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Bloomberg: Home-Flipper Opendoor Hit With Losses in Echo of Zillow Collapse


by Calculated Risk on 9/19/2022 10:55:00 AM

From Bloomberg: Home-Flipper Opendoor Hit With Losses in Echo of Zillow Collapse excerpt:

The company, which sells thousands of homes in a typical
month, lost money on 42% of its transactions in August,
according to research from YipitData. Opendoor’s performance —
as measured by the prices at which it bought and sold properties
— was even worse in key markets such as Los Angeles, where the
company lost money on 55% of sales, and Phoenix, where the share
was 76%.

A representative for Opendoor declined to comment on the
figures, which don’t include fees charged to customers or
expenses incurred in renovating and marketing homes.
Opendoor’s rocky summer is reminiscent of the pricing
problems that doomed Zillow Group Inc.’s iBuying business last
year, according to a research note from Mike DelPrete, a
scholar-in-residence at the University of Colorado Boulder. That
doesn’t mean Opendoor is going to shut down the business, but it
demonstrates the depth of the losses — and September is likely
to be even worse than August, DelPrete’s analysis shows.
“Opendoor’s metrics are in the danger zone,” DelPrete said
in an interview. “They are very close to where Zillow was in its
worst moments.”

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