Real Estate Shows Tech Is No Holy Grail
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Real Estate Shows Tech Is No Holy Grail

In iBuying, just because you bet on technology, it doesn’t mean you’re a winner.

By Laura Forman
Mon, Jul 5, 2021Grey Clock 3 min

Everyone wants to be a tech company. Office-sharing, meat substitution, ride-hailing, fashion styling, fitness—they are all technology businesses, according to founders who covet the high-flying valuations the appellation can garner in the public markets.

But just having technology doesn’t automatically make an investment superior. Consider real estate’s digital home flipping: Here is a business that is undoubtedly “tech” but where the value of the technology isn’t yet clear. With iBuyer Offerpad’s merger with blank-check firm Supernova Partners expected to close early this quarter, the value of technology—or lack thereof—is something that online real-estate investors will want to consider as they place their bets in a crowded field.

So-called “pure play” iBuyers Offerpad and competitor Opendoor Technologies both describe themselves as technology companies. Opendoor says it is a “digital platform for residential real estate.” Offerpad says it is focused on “tech-enabled real estate solutions.” Both companies have a chief technology officer and some version of a data scientist, presumably there to hone the technology investments and analyze their utility.

These companies may be solving similar pain points in seamlessly digitizing real-estate transactions, but they seem to be approaching the problem in different ways—Opendoor with money and Offerpad with experience. As of its March presentation, Offerpad said it had raised less than 9% of what SoftBank-fueled Opendoor had, though it had bought and subsequently sold 38% as many homes. And whereas Offerpad is led by a former real-estate agent, Opendoor is led by someone from the real estate technology business.

Opendoor’s deep pockets have no doubt fueled its rapid growth. It is now active in 39 markets with the stated goal of entering 42 by year-end—double the number of markets Offerpad is targeting this year, despite being only one year younger. But bigger doesn’t necessarily mean better: Opendoor lost far more money last year.

According to company presentations and regulatory filings, both companies had roughly the same gross margins last year, suggesting they are equally good at pricing homes and timing the market. An analysis by scholar-in-residence at the University of Colorado Boulder Mike DelPrete shows the difference in economics lies in “indirect costs” such as technology, the sales and marketing of that technology and the salaries of the people who build it.

Mr. DelPrete’s analysis shows Opendoor sold a little more than twice as many homes as Offerpad last year, but its technology and development expenses were about eight times higher over that period. A look at regulatory filings from both companies shows that dynamic was also true at least in the two years before the pandemic, albeit at a slightly lower ratio. The takeaway: Either Opendoor’s technology isn’t all that it is cracked up to be, or its investments have yet to pay off.

Opendoor says it isn’t blindly pursuing growth for growth’s sake, but making strategic investments in pricing, technology and operations platforms as it scales. The goal, according to the company, is to build a platform capable of high volume. With the real-estate market on fire, it is certainly working that angle: Opendoor’s spent almost as much on technology and development in the first quarter as it did in all of 2019.

The business of iBuying is still nascent: Opendoor says just 1% of real-estate transactions today occur online and iBuyers claim that they are competing against the traditional agent model of buying and selling rather than one another. But the slice of the market open to iBuyers has become crowded, creating a land grab atmosphere. Especially, as the pandemic has shown a generation of tech-savvy millennials finally seem to be hitting the home-buying market, time is of the essence.

Offerpad’s SPAC deal reportedly gave the company a post-transaction value of $3 billion, well below Opendoor’s current fully diluted market value of $11 billion. When comparing the two, investors should at least consider the fact that technology is only as valuable as its competitive advantage.

Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: July 4, 2021.

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The waterfront residence is one of Port Stephens’ finest homes.

By Kanebridge News
Fri, Aug 12, 2022 2 min

In the coastal township of Salamander Bay — nearby to Port Stephens — comes a unique home crafted to take full advantage of unbroken ocean vistas across three levels.

With one-of-a-kind flair, the stunning 5-bedroom, 3-bathroom, 3-car garage home of 52 Randall Drive Salamander Bay is nestled on a private 577sqm plot, optimised through intelligent design to take advantage of the Port Stephens landscape and lifestyle.

Within the home sees the typically coastal textures of natural oak floor and timber feature walls take hold while stone and tiled adornments add layers of luxury.

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Also here comes a grand outdoor spa, central to the balcony, while another outdoor entertaining area with a pizza oven is found on the middle floor.

Downstairs once again comes a second living space replete with the perfect wine cellar — cooled by the natural rock foundation of the home — offering an array of entertaining options

Of the home’s accommodation comes a private and luxurious master retreat with expansive ocean views, a walk-in wardrobe and an ensuite, here, speckled with grey terrazzo tiling and timber joinery vanities.  A further four bedrooms are found throughout the home along with two family bathrooms rounding out the offering.

Less than a five-minute walk from nearby amenities of shops, restaurants, cafes and beaches the home offers the best of the Port Stephens area.

The listing is with PRD Port Stephens’ Dane Queenan (+61 412 351 819) and Erin Sharp (+61 499 912 311) and is heading to auction; prd.com.au