Opendoor – Friend or Foe to Realtors and Brokerages – with Tyler Hixson

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When it launched more than 5 years ago, Opendoor seemed like another rehash of HomeVestors of America – the Ug buys ugly houses company. With offers that were far off value, it was easy for Realtors to dismiss the company.

However, over 5 years, Opendoor has dramatically increased their data and made their offers very competitive. In some markets, Opendoor is offering at or above market value and charging fees as low as 3% total.

Does this mean doom and gloom? Not according to Tyler Hixson, Head of Growth and Strategy at Opendoor Brokerage. Tyler presents numerous ways that traditional brokerages can work directly with Opendoor to not only help their clients, but to get paid for doing it!

Transcript
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Hi everybody. And welcome to brokerage insider the podcast where we interview the leaders in real estate and real estate technology. I'm your host, Eric Stegemann. I'm the CEO of Travis. We're one of the largest independent prop tech companies in real estate and provider of custom brokerage technology to medium and large brokerages throughout the United States, Canada. And even now around the world. Today on the show, we have Tyler Hickson. Now Tyler is the head of growth and strategy for open doors, brokerage division, aptly named Opendoor brokerage. Tyler has been with open doors since near the beginning of the company, and he started there in 2016. He's now been there for over five years and he was employee number 80 when the company started. So, Tyler, thanks for joining us today, Eric. So good to be here. So, how did you get started in real estate? Cause I know you were in real estate before you even started it opened. Yeah. I had a pretty unconventional real estate career. Actually started my career as a public school teacher. I taught ninth, 10th, 11th grade English. I was down in Wilmington, North Carolina, down on the coast. And because I was a teacher, that means I was also a bartender on nights and weekends and over the summer. And I had my real estate license. I got it right. As I, as I. Graduated school. I did it the summer, the summer after went and taught for four years. And then Jessica Edwards down at Coldwell banker sea coast advantage in Wilmington gave me my first, my first start. So I joined on her team and got started in general brokerage before was made an offer to come rep a community with Fonville Morrissey barefoot out in the area and took a community, their rep to a couple of different builders and started on the new home side. Before life sort of unexpectedly moved me over to Phoenix, where I got on with a big builder out there. And I had a couple come in. There was a home that had been sitting in this neighborhood for several months that nobody had been able to move. They had a home to sell. I was talking to them through their sort of standard contingency options. They said, Hey, we we've heard about this thing called open door. And I said, I have no idea what you're talking about. So show me the website. Is said, okay, this looks it looks great. So it's either great or it's a total scam, but let's go ahead and let's request an offer and see what happens. And so I helped comp their house out and kind of gave them guidance on, you know, where I thought a solid office for what to come in at. And sure enough, the offer came in on the money and they sold their house to open door. They bought the new home from the builder and moved in less than a month later. And it was, it was just sort of amazing to watch. And so quickly, I was starting to dig into this company. I was like, who are these crazy people out here in Phoenix offering this, this cash offer product that I had never seen. And you know, a few weeks later I kind of stumbled in the door and they said, Hey, we'd love you to help us come figure out how to work with real estate agents and work with the traditional industry and figure out how to cross that bridge. And five years later here I am. Well, there you are. So, so, you know, we should probably first mention, I think lots of people have heard of open door before and what the concept is, and you gave a very brief description right there of what happened and how that worked with these folks that you worked with out there. But why don't you. Explain the process of an Opendoor offer. Also known in the industry as an I buyer. Why don't you explain the process, you know, step-by-step of how that works so that everybody listening can better understand it. Sure. Well, open door pioneered, you know, what, what Brad, and then eventually coined us the, the buyer model and really you think. Prior to open door, there was sort of, you know, two primary vehicles for home sellers, right? It was the, the traditional MLS listing in order to go out and try and capture a market value for your house. And then there were also cash investors who typically are investing, you know, 68, 70 cents on the dollar. And those are typically, you know, your, your wholesale type opportunities and what Opendoor CA did was come in and say, let's provide all the benefits of the, the investor model, the cash purchase with the value of, you know, the traditional marketplace or the open marketplace. And so the, the goal essentially was to be able to come in and pay market value for a house charge a service fee for that, that. Transaction. And if you think open doors purpose is really to step in for the seller at the point, in which they're ready to sell their home, predict how that home is going to perform on the market. Give them that, that end result upfront. Let them go ahead and take their equity and move on. While Opendoor then takes the place of selling that home on the open market. And so Opendoor will present a cash offer. We have that, that service fee, which traditionally could range anywhere from, you know, for years it was kind of between six and 12% as I'm sure you'll, you'll tell us later. Seen lower today. All of our offers going out at a 5% service fee and what that fee is comprised of, essentially two components. One is the co-broke commission we're going to offer when we resell that home on the MLS. So similar just to how a, you know, a seller is offering a co-broke commission. When they were preparing to sell their home. And then the other portion of that covers our anticipated holding costs for that property. So being able to require it, take on the risk of then holding that home and reselling it and the sellers can pick their closing date anywhere typically up to 60 days out. If you're building a new home, we'll let you close any way up to nine months out. To try and avoid those, you know, double move scenarios and sellers can cancel at any time. So we want to, we want to provide control. We want to provide certainty and want to provide speed of execution. Well, that makes makes a lot of sense. And so let's talk about the numbers, obviously there for just just a second. So you know, it it's, I see in Facebook groups, All the time you know, like lab coat agents and, and some of these other big groups of realtors that are online. I see them all the time where somebody posts something along the lines of, Hey, my seller got an open door offer. How do I convince them not to go that direction? And, and all the comments, every single one of them. Seems to line up with, Oh, well, it's, you know, 30% of our value, 40% of our value. And so, you know, I know you went back, stepped back there for a second and said it was six to 12%. And now you're saying everything's going out at 5% or, or sometimes even better than that. And so, you know, how do we, how can you dispel that message that it seems like folks have in their head that realtors have in their head. That it's this crazy low offer that open door is providing, like what, is there any data that you can maybe provide and say, okay, here's where we typically tend to be at. Yeah. I mean, well, my first recommendation is to not get your data from Facebook forum consensus, but the other, you know, probably the best thing I can point to is is Mike Del Prete did a study I guess maybe a year and a half ago or so now analyzing over 20,000 transactions with an eye buyer and found that I buyers in general were purchasing homes. It was like 98.3% of You know, sort of list market value. And so, you know, demonstrably, like I buyers are not underpaying for houses and really it comes down to being able to compare what are all of the, like the total cost of a move between these two options? Because even as agents, right? We often think like I have the sale price, I have the commission and I have the closing costs and that's sort of the cost of the transaction, but. A traditional sale often has all of these other costs that go into it, the cost to get the home ready. Right. If you're doing new paint, carpet, landscaping, professional cleaning, anything like that, like for decades, sellers have spent on average between one and 2% of the home's value to get that home ready to sell. Then you've got any negotiation, loss, any concessions that are given. So typically, you know, obviously with current market conditions aside. You know, the cost to sell a home can be anywhere from seven to 12% selling traditionally. So open door, even at a six to 8% service fee, it's still not a, you know, a significantly more expensive transaction for, for many sellers, right? Especially when you're then trading off the value of being able to control the time, have certainty in the cash purchase that there's not going to be a fall through the ability to eliminate contingencies. And there is a price on convenience, right? We do this every day. Right? How many people are Amazon prime members? So I would give stuff, we'll pay a hundred dollars a year to get stuff shipped for free in two days. Right. We ride Uber's and Lyft's all, you know, all of our spending is built around paying a premium for. For a lot of convenience and that value does exist for, for many home sellers. You know, I look at myself today, right? I've been working home from home since March of last year. I have three children in the house with multiple dogs. Like the idea of getting ready and prepping for showings for even one week is, is daunting. And, and so there, there certainly a price I would pay to not have to not have to do that. For sure. And, and, you know, that's, that's definitely a factor into it and, and is part of it. But it also, from, from my perspective you know, and, and, and I hope most people listening to this show know I'm a big supporter and always have been of the brokerage industry, you know, we're. And Travis, we're the company that doesn't take funding from outside sources and has no debt and doesn't owe anybody anything other than just doing a good job for our, our customers, our brokerage customers. And so obviously I'm a big fan of the industry, but I also look at what the data is telling me and what a forecast are saying. And it, and it sure seems like. The offers that open door is presenting have gotten better and better. I mean, part of that you're telling me is we were at 12% and now you're at 5% in terms of our, our, our number reduction. Right. Which is right within a realtor commission anyways. But part of it too is the actual offer itself. And it seems like the offer. As you've gotten better data in every market that you work in. It seems like the offer has gotten significantly more competitive from some research that I've done is, is, is that, you know, from your end, you guys are seeing the same thing. Yes. And that's our mission, right? So we know our primary mantra is to start in with the customer and our job and the job to be done for us is to make sure that we're providing as much value as we can to our customers. And so what that means is getting you the most amount of, you know, the best dollar possible with the smoothest experience possible. And, and, you know, in my own case, it seems like the offers that I've gotten just to test things out, have been even as competitive as what multi offers competing against each other on my house would be. And so, you know, the next question that I think that always begs that, that people ask about in these Facebook groups tends to be, of course, You know, w well, how are, how are they making that work when they're, they're paying top tier pricing for it? And it seems like the idea is, Hey, your data is telling you that you can, because the, the appreciation will continue. Is that, is that accurate? One is, it's not just data. I think that's another myth to expel, right? Is it's not just some algorithm, right? That's spitting out prices and we're just, you know, blindly trusting the, you know, Siri with all of this. We have a world-class team of you know, economists and analysts and data scientists, pricing experts, former appraisers and real estate agents all working on this pricing engine to make sure that we are offering a strong. And offer as we can to a seller while understanding, you know, where that home's price point is going to be, you know, in the near future, when we are putting that home on the market. Yeah, I think that makes a lot of sense. And so, you know, you may, in cases overpay for what it is today with the expectation that things will continue to go up. But obviously from the opposite side of the coin is, is, you know, is that. Is that sustainable and it seems like your data folks are, have said, yeah, it's okay. We're we're not getting too much risk in a particular market or, or we think things based upon jobs and based on the economy and everything is going to continue to go up. So I guess that goes back to this thing that I've been trying to dispel in our, our broker customers mind, which is more or less like don't. Don't fight open door, don't fight BI buyer, customers lean into them. And so that kind of brings me up to the next thing, which is I happen to know what is a open secret about open door and particularly the Opendoor brokerage, which, which you're heavily involved with. And we'll talk about it in a few minutes, which is a brokerage or an agent can send you these deals and you guys will pay out, pay a commission to them for it, right. Correct. Yep. So today, any listing agent who is, you know, bringing an Opendoor offer to a seller, and that seller ends up transacting with open door, we're offering a 1% commission to that agent on top of whatever commission they may be earning from that seller. So, you know, and they might get 3% if they did all the work, but obviously when they do all of the work, they have all the costs that are associated with it too. And, you know, in a market like today where things are selling very quickly and you're doing almost no marketing, that may be one thing, but yeah. If things slow down just a little bit, think about all the marketing costs that our broker puts into it, or the Facebook advertising costs, right? Boobs, brokers. You know, we have clients that spend $300 when they get a new listing or $400 when they get a new listing on doing Facebook ads or, or printing out materials to help market the property, or we're doing other methods that they use to, to help market their listings. And so for essentially no work other than passing a name and an address you're going to get a third, third of that commission, right? Yeah. And it's a lot of it's about just helping understand what does that seller's like full situation, right. And what is going to be the best outcome and path for them because statistically, many of the sellers also needing to purchase a home selling is easy today, but buying is the hard game and you can't afford to be contingent. Right. So if you have a seller that's, that's looking to sell their home, they're also looking to purchase. You can either, you know, get them on the market. You can get their house sold quickly and everything's great. But now you are under the gun to try and get them into another home so that they don't have this double move scenario. They're not having to, you know, just settle for any house. They can get their hands on. Right. So that they're not, they're not stuck. Whereas something like the, the open door cash offer and give them certainty that they're there. Current home is going to sell a control over that timeline, the ability to move those closing dates as they've been focused on lining up and securing their next house and being able to, to move those closing dates together, to have a really seamless move. And I think the big shift today really right, is in. But what is like the true role of the agent today and looking into the future, because it's not like we're going to go backwards at this point, right? Like the momentum is too strong. There's too many new too many new models, too many new opportunities. And so as I think about myself, if I went back out into the wild as an agent today, It's really to be like truly consultative and understand what are all of the opportunities available, all of the programs and the companies that are operating in my market. And it gives you this great opportunity to put this really custom PA like moving package together for your clients. And so it's not that if I lose the opportunity to take a listing to market, then I have lost. Right. It's really not just looking for. Listing at bats, I'm looking for how many people can I help move? And the more that I can help me kind of put this custom plumbing together, the more happy customers I'm going to have, and the more people are going to come back to me looking for that consultation, because while it is incredibly easy to sell to a company like open door, Many sellers are hesitant, right? This is their oftentimes their first time selling. It's their biggest financial transaction, and they still want the guidance and support of somebody who does this every day and can help, you know, make sure that they are putting their best foot forward. Well, let's talk about that piece for just a second, because obviously, you know, you're, you're helping them do that and you're working with them on the Burbridge side. But, but of course, you know, your title is, is being, being head of growth and strategy for the brokerage deficient, right? Which. You know, from, from that perspective, like you're, you're helping present offers and, and you're door is out there to help the agent. And we'll talk about a couple of other ways that are coming out as well in a few minutes, but you know, from that perspective, like you run the brokerage division or you're the head of head of growth and strategy for the burgers division. So maybe talk about that division for just a second and, and what makes it different from open door? The brokerage side. Sure. The brokers we have You know, a licensed in every state we operate in. So Opendoor, brokerage exists in, in many States and the sort of primary purpose is it's the brokerage facilitating open doors buying and selling. Right. So for example, if you're a buyer's agent you're submitting an offer or working on a, on a. Transaction with us purchasing one of our houses. We have licensed agents who are, who are working all of those transactions with agents. We have in the last year shifted and started to expand sort of the brokerage operations in two ways. One is, is offering a listing service to our customers. So we launched our listing lists with Opendoor product kind of at the tail end of 2019 because. We had a you know, we listened to our customers and, and there was enough appetite there of customers who wanted another option. They wanted a way to be able to, to list on the market and utilize Opendoor for that service. And so we offer all customers. You can either take the open door cash offer, you can sell to open door, or you can list with open door and we can, we can provide that vehicle. But then we also have our buy with Opendoor program, which is our largest referral network program that we have across the country. And it operates in, in many of our markets in which. Buyers are using the Opendoor app, defined into our properties. We have licensed agents that are called Opendoor tour assistance. These people do nothing but facilitate these on demand showings for our, for our customers at the point at which that customer is ready to transact and they found a house they want to make an offer on. We will pair them with a buyer's agent to represent them from offer to close. And much of that is happening through referral partnerships in our markets. So the brokerage is, is a great function there to be able to facilitate those, those referrals in that program. And then very recently we started for the first time to open up the brokerage to allow independent agents, to actually hang their license with Opendoor, brokerage, and continue running their business while being able to tap into our pipeline of business. So let's talk about the referral site for just a second. Because I know some of the brokers that I've spoken with that can be one of their most interesting aspects of potentially working with you guys in a, in a larger arrangement. So you're saying you're getting leads that come in to open door and you're able to refer some of these deals out to other traditional brokerages. Is that correct? Yeah. So we'll do that for the buy side and the sell side. So our list with Opendoor product also has partner agents in each of those markets where we are pairing them with, with sellers who are interested in learning more about the listing option, kind of understanding the trade-offs between, you know, the cash offer and the go to market scenario. And so we're both referring out listings and buyers. And sometimes you get listings too, that are outside of your buy box. And from, you know, from my conversations with you, I know you guys refer those out to where it's not just, you know, somebody that's open door that went down the opener path, but it's also, Hey, this home is a $2 million well, that doesn't make sense for open door to buy in, in your bio box. So you refer those deals out to correct. Correct. Yeah. So, you know, sellers who come to us who are outside of our buy box, be at the house, you know, the price point or it's outside of a zip code that we service the house might be too old, the lot too big, you know, there's, there's lots of certain criteria where we just can't extend the cash offer, but we want to be able to help that seller. Right. They came to us looking for an option as a resource for their move. And so if we can connect them to a, you know, an excellent agent that we know of in that area, we're absolutely going to do so. Well, that's, you know, that alone, right there seems like if nothing else, a great opportunity to connect up with you is to say, Hey, look, I, you know, our, our brokerage has the wherewithal to handle just about anything you throw at it. You know, send us all your, all your deals. And I'm sure plenty of brokerages out there would, would, would love to get that. So, you know, can a kind of brokerage contact you and say, Hey, look, I want to do this. Or, or what's the process to get, to get set up with you guys. Yeah, we currently don't accept inbound applications per se. All of our, our primary referral partners come to us through referrals, you know, within market or, you know, we are sort of proactively going after them. But yeah, I'm always happy to chat with, with anyone. Pretty easy to findTyler@opendoor.com. You can, you can always email me. But yeah, we, we, you know, we're constantly expanding. We are. Publicly our goal this year was expand from 21 to 42 markets. We are currently now in over 30 markets. And so with all this you know, new growth and, and new market areas, we're going to be looking for, you know, additional partners in all of those. Well, that's great. I mean, and I know Tyler, I've known Tyler for essentially most of the time he's been an open door. He's a very nice guy. And he'll, he'll tell, tell you like it is. the brokerage division. I'm talking about when they first got started, they actually had a license, I believe in all 50 States at one point. And it. People found out about it and they got very nervous. So, you know, what, what could you say to a broker that's sitting there and saying, well, wait a minute, why would I work with open door when they're a brokerage? Like R R is the long-term vision to compete with the, with the brokerage or, or is it, you know, just to continue to work in these other ways with them? I think it's possible to hold both. Right? Like you know, we are a company, right? We are now a public traded company. And so you know, we are out there to, to grow market share. Right. And so, you know, part of that is going to come through being able to have this, this great brokerage arm and, and agents out there who are able to. Transact and able to, you know, further help our customers, especially through our, through our pipeline. However, like all of these other programs are going to continue to exist. So in these markets, We're still, we still have all of our referral partners. We're able to provide, you know, cash offers to any agent in the market for any seller that fits our buy box and the big difference. So I think between you know, just like we are not a traditional real estate company, we are not a traditional real estate brokerage. And so this is not one where we're out just to. You know, try and get as many licenses under the banner as we can. Now we're actually highly selective and only have certain you know, number of opportunities available in any market in any given time. And the being an agent with Opendoor brokerage is much more akin to. Like the structure of the team, right? It was, but with having so like the independence of being an independent 10 99 agent so we provide somewhat of like a business in a box scenario, right. We can provide a full pipeline of leads with our seller and buyer customers. We'll also provide things like, you know, a CRM, a transaction coordinator, all the tools and support. In the mentorship that, that an agent would need to be successful. And the trade-off for them is they're not having to spend their time, money and energy prospecting independently. Right. They get a lot of the benefits and the support of the team. And so it's been there's been a great appetite for it. Right. We have agents all over the country who have, who have. Been interested in it, you know, in some certainly I'm sure in the Facebook forums or are scared off by it, but, you know, it's a, it's a great fit for, for some agents and not for others. And so we'll continue to work on our, our niche and, and expand as we can. But, you know, I definitely think they're there, you know, just like any two brokerages, right. There are opportunities to compete and opportunities to collaborate. Yeah, for sure. I mean, that's the thing that I always think about too is what is IDX and what isn't MLS it's, it's every broker working with other brokers that are con competitive with them every other minute of the day. Right. So you know, definitely, definitely something to think about. So let's change the topic for just a second and, and something that I know is newer. At open door, which is these cash backed offers. And let me tell you, I had to say that about 10 times ahead of time to make sure I was going to say it right. Ash backed offers. You know, I read recently that something like 30% of all offers that were being made were cash offers, true cash offers. And, and it seems like that's going up these days and I know I've seen a lot of. Of deals and a lot of folks in these face, same Facebook groups commenting. About how they withdrew their appraisal contingency. And then of course the deal came in much lower and they were not able to get financing. And then saying, well, what do you do? And of course, they're then in these Facebook groups, the trolls come out and, and 90 agents say, well, why would you ever reduce or get rid of your appraisal contingency to which of course it's. You know, well, that was the only way the offer was going to get accepted or my clients could ever buy a house. And there's plenty of, there's a whole two hour podcast around just that concept. But you know, obviously Opendoor cash back offers are somewhat of a solution there. So can you tell, tell us a little bit? Sure. So you know, buyers today who are using the open-door app can, can leverage An offer backed by open doors cash. So we help essentially guarantee that buyer's offer we will step in and actually purchase that home on their behalf and then give them the opportunity to then transition into that house once they've lined up their financing. So there's. Plenty of opportunities where this all right, I'll give you one specific example. I saw this a couple of weeks ago, we had a buyer who was able to be the winning offer on the house while being $25,000 lower than the highest offer. And the reason is because it was backed by open doors cash. And we were able to close that home in 10 days. And the seller valued that the ability to close quickly over just getting the, you know, the highest dollar. And so, because we added that flexibility, we were able to go ahead and purchase that home. Give our buyer, the time to then, you know, line up their, their financing, go through their, you know, sort of typical timeline and then be able to just repurchase that home from open door, once their financing lined up, it's also a huge benefit on the contingency aspect today. Right? You can't afford to be contingent. So if we can come in and help you actually. Reverse engineer, the contingency process, spend your time and energy focused on finding the right home for the next chapter of your life. Purchase that home for you. Let you go ahead and move into it. And only once you're comfortable in your new home, do we then worry about selling your other, your current home? Right. And whether that's selling that home directly to open door or listing that home with open door and listing it on the market, where now you have the benefit of. Being able to list on the market while not having to be there. It's now a vacant listing and you're already comfortable in your new home. And so then once that current home sells, then they, then they go through it that repurchase of the new home from, from open door. You know, and obviously that makes all every offer better. That's, that's there and, and allows you to compete and not worry about those things so much. But have you seen many circumstances where there's been a problem with the offer and, and obviously with the with the appraisal or with getting the financing or anything that like that lined up with it yet? Or is there some kind of. System in place for these cash back offers that more or less tells the, the buyer, Hey, look, this is the most you can go on this property. Yeah. I mean, there, there are certain like, you know, guardrails in place at, at various points, but in general, you know, if that, if, if a situation like that happens, the buyer still has an opportunity to sort of walk away. Right. Because we fortunately have the ability to then turn around and resell that home. Right. So, so there's actually some mitigated risks there. And if the situation and some of it is not just like. No, the appraisal comes in super low and the buyer just doesn't want to move on it. It doesn't have the capability, but maybe their job transfer fell through, you know, maybe something else, you know, happens situationally. And so just like with our. Our cash offer product for sellers, and we provide the ability to like, be flexible with that. And we don't look for opportunities to penalize our customers. So if that situation happens and we have purchased that home, then we can, we can turn around and resell that home and just put it back into inventory. What's the downside to using, like using something. Is there there's some added costs or is it just, you know, you guys are hoping to get the mortgage or, or any of the other business that are out of it, you know? W what is there, is there a downside to the buyer I'm using a cash back offer from you guys? No, I don't think there's like a blatant downside. I mean, I think, you know, depending on how you treat that, that appraisal risk and sort of where the, you know, the buyer situates themselves, you know, could, I guess, you know, create a situation where they have to make the sort of hard trade off decisions. But this is not something there's no like additional cost to it. If you're contingent, you have a home to sell, you know, what we're looking for is to. To be able to work with you on selling that, that current home. And then of course, the ability to, for, you know, additional opportunities for adjacent service attach. Gotcha. Yeah. And, you know, obviously most big brokers know that's where the money is made anyways. And not gouging people just charging regular rates. You make more money on mortgage and title than you do generally running a brokerage. So, so that makes, it makes a lot of sense. You know, obviously cashback offers you know, regular traditional offers, Opendoor brokerage. It seems like open door started out really as like just the offer company and, and created the concept of an eye buyer that made a real offer, as opposed to, you know, if you go back 20 years. I remember when I started selling real estate, I always heard about UG buys, ugly houses, and those offers were like, You know, 50 cents on the dollar and 30 cents on the dollar. And they really trying to, we're trying to get ugly houses, not necessarily the regular house down the street. That that's perfectly fine, but it seems, it seems like open-door over the past five years is more and is continuing to morph from being a traditional, just like offer company. Hey, here's here's, here's an offer to make on a property, like a broker of homes. But it seems like you're morphing into doing a lot more, like, is that, is that the direction that you guys plan to go. Yeah, our mission is to empower everyone with the freedom to move. And there are so many opportunities, you know, within the scope of a real estate transaction, there's so much friction and just, you know, places within the transaction that need to be optimized. And so the more that we can help create a seamless buying and selling experience You know, the better that is, that is for customers. So today, yes, we are. We are very much holistic in terms of, in terms of the move. So we can, we have multiple ways to help you sell. We have ways to help you buy. We can help, you know, with, with everything in between. And so we. It's very exciting. I think just to look at everything, I've the growth that I've seen over the five years that I've been with Opendoor and looking forward to the opportunity we have over the next five years. And if we, you know, do another one of these in 2023 or 2025 it'd be interesting to kind of revisit this conversation and see how much has changed by that point. They will have to do that. I actually have asked a lot of my guests to come back and kind of reassess after. You know, the combination of 20, 20 and 2021 to see where things stand, you know, maybe towards the end of 20, 21 or, or the beginning of 2022, even just with how odd the market is today and, and how some people have been forecasting for this glut of foreclosures and how all the data shows that's just never going to happen. And really the bigger fear is that prices get so high that, you know, the average person can't afford it anymore. Not that everybody's getting foreclosed on. So, you know, I'd love to have you back number one. But I think, you know, the thing that I always go back to when I think about high buyers and open door that I've said frequently to some of our customers is in the history of the planet in every economic system that's ever existed. If there's more liquidity, that's brought to a market. So, you know, look at, look at stocks. For example, anytime it's easier to trade, stock the value and, and the, the ability to trade those things go up and there's more money to be made in the trading of those things. Right. I mean, look at. Even the more recent example of the stock market, where, you know, to sell or buy stocks, you had to have somebody literally on the floor 20 or 30 years ago that raised their hand and said, I'm buying for one of my customers or I'm selling for one of my customers and, and how much easier and less expensive that it's gotten to transact the real estate because, or transact the stocks now, because of, of doing it, you know, completely online. And it seems like Opendoor is bringing that liquidity to, to, to the market. That's there. And then the real question that it gets to is. You know, do we have more transactions? And it seems like the answer is yes, that we go from where an average year is about 5 million transactions a year. And in the residential real estate industry to, you know, maybe six, seven, 8 million transactions in an average year. And then, you know, the, the, the 2% reduction or whatever it happens to be that a brokerage loses on. On the seller side of the commission sometimes on the deals and it's certainly never going to be every deal, but on some of the deals gets made up in, in doing more volume that's there, right? Yeah. I mean, I look at, it is essentially with two main factors, right? Like one, the cost of the transaction needs to continue to come down. Right. Like. Today you typically need like 9% of positive equity, right? To be able to just go through a transaction and not lose money. So as we see the cost of the transaction, come down coupled with the ease of equity transfer, right? The easier it is to move equity from one house to another, and the less it costs to do that each time, the more likely people are to move more frequently. I meant to go back and look this up. I, I. Read this at some point in the last year, and don't quote me a hundred percent on the stat, but we can always do the math on this. If each person, right. If each homeowner in America moves one additional time in their lifetime, it increases the overall transaction volume by some significant percent somewhere in like the 30 to 40% range. So yes, I, I. I'm a strong believer that as more liquidity is coming to this market, we're going to see more people moving. There's gonna be more opportunities for, for everyone in that field and today, right? Like less than 1% of transactions in the U S happen online. And so for all of the sort of Yeah, sort of pitchforks and riots that may be happening in the streets worried about IP buyers, you know, taking business away from agents and going out to eliminate agents. We're not even 2% of the way there. Right? It's the, the likelihood is actually a very small that that real estate agents would be irrelevant at any point. Right? I think the, just the value opportunities in sort of the day-to-day role and function of the agent are changing as they, as they should in an industry. For sure. And, and you know, that, that brings up the next side of this, which is something that I've been passionately thinking about for the past two years. And, and my, my wife, who's also in this industry thinks about regularly and has this great, great overall idea. And it's more about implementation than anything else, which is. If you can sell your house to open door, what becomes the biggest hindrance to moving more often? So if you, you know, you're talking Tyler about, you're talking about one more time and, and, and I see this as being three, five more times that you might move or upgrade your house over your lifetime. You know, in, in 40 years that you're a homeowner or, or whatever. And I see the biggest hindrance, not being any more of the financial aspect or the selling aspect or all the stuff that goes into it and having to have your kids make their beds every day to me, it comes back to the next problem to solve. And that's what I think about frequently, which is how do we make moving literally the concept of moving, you know, getting your stuff from point a to point B, how do we make that easier? Right. And cause that's really, the problem is think, you know, everybody, dreads you know, packing up all their stuff in boxes and then unpacking and everywhere else. And how can we make that easier for somebody? I think that's the next frontier. If somebody can really make that easy for folks, you know, I do think we get to three or five more moves for the average consumer. Because you guys have made it so easy to, to sell their house, then it comes down to just finding the next one. That's the right one for them. And then clicking a button and paying a fee and having all your stuff go from point a to point B and you know, having to worry about it right. Yeah. I, I, it sounds like you're looking for like the magic Mary Poppins bag, right? Like everything in your house can just go into one thing and then it just pops out when you get to the next place. Yeah. I mean, that would be lovely. You know, that's not realistic, but but, but, you know, there's, she's, she's got a pretty good, I'd done good idea of how to get stuff from point a to point B and, and keep it organized for folks without them having to pack everything up. You know, maybe we'll have to, to work on that at some point. You know, if we, if we ever get that moving, it seems like a partnership with Opendoor on that would be, would be a perfect idea. Perfect. But all right, well, so Tyler, thanks so much. You know, I always ask all of my guests the same last question, because I always love, you know, having this baseline of what everybody says. And so our last question for today is if you could change one thing. Any one thing about organized residential real estate, what would that one thing be? Oh, I really want to give you two. I'm gonna give you one for, for the agent, like the brokerage side. I think. I look at agent quality assurance, right? So barrier for entry is, should be higher, right? It should be much harder to become a sort of a freewheeling real estate agent being able to be entrusted with. Life's biggest transaction for most people. And so whether that's through, you know, revamping sort of the education and the requirements and sort of the performance that, that goes around that and then I'll give you my, my controversial consumer take, which is decreasing the, the transaction through decoupling of commissions. Well, you know that the first one I will tell you we've had. Pretty much every major person that's been on the show that I've asked this question to every CEO of an organization, the CEO of Sotheby's, the CEO of Fox Roach realtors you know, the CEO of exit Realty. All of these folks have said the exact same, you know, of your first item, which is harder to make it To make it be, you know, to get a real estate license. And I've been a long an advocate for the concept of an apprenticeship program that yeah, just required much like you do for appraisals to get started out there. I think you'd have a, a hard, much harder time getting all of those same people to agree with with your commissions portion of it. Something tells me that there would be a lot more pushback on your second one. So. Anyhow, there's a, there's a podcast opportunity right there. May, maybe we do actually, you know, I've talked about this on the podcast before, and we've kind of been waiting for the pandemic to die down. And now that, you know, lots of people have gotten vaccinated and the numbers are all coming down. We may start to get this plan, which is later on this year, I think we're going to put together a summit. I don't know whether it'll be, you know, just. Online or, or actually in person somewhere, I feel like everybody wants to get in-person somewhere. And we may coincide it with at NAR or, or in men or something like that, where we talk about this and get all of these folks talking about the concept of, of what are we, what do we do to, to get agents better? And then who knows, maybe we throw your, your second one out there and, and and the ether and see what happens when the conversation gets started. So we'll have we met at, we met each other at a, at a, a bar camp. And I think that that could be a great, great format for this. I, I liked the idea let's bring back the bar camp. Those things were great. And I think everybody just got busy and they kind of died out and maybe we should bring back the once a year bar camp at least, and have the sorts of things brought up there. I'd love to do that. Excellent. Well, thank you for having me. It was, this was, this was really fun. That's a lot for joining us again, everybody you were listening to Tyler Hicks and he's the head of growth and strategy for open doors, brokerage division. Open-door brokerage. He's been there for over five years and hopefully everybody learns something today by listening in and, and again, you can reach out toTyler@tyleratopendoor.com. Thanks so much, Tyler. Thanks.

CEO | Director of Strategy
With more than 17 years experience in the real estate industry, including being a Realtor and Broker / Owner, Stegemann brings a wealth of knowledge to this job as CEO of TRIBUS. He focuses his time on helping brokers enhance and expand their business and working with the TRIBUS labs team to consider what's next in real estate.
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