From the Desk of Dan Amdur, CEO, Moving Station/QuickBuy®
Dear QuickBuy Partners,
The following is a review of the key points provided in the first quarter earnings reports from Opendoor and Offerpad.
Key takeaways:
The reports illustrate the threat iBuyers continue to pose to our business, which includes aggressive and thus far, successful, pursuit of our customers. There is little question that the agenda of the iBuyers is to intercept the customer and sell a comprehensive suite of services, all of which are integral to your brokerage’s offering.
Consumer demand for alternative ways to transact real estate is clearly reflected in the significant number of transactions, growth, and expansion plans of the iBuying companies. The reports below also indicate that price is no longer the key concern of sellers, with certainty and convenience increasingly being the priority.
On the positive side, when we combine resources, we have an undeniable advantage. We can win the consumer by delivering what they are seeking – speed, certainty, convenience –plus market knowledge, care, and compassion. We have the collective skills, means, trust, and relationships to execute better than the industry interlopers. In working together, we can stop the iBuyers effort to replace agents and brokerages with faceless conglomerates. Keeping the agent and brokerage front and center, to capture all aspects of real estate is our mutual goal. With your commitment and support, we can put forth a powerful consumer message: “The trusted expertise of an agent with home sale solutions to meet your every need.”
Below I offer key data from the reports and welcome your feedback:
iBuyer Agendas:
One of the more interesting quotes from Opendoor’s earnings call, demonstrated that price is not the driving force behind the customers’ decision to accept an offer during their time of transition. This would indicate that the iBuyers successfully delivered a new message that not only captures consumer attention, but has changed their behavior entirely:
“Since last fall is we have been increasing our [purchase price] spreads. But that hasn't inhibited either a conversion or a pace of acquisition growth. The value we're delivering to consumers is seeing the value we're capturing. And as we've increased spreads, we haven't seen a material impact to our conversion, which is an incredible sign that, again, if we deliver desired products to the consumers, they will convert.”
Both Opendoor and Offerpad outline their plans to capture more than home sale, but to capture every facet of real estate. As we know, the idea of integrated services is not new, but the well-crafted and well-financed story they are delivering to the consumer is clear and effective.
Opendoor
“We believe home sellers and buyers value simplicity and convenience. To that end, we are building an online, integrated suite of home services, which currently include title insurance and escrow services, Buy with Opendoor, Opendoor Home Loans, and Opendoor Complete (home warranty and insurance). We believe that vertically integrating services that are adjacent to the core real estate transaction will allow us to deliver a superior, seamless experience to the consumer. Our success with title insurance and escrow services helps validate our view that customers prefer an online, integrated experience.”
“We continue to take major steps towards our goal of servicing every home seller and homebuyer across the country. We recently entered some of the largest markets, including San Francisco Bay Area, New York, and New Jersey, and we continue to demonstrate that we can operate in all markets in the U.S.”
Offerpad
“We built Offerpad to address the toughest pain point in real estate, the transaction. Finding an agent isn't hard, the transaction is. At Offerpad, instead of providing customers with a list of options for different companies they can use to complete each part of their transaction, agents, renovation companies, mortgage companies, moving companies, insurance companies, etc. We take care of all these things. Completing the transaction for the customer on their timeline is what we do best. To facilitate the transaction with the most control and certainty allowing for the best customer experience. We are proud to lead this transformation by offering customers a simpler solution. “
“We added 600 new ZIP codes, increasing our service territory by nearly 15%. Looking forward, we plan to expand our services to five additional markets this year.”
“I don't think anyone can argue that consumers are unsatisfied with the old way of real estate, with the lack of certainty and control in selling their home. We are solving that every day at Offerpad. We had a fantastic first quarter, belief in our values proved once again to deliver results exceeding expectations.“
iBuyer Performance:
Opendoor:
“For home sellers, adoption continues to accelerate, with offer requests up threefold versus prior year. And our reengagement strategy is also successfully fueling growth. Most encouragingly, we've been able to maintain real seller conversion at over 35% and NPS north of 80. For home buyers, we hit all-time highs for purchase offers, driven by the adoption of Opendoor-backed offers and Opendoor Complete.”
“We surpassed our expectations delivering record revenue of $5.2 billion, gross profit of $535 million and contribution profit of $332 million. We also demonstrated profitability with adjusted EBITDA of $176 million and adjusted net income of $99 million.”
“[ Q2] Revenue is expected to be between $4.1 billion to $4.3 billion, representing over 250% growth at the midpoint.”
160K transactions
80% direct to consumer
35% of “real seller” conversion
2.1mm offers in 2021
48 markets with an average 1.9% market share. 3.1%. Charlotte, Atlanta, Jacksonville, Tucson, Phoenix they have 4.6% market share.
84.1% attach rate on title and escrow. Opening mortgage, home warranty, and insurance.
Contribution margin 5.6%
Contracted to purchase 8K homes
12,669 homes sold in the 1Q.
13,360 homes in inventory.
1,050 homes over 120 days.
Offerpad:
“Demand continues to grow for our products with 115% increase in request volume year-over-year.”
“We have seen significant increase in customers using our FLEX product. Our FLEX team completed 20% more transactions in Q1 over last quarter, and more than double the number of transactions year-over-year. This includes 100% increase in home buyer closings compared to the first quarter of 2021. I believe our ability to meet the customer at the beginning of their real estate journey will help increase our total transaction volume, reduce costs to the company and the customer, and provide a better one-stop experience for customers.”
“Seven markets reached 8% or higher buying penetration in the fourth quarter last year, highlighting the increase in consumer awareness and adoption. Our top of funnel request increased as well. In the first quarter, we hit a record high request volume company-wide.”
Adjusted EBITDA was $50.4 million
Gross profit this quarter was $132.1 million at a gross margin of 9.6% compared to 8.1% in the fourth quarter of 2021.
The outsized revenue growth this quarter was driven by a record 3,602 homes sold.
Acquired over 2,850 homes in the first quarter, with March of this year setting a record for the most homes we have ever bought in a single month
Expanded geographic footprint across the U.S., to 24 markets, spanning 16 states and serving over 1,700 cities and towns.
Inventory owned over 180 days as of March 31st was below 5%, which is significantly lower than our target of less than 10%.
Footnote:
Our Partnership
QuickBuy always operates with truth and trust, as we feel we owe that to our partners and in turn, the agents owe the same to their customers. Our combined goal is to promote skill and knowledge of the agent within an agency relationship. Training agents in the QuickBuy process and how to present QuickBuy offers is imperative, so they can help deliver the message of “transparency” against an opaque competition. Moving Station has made adjustments to our staff to offer more coaching for individual agents, marketing support, as well as group trainings and on-demand training support. As a team we need to work together on perfecting messaging and communication to capture and retain the consumer and to retain our leading position and value proposition in residential real estate.
Thank you.
Daniel Amdur