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Also, their position in the market gives them a very good insight into the likelihood of a crash. As demand for their services will increase whenever sellers ar

by phire 10y ago

Also, their position in the market gives them a very good insight into the likelihood of a crash. As demand for their services will increase whenever sellers are desperate to sell their houses. If they track those indicators, they will be able to dynamically decrease their purchase price based on the likelihood of a crash and (in the worst case) limit their exposure to only the housing stock they had at the start. In the best case, desperate sellers might accept the much lower price and Opendoor will make a profit off the crash.

dandermotj 10y ago
There's no such thing as reliably predicting a crash - that's why it's called a crash. There's bulls and bears but no one side is 'right' in aggregate.
- jdross 10y ago
  real estate doesn't really crash, like the stock market. It kind of... slides as liquidity dried up for higher price points. All of this takes many months, with many early leading indicators if you know where to look and have the right data
  - LordHumungous 10y ago
    Holy wishful thinking batman. I don't know why you are fucking around with start ups, you should be on wall street
    - jdross 10y ago
      I'm describing data from '07-'10 across markets, not how I believe things might play out. Don't troll, show data otherwise.
LordHumungous 10y ago
> their position in the market gives them a very good insight into the likelihood of a crash LOL what? What insight into the market will opendoor have that is not publicly available? Sorry but this is magical thinking
- phire 10y ago
  There are two reasons why someone might sell their house to Opendoor... A) They are willing to sacrifice some of the money for a much easier sales experience. B) They really, really need to finish the sale now. The size of the first group will follow a constant trend, but the second group will fluctuate based on various factors. So Opendoor can infer the desperation of the sellers in the market based on their numbers of sales. Most other factors are publically available, but the desperation of sellers isn't publicly tracked. Regular real-estate agents will be exposed to the same desperation, but it's in their best interest to hide any desperation, to maximise the sale price. Lenders will also know when some homeowners are falling behind on payments, but again they don't publish those numbers until a foreclosure actually happens. It's not like Opendoor is going to predict the crash before it happens, but as long as they can spot the crash early, before it really picks up steam, they can minimise their exposure.

by phire 10y ago

dandermotj 10y ago

There's no such thing as reliably predicting a crash - that's why it's called a crash. There's bulls and bears but no one side is 'right' in aggregate.

jdross 10y ago
real estate doesn't really crash, like the stock market. It kind of... slides as liquidity dried up for higher price points. All of this takes many months, with many early leading indicators if you know where to look and have the right data
- LordHumungous 10y ago
  Holy wishful thinking batman. I don't know why you are fucking around with start ups, you should be on wall street
  - jdross 10y ago
    I'm describing data from '07-'10 across markets, not how I believe things might play out. Don't troll, show data otherwise.

LordHumungous 10y ago

> their position in the market gives them a very good insight into the likelihood of a crash LOL what? What insight into the market will opendoor have that is not publicly available? Sorry but this is magical thinking

phire 10y ago
There are two reasons why someone might sell their house to Opendoor... A) They are willing to sacrifice some of the money for a much easier sales experience. B) They really, really need to finish the sale now. The size of the first group will follow a constant trend, but the second group will fluctuate based on various factors. So Opendoor can infer the desperation of the sellers in the market based on their numbers of sales. Most other factors are publically available, but the desperation of sellers isn't publicly tracked. Regular real-estate agents will be exposed to the same desperation, but it's in their best interest to hide any desperation, to maximise the sale price. Lenders will also know when some homeowners are falling behind on payments, but again they don't publish those numbers until a foreclosure actually happens. It's not like Opendoor is going to predict the crash before it happens, but as long as they can spot the crash early, before it really picks up steam, they can minimise their exposure.