"iBuying was never out of vogue, Rabois said, addressing comments about Redfin's and Zillow's exits from the space. It was out of vogue because Redfin and Zillow didn't know how to do it. We were always successful. We minted free cash flow every year I was involved in the company. However, it's very complicated and very difficult to do iBuying well, but the value proposition of certainty, transactional speed is incredibly compelling to Americans."
"Rabois feels like the main hurdle is increasing awareness of the value working with an iBuyer provides. He also addressed claims that Opendoor has struggled due to the rapid cooling of the housing market in 2022, leaving it with over priced inventory. The Federal Reserve raised interest rates six times with unprecedented speed and that did create a cohort like one month, maybe one quarter of mispriced homes, he said. However, every cohort thereafter was actually priced correctly."
"The bloated G&A was a real problem because as people stopped transacting as interest rates went through the roof, the company's burn rate made no sense. To get back on track, Rabois feels a necessary step is cutting the firm's headcount. There [are] 1,400 employees at Opendoor. I don't know what most of them do. We don't need more than 200 of them, he said."
iBuying offers consumers certainty and transaction speed but is complex to execute well. Opendoor generated free cash flow historically yet faced mispriced inventory during rapid 2022 interest-rate increases. The primary operational problem was bloated general and administrative expenses and excessive headcount that made the company unsustainable when transaction volumes fell. Restoring resilience requires cutting costs and reducing staff significantly. Rapid advances in AI will enable automation of many roles. Remote work damaged company culture, and returning to in-person collaboration is expected to reinstate innovation and teamwork.
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