Thread by @patio11

Isn't this just *obviously* the way the typical consumer's most important transaction should want to work? People are worried if they can make the math work. Me, less so, but that aside: few would say "Sign me up for the traditional sell/buy process!" with this as an option.

https://twitter.com/Opendoor/status/1456244888199065606

Ignoring the "new experience" thing which is product speak for "We stitched everything together in a web app", substantively:

1) You ask Opendoor for a quote.
2) They give you a hard quote and accept sale contingent on you winning target house.
3) You share pre-qual letter.

A "pre-qualification" letter is a document from a mortgage broker or originator that says "Contingent on you submitting a bunch of documentation, indicatively, we think we can underwrite you for a mortgage up to $X." Most common use is showing to seller to say "I could swing it."

4) Opendoor, in reliance on your ability to get a pre-qual letter, says "Find a house. We will purchase it *in cash for you*."
5) Opendoor syncs the sale of house #1 and purchase of house #2 to eliminate days where you own either 0 or 2 houses.
6) Opendoor sells you house @ cost.

7) You close on the new home (from Opendoor, not the original owner) using the mortgage you got from either the lender which did the pre-qual offer, another lender, or maybe even Opendoor itself.

(Like all sellers, they're almost ambivalent to the choice of lender.)

The "we will purchase it in cash" pushes you to the top of the line in negotiations with house sellers because it removes one key dimension of their buyer quality matrix, which is "execution quality" (the likelihood you will be able to close in a timely fashion w/ financing).

Many, many, many deals fall through due to e.g. buyer's remorse or buyer wasn't able to PM themselves through getting a mortgage or "Whoops, turned out you're not underwritable and nobody knew that until late in the day."

Sometimes sellers will take less $ for more certainty.

Opendoor is the *maximally* ideal buyer from an execution quality perspective.

"Hello I am a real estate professional. I buy houses all day. I am utterly uninterested in anything about this property and have no personal emotional attachment to it. I will pay with wired cash."

"Would you like to close tomorrow or would you prefer to take your chances? Day after tomorrow? I'll be here. A week from now? Maybe. But as soon as you say Yes I sign. Why? You don't even need to know why."

And Opendoor can even tolerate some presumably small amount of breakage on the second leg of that transaction because "Oh well we're holding a house that we bought at around market; good thing selling houses is literally all we do."

(It's presumably small because you're likely contracted to buy it unless something serious comes up and because you, a recent homeowner, would far prefer to live in a house than have to rent or put stuff in storage and live in a hotel while trying to find a house the old way.)

Disclaimer for scrupulosity purposes rather than because it matters: I own something like 200 shares of OpenDoor which I bought when they announced the SPAC deal, on the thesis that "automated marketmaking for houses" basically has to exist in the world someday.