got that house and we were able to within 24 hours get them an offer. A worked signed our contract. They made an offer, you know, the listening engine, the other entities that contingent offer and sees it’s open door on the other end and they were able to, to make that work. So we want to like decrease cycle times for everybody. Okay.
01:10:37 Alright. So appreciate that. Thank you very much. If someone wants to get
01:10:41 a hold of you, how would they do that? Opendoor.com/agents and it’s going to be their primary way. Uh, if you need an inquiry outside of that that you can’t find on the website, you can always email [email protected].
01:10:54 All right. Perfect. All right guys. Thank you. Thank you. And if you guys liked this show, please do share this episode and please join me next wednesday. Two o’clock. We got a leisure ruben. He’s the king of houses burnt to a crisp so he loves firehouses and um, he’s also the guy that runs a young millionaire society. And don’t forget to join our. Check out our website real estate disruptors.com so you can find out about our upcoming events. Thank you, tyler. Thank you. Appreciate it. Until next time guys.