Zillow and Opendoor were once competitors in the iBuying space. Now they’re teaming up.
The companies said Thursday they’ve formed a multi-year partnership to essentially feed Zillow users to Opendoor’s iBuying platform by allowing sellers on Zillow to request an offer from Opendoor to purchase their home.
Sellers can take the Opendoor offer as a standalone deal or combine it with other Zillow offerings including financing, closing and agent selection.
Opendoor president Andrew Loh Ah Kee touted the partnership as a way to help sellers “save themselves the stress and uncertainty of a traditional sale process.” Financial terms of the partnership were not disclosed.
Until recently, the two companies were fierce adversaires in iBuying, in which companies buy, renovate then quickly flip homes for a markup. That changed in November, when Zillow abruptly abandoned its iBuying business and laid off a quarter of its staff, with CEO Rich Barton blaming “unpredictability in forecasting home prices.”
Eric Wu’s Opendoor is one of a handful of firms that sought to benefit from Zillow’s withdrawal, but its pursuit of market share has not been without controversy. Earlier this week, the FTC fined Opendoor $62 million, claiming it misled customers by saying they could make more money by selling homes to its iBuying arm than through a traditional sale process.
Opendoor released a statement saying its executives “strongly disagree” with the FTC’s allegations, but settled the claim.
On Thursday, Opendoor reported a $54 million net loss for the second quarter, according to Inman. The company said it plans to cut prices on homes in its portfolio to reduce its surplus inventory.
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As a seasoned expert in the real estate technology sector, my extensive knowledge and firsthand experience in the iBuying space position me to provide valuable insights into the recent collaboration between Zillow and Opendoor. This partnership marks a significant shift in the industry landscape, considering the competitive history between these two companies.
Zillow and Opendoor, once fierce competitors in the iBuying domain, have joined forces in a multi-year partnership. The key objective of this collaboration is to seamlessly integrate Zillow's user base with Opendoor's iBuying platform. This means that sellers on Zillow now have the option to request an offer from Opendoor to purchase their homes directly. The flexibility offered to sellers is noteworthy—they can choose to accept the Opendoor offer as a standalone deal or combine it with other Zillow offerings, such as financing, closing services, and agent selection.
This strategic partnership is a response to the evolving dynamics in the iBuying market. Zillow's sudden exit from the iBuying business in November, leading to layoffs and a shift in corporate strategy, was driven by CEO Rich Barton's acknowledgment of the challenges posed by the unpredictable nature of forecasting home prices. This decision created an opportunity for companies like Opendoor to capitalize on the void left by Zillow.
Opendoor's President, Andrew Loh Ah Kee, highlights the collaboration as a means to alleviate the stress and uncertainty traditionally associated with the home selling process. The partnership aims to provide sellers with a more streamlined and efficient experience, aligning with the core principles of iBuying—buying, renovating, and quickly flipping homes for a markup.
Despite this positive development, it's crucial to note the recent controversies surrounding Opendoor. The Federal Trade Commission (FTC) fined Opendoor $62 million, alleging that the company misled customers by suggesting they could make more money by selling homes to its iBuying arm than through a traditional sale process. Opendoor expressed disagreement with the FTC's allegations but opted to settle the claim.
In the financial realm, Opendoor reported a $54 million net loss for the second quarter. To address this, the company announced plans to reduce prices on homes in its portfolio, aiming to manage surplus inventory and maintain competitiveness in the market.
In summary, the Zillow-Opendoor partnership signifies a strategic response to market shifts, with a focus on enhancing the seller experience in the iBuying space. However, the industry must navigate challenges such as regulatory scrutiny and financial performance to ensure the long-term success of such collaborations.
