The online real estate market to which OpenDoor belongs is currently growing rapidly, having attracted US$5 billion in investment in 2017, up from US$33 million in 2010. The market continues to attract a number of newcomers every year. However, there is still the question of how the market will adapt to new tech developments and whether it can sustain as many competitors.
At least seven competitors (Redfin Now, Zillow Instant Offers, Knock, ZHome, Amne, OfferPad and Faira) have entered the market since 2015, usually doing so in one city or region and later expanding to other areas. Their products vary slightlyas to specific offerings, but they all center around making the house selling and buying processes more seamless and reducing traditional financial burdens.
OVERVIEW OF THE ONLINE REAL ESTATE MARKET: DIGITAL DISRUPTION OF REAL ESTATE
According to Forbes, real estate technology has exploded in the last decade. In 2017, venture investors dedicated US$5 billion to the industry, over 150 times the US$33 million investment of 2010.
As explained in the Forbes article, the industry is currently in its second stage. The first was the appearance of online marketplaces like Zillow and Trulia, which rose as the big winners after the 2008 crash.
The current stage is dominated by two waves: the tech enabled services and space arbitrage. Space arbitrage, which includes services like Airbnb, creates customer value by offering different uses to real estate, such as short stays. Tech enabled services are offered in online brokerage sites, like Redfin or OpenDoor, which aim to provide similar services to traditional real estate brokers, but using technology to streamline and speed up the process.
Reasons behind the growth of these services lie in the success of tech-powered business, such as Uber. As real estate companies realize the potential of tech, they understand the importance of staying relevant in today's market in order to remain competitive.
The market is currently maturing, developing quickly and welcoming new entrants, but it remains to be seen just how many competitors it can sustain — and how these competitors will be able to adapt to the third stage, which will be shaped by the Internet of Things, Big Data and managed services platforms.
OPENDOOR'S COMPETITOR LANDSCAPE: WHO IS ENTERING THE MARKET & WHAT ARE THEY OFFERING
In the last three years, OpenDoor has seen a number of competitors come into the market. Companies like Redfin Now, Zillow Instant Offers, Knock, ZHome, Amne, OfferPad and Faira launched between 2015 and 2017, suggesting that the industry is growing and attracting a number of investors and entrepreneurs.
Some of these services, like Redfin Now and Zillow Instant Offers, are new products offered by established digital real estate companies which are increasing the scope of their business — which also suggests that the market is expanding.
Most of these companies follow a similar strategy: first open up in one city or area, then slowly take on other geographies — though companies backed by established businesses have more geographical presence than newcomers.
Whereas specific products vary depending on the company (e.g. some offer guaranteed sales prices, such as Amne, whereas others promise users that they'll sell their homes in a week, like Zillow Instant Offers), most promise to take uncertainty and hassle out of the home selling/buying process while reducing financial burdens such as commissions.