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How Does Opendoor Make Money (Business and Revenue Model)

The Opendoor business model

How Does Opendoor Make Money?
Here’s what you should know:
  • What is Opendoor, and how does Opendoor work?
  • How does Opendoor make money?
  • Buying and Selling Homes (Sell to Opendoor)
  • Commissions from Real Estate Brokers (List with Opendoor)
  • Reselling Mortgage Loans (Opendoor Home Loans)
  • Title and Escrow Services
  • Opendoor subsidiaries, acquisitions, and exits
  • Opendoor profit and revenue
  • What is the Opendoor business and revenue model?
  • Opendoor funding, net worth, and market cap

How does Opendoor make money? Here is a full, in depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as Opendoor’s business model, their profit and revenue, and how Opendoor works.

What is Opendoor, and how does Opendoor work?

Opendoor is an online real estate marketplace where homeowners can buy, sell, or finance a home.

Founded in 2014 by Keith Rabois, Eric Wu, Ian Wong, and JD Ross, Opendoor began trading on the NASDAQ on December 21, 2020, under the ticker symbol “OPEN”.

Since that time, Opendoor has since bought and sold over 140,000 homes since being founded back in 2014.

So, how does Opendoor work? To use Opendoor, users can simply visit their website; or download their mobile app from the Apple App Store or Google Play store.

Once on their site, users can simply choose from the buy, sell, or finance tabs at the top of the page – and go from there.

Some of Opendoor’s competitors include Zillow, Redfin, Compass, Offerpad, Trulia, and other online real estate marketplaces

Opendoor App in Apple App Store | Opendoor Business Model | How Does Opendoor Make Money? | How Does Opendoor Work?
Source: Apple App Store | Opendoor

How does Opendoor make money?

According to Opendoor, Opendoor has bought and sold over 140,000 homes since its founding; including the 21,725 homes they sold in 2021 alone.

So how does Opendoor make money off of all those homes bought and sold on their marketplace?

Below is a breakdown of how much money Opendoor makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 4 ways of how Opendoor makes money in 2022

Opendoor has a revenue model that makes money in four (4) ways; by buying and selling homes, their title and escrow service, commissions from its real estate brokers, and reselling mortgage loans.

#1. Buying and Selling Homes (Sell to Opendoor)

Opendoor makes most of its money from buying homes directly from homeowners and then reselling them on the market.

How selling to Opendoor works is homeowners request an offer online through their website and receive an all-cash offer within 24 hours (without the need for prep work or a showing). If the offer is accepted,* Opendoor then does its due diligence on the property and allows homeowners to choose their preferred closing date.**

After the home is sold, Opendoor then hires third party contractors to make repairs (if any) to get the home in market-ready condition and then relists it for sale on the Opendoor marketplace.***

Some quick facts about selling with Opendoor is; * Opendoor had a seller conversion rate of over 35% in 2021. ** Opendoor charges sellers a 5% service fee at closing. *** Opendoor reported having a 9.1% gross margin from acquisition to resale in 2021.

How much does Opendoor charge?

  • 5% service fee at closing
How much does Opendoor charge? | Opendoor Business Model | How Does Opendoor Make Money? | How Does Opendoor Work?
Source: Opendoor

Note: Opendoor sold 21,725 homes in 2021.

#2. Commissions from Real Estate Brokers (List with Opendoor)

In addition to Opendoor making money when homeowners sell their homes to them, they also make money when homeowners sell their homes on the platform.

Whenever a home is sold on Opendoor that is not sold to Opendoor, there is a 5% commission fee that goes to the real estate broker when the sale closes. Of which, Opendoor takes their cut of that.

Opendoor Fees:

  • 5% commission fee at closing

Note: Opendoor collects 5% of every sale made on the platform regardless of whether the homeowner sells their home to Opendoor (5% service fee) or sell it on the marketplace (5% commission fee).

#3. Reselling Mortgage Loans (Opendoor Home Loans)

Opendoor also makes money through a service they offer called Opendoor Home Loans.

How does Opendoor make money from home loans? Once Opendoor’s mortgage business originates a loan, Opendoor then turns around and makes money by selling the loans in the secondary mortgage market.

Opendoor Home Loans | Opendoor Business Model | How Does Opendoor Make Money? | How Does Opendoor Work?
Source: Opendoor

#4. Title and Escrow Services

Another service Opendoor offers and makes money off of is through the title and escrow services they provide.

As noted above, Opendoor sold 21,725 homes in 2021. Of those sold homes, Opendoor’s title insurance services were used in over 75% of those 21,725 transactions. Which all incurred a 1% closing fee cost, regardless of whether homeowners are selling to Opendoor or on the marketplace.

Opendoor Closing Costs:

  • 1% closing costs

Note: Opendoor’s title insurance company was used in over 75% of all transactions that were closed on the platform in 2021.

Opendoor subsidiaries, acquisitions, and exits

To date, Opendoor Technologies Inc. (Opendoor) has made a total of 4 acquisitions.

Mergers and acquisitions business model
Source: Crunchbase | Opendoor

Opendoor profit and revenue

In 2021, Opendoor reported $8.02 billion in revenue.

Note: Because Opendoor Technologies Inc. (Opendoor) is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Opendoor’s publicly released financial reports, including annual reports, through Opendoor’s investor section on their website.

What is the Opendoor business and revenue model?

Opendoor makes money through a few revenue models that they combine within their company, they are:

  • Transaction based business model
  • Commission based business model
  • Fee for service (FFS) business model
  • B2B2C (partnerships) business model
  • Mergers & acquisitions (M&A) business model

Opendoor funding, net worth, and market cap

According to Opendoor’s Crunchbase profile, Opendoor has raised $1.9 billion over 10 rounds and has a market cap of $4.52 billion as of June 2022.