After a review of Atlanta area property records, it would appear Kim Klir is the most successful real estate agent in world history. Between April 2020 and the end of March this year, Opendoor, an iBuyer but also a residential brokerage, sold 1,613 homes listed on First Multiple Listings Service, the greater Atlanta region’s National Association of Realtors’ endorsed spot for home listings.
Of those sales, Klir was the listing agent for 1,213 of the 1,613 deals, according to FMLS data. Klir sold more than three homes per day, every day of the year.
But Klir was mostly invisible to buyers’ agents. In fact, agents didn’t know who at Opendoor they would get routed toward, a process they compared to dealing with an unevenly run DMV.
Opendoor is a “pain in the neck,” said Cheryl Butler, an agent at Coldwell Banker Realty in Atlanta. For Sarah Shurden, also of Coldwell Banker, “It was a pain in the butt.”
Formed in San Francisco in 2014, Opendoor stands at the vanguard of businesses that cast their lot with the instant purchase, and then resale of homes. Led by CEO Eric Wu, Opendoor is arguably normalizing iBuyers in real estate.
HousingWire looked at Opendoor’s metropolitan Atlanta operations, because the company has bought homes in the market since 2017. Plus, Atlanta is an Opendoor engineering and sales hub, and the region is replete with the modest abodes that dot the brokerage’s housing stock.
If there were ever a place to understand how Opendoor does business – and how they affect agents, it’s the Peachtree City.
The Opendoor experience
Opendoor’s Atlanta splash was done with affordability in mind. A company executive mentioned to Inman News in 2018 that its engineers could afford houses if they worked in Atlanta, as opposed to notoriously pricey San Francisco.
By the end of 2020, the metropolitan Atlanta median home price stood at $250,000, according to Kiplinger’s Personal Finance, less than the $309,000 U.S. median home price.
Opendoor buys and resells homes at just below that median price. Those 1,613 listings added up to $387 million in sales volume, which comes out to $239,725 per house.
The way Opendoor works is that sellers reach out to the company, and Opendoor makes an offer based on its home valuation model. Should the seller accept, Opendoor collects 5% off the sold price.
This simplicity – in exchange for home sellers not shopping around for the best offer – is Opendoor’s stated consumer value. It’s a model that Zillow, Offerpad, Knock and a legion of other operations have followed.
But when Opendoor tries reselling homes, reality sets in.
While other iBuyers – for example, Offerpad – go into their purchased domiciles and make significant renovations, Opendoor routinely lists homes within three days.
“They put a little lipstick on the pig before putting it to market,” said Shirley House, an Atlanta agent at Homesouth Residential. “They will go in and paint, and maybe change the carpet.”
One home promptly listed after Opendoor purchase was a two-story on Capella Circle in Atlanta’s Southwest quadrant. Built in 2015, the 1,850-square-foot home is visually and architecturally similar to other houses on the block.
Opendoor bought the Capella Circle home in late January for $211,500, and then listed the home for $237,500, with Klir as listing agent.
The home sold 35 days after it was listed for $220,000 with Shurden of Coldwell Banker representing the buyer.
Shurden had a mixed experience with Opendoor.
One inconvenience was getting into the home. Other homes on-market in Atlanta are entered into when the listing agent greenlights a buyer’s agent appointment through the FMLS, and then provides a lockbox code.
But Opendoor insists that buyer’s agents must download the company’s app, and get the code that way.
“I’m standing outside the home, and I’m waiting four or five minutes to get a text message that corresponds with the right lockbox code to enter the apartment,” she said.
Shurden also felt stymied that she couldn’t reach Klir, and instead was routed to another company representative.
Shurden found that representative professional and helpful. But it was a new experience.
“Everything was done over email, with a 9-6 Monday through Friday operation,” Shurden said. “Normally in my profession, you can get the listing agent on the phone at 9 at night on a weekend.”
Butler of Coldwell Banker also mentioned it was confusing Klir was the listing agent, only to be routed to another representative.
Opendoor declined to discuss Klir, a registered agent in the state of Georgia and a former RE/MAX agent, stating it does not comment on specific employees. Messages left with Klir went unreturned.
Sources close to the company said that Opendoor has a collaborative approach to sales, which was echoed by other agents.
“Kim Klir’s name appears on their listings, but there is a team of agents that work the transaction,” said Bruce Ailion, a current RE/MAX agent in Atlanta.
Butler’s experience with Opendoor was representing a buyer on a home in Lawrenceville, which lies 10 miles northeast of Atlanta.
The home on Arbor Gate Drive, with a brick façade and built in 2006, was bought by Opendoor for $182,700 and resold to Butler’s client for $192,700.
Like other agents, Butler was upset that she got a 2.25 % sales commission, compared to the Atlanta area’s informal 3 % standard for buyer’s agents.
“I worked my butt off, and I got a reduced sales commission,” Butler said. “If I have a choice to show two similar properties, I’m not showing the Opendoor one.”
Opendoor declined to address each complaint for the record. It did provide a statement from Megan Meyor Toolson, Opendoor’s chief customer officer:
“Much like they are in other industries like retail, auto, and e-commerce, consumers are demanding digital, on-demand experiences in real estate. Reimagining real estate from the ground up to deliver simplicity, certainty and speed through a digital platform describes the extremely fulfilling work we get to do here at Opendoor. We believe this is creating more liquidity for consumers, empowering more people to transact, and unlocking greater efficiencies for agents to serve more clients.”
Opendoor’s economics
Opendoor’s $387 million in sales volume between April 2020 and March 2021 was good for 1.8 percent of the Atlanta region market, a figure deflated by the company’s pandemic-induced, four-month pause in home buying.
Opendoor is now in 30 different areas, and it has the biggest share of the growing iBuying market, noted Ygal Arounian, an analyst at Wedbush Securities.
“There is a still large untapped market and opportunity,” Arounian said.
Opendoor, which went public last year through a special purpose acquisition company, trades shares of stock on Nasdaq and the company enjoyed a market value of $10.56 billion as of May 6. That’s billions of dollars more than most residential brokerages – Compass, eXp, Realogy – that are also publicly traded. But it’s much less than iBuying competitor Zillow, which has a market value of about $28.1 billion.
Opendoor loses money. The company posted a $287 million net income loss in 2020. In 2019, the last year the company had a full, 12 months of operations, Opendoor lost $339 million.
The losses are reflected in individual home sales, where razor thin profit margins are overwhelmed by marketing, staffing and administrative costs. Opendoor declined to break out Atlanta financials, or comment on particular sales. But, to give one example, let’s look at that Cappella Drive home.
Opendoor’s 5% fee plus the $8,500 net from the purchase price to the resale price, generated $19,275 in revenue.
For expenses, Opendoor paid Shurden a $4,961 commission, from the 2.25% rate. But, according to Shurden, it did not pay a commission to Klir or another Opendoor representative.
How much did it cost Opendoor to clean and maintain the home? Arounian estimated that the average holding and interest rate costs total two percent of the home sale, or $4,230.
Revenue minus expenses at this point come to $10,084. But here’s where Opendoor runs into trouble.
“Once you factor in other costs, including the marketing to attract consumers to the Opendoor service, salaries for Opendoor employees, and other overhead, the company is losing money on each transaction,” said Mike Del Prete, an industry consultant and author.
Opendoor, for example, spent $75 million in 2019, and $33 million in 2020 on marketing alone.
In aiming to become profitable, Opendoor is turning to a tried-and-true idea in brokerage, which is making money through title and mortgage. Opendoor is also starting agent partnership programs.
What Opendoor is mostly not doing, at least in Atlanta, is selling homes in bulk to corporations like Lennar or Invitation Homes, both early investors in the company.
A review of 100 recent property deed records in Fulton County found four Opendoor-sold homes bought by institutional investors (three by Cerberus Capital Management, one by FirstKey Homes).
Bulk-buyers, said Arounian, “Is not part of Opendoor’s operating model.”
Door into the future
Opendoor pointed to several agent partnerships they are starting to make in Atlanta.
One such broker is Matt Fagioli, operating partner at Brokerage Atlanta. Fagioli said that he and his agents have begun to refer clients who might get cold feet about the home sales process to sell their home to Opendoor. In exchange, Opendoor provides a one percent commission to the agent.
Fagioli said that his team has done about a dozen such deals, and it plans to interact further with Opendoor in the coming year, including on the buyer side.
Opendoor’s partnership program sounds similar to an emerging niche market where, “We have a service presenting the consumer the best offer out of all the iBuying programs,” said Cleve Gaddis, a RE/MAX agent in Atlanta.
“Ibuying,” Gaddis added, “Could meld into the overall deal-making process.”
Such melding sounds like an impressive accomplishment for Opendoor. The company has played a major role in making cash buys a mainstream part of some housing markets, eons away from the “We buy ugly houses” pinned-on utility pole signs.
But it could also make Opendoor another face in the crowd, another company with home listings that touts technology but cannot channel tech into making money.
Gaddis said that he is willing to work with Opendoor. But he knows other agents who aren’t.
“You are dealing with a corporate entity who is more stand-offish in their dealings,” Gaddis said. “They try to take an emotionally charged process and make it black-and-white.”
Ken Covers, an agent at Engel & Volkers in Atlanta, echoed many colleagues in saying he’s “cautious” dealing with Opendoor.
“I don’t resent them,” Covers said. “But the challenge is finding a human point of contact.”
