Transcript
Deidre Woollard: Hello, I’m Deidre Woollard, an editor at Millionacres. Thank you so much for tuning into the Millionacres Podcast. One of the biggest trends that has consumed residential real estate for the last few years is iBuying. We’ve seen some of the biggest companies in real estate, Zillow, Redfin, get into the space. Opendoor went public last year via special purpose acquisition company. These are grabbing a lot of the spotlight today, but I’m talking to one of the bigger iBuyers that is still a private company; OfferPad. My guest is Cortney Read, chief of staff and communications for Offerpad. She works closely with the CEO, Brian Bair. She manages a variety of high-level and long-term cross-organizational products. She oversees Offerpad’s strategic communications, public relations, and media efforts. I’m really excited to have this conversation. Thank you for joining me today.
Cortney Read: Thank you. I’m really, really excited to dig in with you too.
Deidre Woollard: I’m sure most of our listeners are probably familiar with iBuying, but could you explain what it is and how long ago Offerpad actually got started in iBuying.
Cortney Read: Offerpad started iBuying homes a little over five years ago. Really, we’re one of the leading, the founders in iBuying. Ultimately, what it is is it stands for instant buyer, which means Offerpad would be an instant buyer of a home. The purpose of it is to eliminate a lot of the contingency, the fragmented process of real estate and put the consumer in control over selling their home. They’ll know exactly how much they’re going to get for their home. They’re going to be able to know exactly when they want to close. They can adjust their closing date. There’s tons of different services that we’ve added into the iBuying platform, but overall, convenience and control is why people come to an iBuyer.
Deidre Woollard: One the things that I find pretty interesting is that iBuying has really thrived in this time when resident to real estate has kept going up and up. But I noticed last year when the pandemic hit, iBuying really froze. I saw a lot of companies stop iBuying completely. What was that like for Offerpad and what kind of lessons did you learn as the market suddenly heated back up?
Cortney Read: It’s a great question, and really, in all honesty, Offerpad was built for all types of market. Nobody was expecting the pandemic so that definitely was something that we had to take a moment and pause and not purchase homes. We actually have the shortest pause period out of any iBuyer. We were the first ones to open back up in all markets and we had a very limited downtime. The reason why we didn’t need to take a pause was because we needed to make sure that we were re-calibrating our processes. A few things is, one, we want to make sure that our offers were still accurate. When the pandemic hit, nobody really knew exactly for the first-time ever in history which direction the housing market was going to go. So we needed to take a brief pause, make sure that we were providing competitive strong cash offers. Somebody can come to us and get a cash offer but not close on their home for three more months. So we have to take that into effect, of, in three months, what this home may be worth? That’s one of the main reasons we had to stop a very short period of time. Offerpad is founded by real estate experts. Prior to Offerpad even starting, our founders had 100,000 homes under their belts that they’d either bought, sold, rented, or renovated, so it was really easy for us to be able to re-calibrate and adjust, and then be able to continue buying homes. Another important reason why we took a brief pause, we did this proactively at Offerpad, is that we wanted to make sure that obviously, the health, the safety, wellness of our employees, [inaudible 00:05:35] our sellers and buyers and our third-party vendors was taken into account. When we did that pause, while our real estate operations teams working on our calibrations, making sure our offers were strong, there’s a large percentage of the company that was focused on what are all the touch points we have with sellers, buyers, and vendors, and how are we going to operate safely. We were able to get certified through a company called HealthyVerify. They certified all of our safety protocols, all of our procedures, all of our PPE, who uses it, when he uses it. We’re able to get a lot of our local government officials to back that niche of the markets that we were into. Once we got those two things locked in, we turned back on and we’ve been buying very strongly and aggressively since.
Deidre Woollard: It was certainly a crazy market, how fast everything went back up. As we’re recording this today, existing home sales came out, and inventory, again, at record lows. For 2020, did you end up buying more homes in the previous year or did it end up tracking out around even? How did that track out for you?
Cortney Read: As a privately held company, we don’t release a lot of that information, but I can tell you that we ended 2020 a lot stronger than I think a lot of companies. We were built for this. When we did turn back, went green again and start buying homes, we saw a completely new demographic of people coming to us. You know that we’re here for convenience and control, but now, people can sell their homes to somebody online and still get that strong offer without having a lot of human interaction. With COVID happening, people don’t want strangers in their home. So the same people before who maybe didn’t look at iBuying as an option now were looking at us as the only option. Although there was that pause and it may have impacted our numbers for a short period of time, we did see an influx of people. Even when we were paused, we were receiving hundreds and thousands and thousands of requests every single day because people were like, “I still want to sell. I want to sell now. I don’t know what’s going to happen in the market, and I don’t want strangers in my house. I want a quick cash offer. What will Offerpad pay for my house today?”
Deidre Woollard: That makes sense to me. I know a lot of sellers who were very hesitant about putting their homes on the market just because nobody wanted to have an open house during that time period, so that makes a lot of sense. If you’ve seen a lot of interest on the buyer’s side, that was the story of 2020. Did you see a rapid increase in buyer interest as well?
Cortney Read: We did see the rapid increase in buyer interest, but we saw it shift to people wanting different types of homes. As you can imagine, we’re all working from home. People want, even me, [laughs] an extra office space. You want a larger backyard. You want just more square footage in general. So the average price point has shifted a lot to what buyers are looking for, but that more is the number of rooms, the lot size. Everybody seems to want the same type of home right now, which can have a lot of impact on the current inventory.
Deidre Woollard: I think that’s also something that buyers like, to know that the home has been freshly remodeled and redone. What is that process like in terms of what Offerpad does, and how have you gone about identifying vendors that can do that for you in different markets?
Cortney Read: Sure. I’ll just back up and tell you a little bit about our process. Somebody comes to offerpad.com, they take five minutes and they tell us about their home. They will get a cash offer within 24 hours. Our real estate teams will evaluate everything they tell us in that five-minute questionnaire and be able to provide them with that strong cash offer. We’re going to ask them, what does their flooring look like? What does their paint look like? Do they have any conditions we need to know about the home? The more people can be upfront with us, the more accurate their offer is going to be. We can’t go down the road and, in two wee
ks, see that the roof is caving in and that’s not something that they told us about. We want people to be upfront. We ask them to upload pictures. It’s going to give us a lot of insight into their home. But really, we also want to know what makes their home special. Did they add an extra bedroom? Did they recently change their countertops and put new appliances in? That’s all things that we’ll take into consideration. Within 24 hours, they’re going to get back a cash offer from us. If they decide they want to move forward, then we’ll enter into the agreement and we’ll also have our due diligence period, so we will have to send out a third-party inspector to make sure that everything in that home is as what’s expected. Then that seller gets to select their closing date. They can close in as little as 12, 14 days all the way up to nine months. We’ll see people come to us for a variety of reasons. They’ll come and say, I haven’t found my dream home yet, especially right now with how fast homes are moving. They want to come to us saying, I know my home is sold. I know exactly what I’m selling it for. Offerpad’s not going to back out of the purchase contract or their loan is not going to fall through like another buyer could. Now, they have removed that contingency and can look for their dream house. Once they find that house, they call us, they let us know, I need to adjust my closing date to ten days sooner or ten days later, and they have all that freedom. There’s no additional cost to it. When they sell to Offerpad, once that home is now ours, in our possession and it’s closed, our renovations team, which Offerpad is one of the largest renovation companies also in the world where we are renovating more homes in a very short period of time than really any other company out there, that will include anything from $1,000 renovation where we just need to do a little bit of touch-up on the house where it’s in great condition, just maybe a couple of areas of paint or some flooring. Then Offerpad can also renovate homes at a much higher expense, so 20, 30, 40, $50,000. We’re looking for quality homes, but Offerpad can also take on homes that do need more work. That is done all after the home closes. The seller is not having to worry about renovation, they don’t have to worry about people in their homes, finding a general contractor to do anything. We take all of that on. Within just a few weeks, our renovation crew is done and we put it on the market, and the next buyer is going to be able to have a home that is upgraded, like you said, that’s clean, that’s fresh paint, fresh appliances, anything that we think that it needs to be done.
Deidre Woollard: Interesting. What is the price range? I know it will probably vary by market, but is Offerpad looking for middle of the market? Do you also deal with starter homes? What is the general type of house you’re looking for?
Cortney Read: When Offerpad first started, it was definitely more of that median house pricing. But now, it does vary per market, but I would say on average, anywhere between 80, $90,000 condos all the way up to $600-plus homes. We didn’t launch a new service offering actually during the pandemic, which is a superior listing option. That will allow anybody to be able to work with us and really utilize the Offerpad brand and maximizing their home’s value. So that is completely new, and really a game changer to the real estate industry. Somebody with a million-dollar house can come to us. Offerpad will offer the superior listing service where we provide tons of free service, their home is always show-ready. But what’s really my favorite feature about it is that you’ll have that Offerpad cash offer as backup. Let’s say you decided, “I’m interested in selling my house. I think that if I put maybe just a couple of thousand dollars worth of money in it, I could get $10,000 more if I list it on the open market.” You come to Offerpad, we will do that renovation work for you, that $2,000 worth of work that you think may need to be done. We’ll do that renovation work for you. You don’t pay any costs until closing, so nothing out of pocket. Our crews will manage that work and then we’ll list it at that higher price for you. Now, you get 20 days then and say, “I don’t want to list it anymore,” “I don’t like strangers in my house,” or “This isn’t working for me, I need to close now,” and you can go back and activate our original cash offer. So really, we’re giving people that choice, that freedom to move how they want to to sell their house with whatever works best for their situation.
Deidre Woollard: Interesting. Are you seeing more migration where people are selling and then moving to other markets? Do you have any information or insight on that?
Cortney Read: We do have a partnership with a relocation company too, so we do have a little bit of insight into people moving across. I don’t have exact numbers for you, but right now, as you’ve mentioned, like the inventory is lower, we see people moving into larger houses with that larger land space, number of rooms, versus moving into other markets. We do see that people will use us for multiple markets. We’re in 900 cities now. So somebody that is selling their house in Austin and needs to move to Phoenix, they’ll sell their house to Offerpad and then Offerpad will help them find a house, whether it’s an Offerpad-owned home or not in Phoenix, and we’ll align all the closing dates exactly how they need to. So it’s definitely an amazing option for those that do want to move to another state.
Deidre Woollard: I’m studying this year’s market and what it’s going to do. There’s a lot of talk about what happens. Obviously, we’ve had 106 months now of existing median home prices keep going up. What is Offerpad looking at and how are you planning for when this starts to shift?
Cortney Read: Offerpad, as you can imagine, when we purchase a home, the fact that people can [inaudible 00:15:05] their closing date, we have to be able to evaluate and look at the market not just 30, 60, but six months ahead to be able to make sure that we’re providing the best and the right offers. With Offerpad, we do see that the market that we’re currently in is probably something that’s going to continue through a lot of this year, through 2021, with the inventory low, people looking to purchase the same types of homes, more of that seller’s market. If there’s a shift, that’s where I think people might have a hard time understanding, “Well, if the market shifts or homes are selling so quickly, why would I use an iBuyer?” It’s the benefits that we provide on both sides. One, if the market does shift, Offerpad has operated and our real estate operations teams have operated in all kinds of markets, so there’s no concern there. We’re ready for whatever way the market is going to go. Offerpad can support sellers or buyers in whichever way. But if we do see that we continue right now and homes are selling very quickly, people say, “Well, why would I sell to a cash buyer? I can sell it on the market within two days.” It’s true, but that means that if your home is going to sell in two days, the home you may want to move to is going to sell in two days. How are you going to make sure that you don’t have your buyer back out? How are you going to make sure that you have the contingency? When it really comes down to it, Offerpad’s offers are amazingly accurate and high and good. They’re free too, so it doesn’t really make sense for somebody to not come to us and just request that free no-obligation offer upfront before they think about listing their home on the traditional market.
Deidre Woollard: Certainly there have been a lot of bidding wars we’ve heard from real estate agents in some of those hot markets, they’re getting 20 offers on a house, so there’s a lot of competition out there, so I think that’s another factor.
Cortney Read: Yeah. We see it too. Offerpad is a technology company, but our roots are real estate, so we’re a brokerage. We have the same standards and regulations
as any other brokerage out there. So we sell the homes that we purchased after we had to go through renovation. We put those homes back on the market. It’s Offerpad who actually sells those. We’re seeing the same thing with the bidding wars and people coming in, much higher over-appraisal. It’s been definitely an interesting 12 months, I would say, but I would say that it’s probably going to look a lot like this for the remainder of the year in the real estate world.
Deidre Woollard: Your agents are licensed, obviously, and your brokerage you mentioned. Do you have partnerships with any of the other brokerages or individual real estate agents?
Cortney Read: Yes. Absolutely, our agents are licensed through the Offerpad brokerage. We’re constantly adding more agents. It’s been something that we officially launched in June. We did a lot of pilot testing for quite some time. But we have a lot of agents coming over to us because of the different employee benefits. They’re employees of Offerpad, so they’re getting a lot of benefits with us, and then you can imagine we have thousands of people coming to us looking to sell and buy a home every single day. Some people still want to use a real estate agent and so we’re able to provide that. We work with other brokerages every single day, so those that are representing a buyer that’s buying our home. We work with agents every single day, always have been. I think something that really sets us apart from anyone else is that we offer the highest referral fee in the industry. So if you’re an agent, and your seller is interested in possibly using Offerpad or a similar company, if the agent comes to us and requests an offer on behalf of their seller and the seller selects us, they can receive a three percent referral fee, so the same amount of money, the same commission they would if they were going to put that home on the open market, but they’re really offering their seller a different experience; no showings, no negotiations, don’t need to get their house show-ready, they don’t have to do any repairs or anything like that. It’s actually increased quite a bit. It used to be a one percent referral fee, and about midway through last year, we upped it to three percent because we wanted to make sure that agents were looking at us as a serious option for their sellers but that they were also going to be paid accurately too.
Deidre Woollard: That makes sense. In terms of the agents, are these newly licensed agents or are you seeing agents come from existing brokerages and then joining Offerpad?
Cortney Read: We have a hiring process with our agents, so it’s not just anybody fresh out of school can come to us. They do have to have a tenure, they have to have a certain number of homes that they’ve sold in a certain time period. It does vary per market. But these are going to be experienced real estate agents that are coming to Offerpad that are seeing Offerpad as a different way that they can support their sellers and the direction of what real estate is going to move to. So the majority that are coming is not all from other brokerages.
Deidre Woollard: I want to pivot a little bit and talk about your relationship with homebuilders, because I think one of the things that is interesting in iBuying is that there have been these partnerships. Some of your competitors are doing this as well because it just makes sense to be able to move into a new home and have this other offer there. I know you have the Homebuilder Alliance Program. Can you talk about that and maybe mention some of the homebuilders that you’re working with?
Cortney Read: Yeah. We have some of the top home builders, the top 20 homebuilders that we’ve partner with across the US; Beazer Homes, Meritage Homes, Maronda Homes. It really varies per market and our website shows a lot of the builders that we’ve partnered with. It’s an amazing experience [laughs] though. I mean, if you think about it, you got to purchase, buy a new house, you have no idea when it’s going to close. They may say it might close in six months, but it could take nine months, it could take 10 months. You don’t know when to put your house on the market. How are you supposed to figure out when am I supposed to sell my current house when I don’t even know when my new house is going to be ready? We see people have to move twice, they have to put their stuff in storage, they have to move in with a friend, a family member, in laws, [inaudible 00:21:10] place, where if they sell their home to Offerpad, you know I told you that sellers can pick between like two weeks and 90 days to close with Offerpad? If they are purchasing from one of our homebuilder alliance partners, they can have up to nine months in their home. They come to Offerpad in January, we give them what their offer is, that offer will be good up until the nine months. When their home closes, that new-build home closes. Again, they can adjust that timeframe as much as needed but we give them a huge window of where they don’t have to think about moving twice. They don’t have to think about selling their house. They can think about everything for new-build knowing that their house has already sold with Offerpad.
Deidre Woollard: Interesting. Have you seen delays from some of the homebuilders? I know that there have been some concerns about supply chain and things like that. Has that been something that has impacted Offerpad at all?
Cortney Read: It hasn’t impacted Offerpad. I can’t speak on behalf of the homebuilders themselves, I’m personally just not close enough to that right now, but it hasn’t impacted Offerpad in any way that we’re seeing. We’re very flexible even with that nine months. If somebody needs to close in three months or close in 10 months, we’re very flexible, especially with their builders. For us, we just want to make sure it’s on whatever they can sell their home on whatever timeline they need to Offerpad.
Deidre Woollard: Are you seeing more of an interest in new homes? I think that’s one of the things that we’ve been tracking now that the median home price for an existing home and the median home price for a new home are tracking closer together. Are you seeing that same amount of interest in new home buying?
Cortney Read: I would say we’ve seen a significant increase in net homebuilders that have looked to partner with us. Our Homebuilder Alliance Program has been around since the beginning when Offerpad was founded in 2015. Now, we’ve added even more and more partners, a lot of smaller community homebuilders, a lot of 55-plus builders. A lot of the builders are definitely seeing the advantage to partnering with Offerpad because that seller, that buyer of their home, their contingency is completely removed. They know that builder knows that if their home is sold to Offerpad, the likelihood of them being able to move forward with that new-build at the end is extremely high. But we’ve seen a lot more with us adding on more builders, then yeah, of course, we have seen a lot more people coming to us that are purchasing new-builds knowing that their builders have partnered with us.
Deidre Woollard:. On the Motley Fool Live, on Millionacres, on the website, we’ve talked a lot about earning reports for some of Offerpad’s publicly-traded competitors. A lot of them are making some big bets on iBuying even though, for some of them, it’s not profitable. What do you think it’s going to take to make iBuying profitable on a wide scale?
Cortney Read: I really can’t speak on behalf of the competitors because, really, there’s just a few large competitors in this space, people that are able to buy and sell and operate at the same level Offerpad is. You’re talking hundreds, thousands of homes every single month. So there’s really only a few like you had mentioned some of our competitors earlier on. For Offerpad, as a privately-held company, we don’t share a lot of our financials, but we do have a different way that we develop our offers compared to the majority of
our competitors. For us, let’s just say we are very good at making sure that we’re providing the right accurate offer and what the holding cost will cost us if we’re going to hold a home for 10 days or 90 days. I’m beating around the bush here because there’s not a lot I can share but if you can read between the lines, Offerpad is in an amazing spot. Every competitor is operating differently. They have different strategies if they are trying to open up the most markets or buy the most homes or have the most contracts signed or sell the most homes. There’s a lot of different strategies going on right now. With Offerpad, ours is really completely around two things. It’s the customer experience. We have an amazingly high net promoter score, if you’re familiar with that; 84 is our net promoter score, which is basically almost unheard of. Our customer satisfaction score is 94 percent, so nine out of 10 people would highly recommend us to a friend or a family member. Everything we do, every product we roll out is all about our customer’s experience, making sure they have full control and that they’re enjoying and it’s a stress-free process. That’s why we’re here, to take on all the heavy lifting and stress for them. But then I would say the second thing that we’re primarily focused on is to be this amazing real estate solution center, that no matter what way you prefer to sell your house, Offerpad can be that source for you. If you want to sell instantly to us, that’s what we’re known for, that instant cash offer for the last five years, you can do that. If you want to list your home with us and use Offerpad agents, and get free show-ready services, and a handyman, and a concierge that’s going to be making sure your home is always show-ready for free with that [inaudible 00:29:00] offer, you can do that. To be honest, we’re just getting started. The different products and things that were in development, we’re really, really excited about. We have tons more options and solutions that are going to be rolling out to customers even just this year on really groundbreaking real estate changing products that put that seller or the buyer in complete control like they’ve never had before. That is really our primary focus right now, is those two things, is they’re all really about our customer.
Deidre Woollard: Traditionally, you just had one way to sell your house, and now, there’s whole different types of different options with concierge programs and offering people a variety of ways to sell. Is that also part of what you’re thinking about?
Cortney Read: Absolutely. You have to remember too, Offerpad was founded by the top real estate agent in the country. He had more transactions over an eight year span than any other agent in the country. That’s our founder, Brian Bair. He’s our CEO. You don’t get to be the top agent on accident. It’s all about referrals and it’s about your customer experience and what are you providing that’s different than any other real estate agent. That’s something that is funneled all the way down through Offerpad. That’s what we do, is how can we make this experience better? How can we put the customer in more control over their experience? What can we do that’s different, that’s never been seen or done before? All of that starts at the top at Offerpad and it’s weaved into every aspect of our business.
Deidre Woollard: I wanted to talk about one thing that you’re doing that I think is interesting, is that you have the Home Improvement Advance programs where you’re managing some of the repairs and renovations. It’s a different option for people if they maybe don’t want to do the straight-up iBuying. How has that been going so far for you? Do you think that’s going to be a larger portion of Offerpad’s business going forward?
Cortney Read: Yes. The Home Improvement Advance is aligned with Offerpad’s listing service. It’s pretty unique. With us being one of the largest renovation company, we’re probably one of the only ones that can do it and do it at this scale and be really, really good at it. What it means for the seller is that they can come to us and maximize their home’s value without any stress on them. If you decided today that you wanted to list your house on the market, you have to think about all the things that would need to be done. Do I need to get my carpets cleaned? Do I need to get my house painted? Do I need to get the roof done? Do I need to have the appliances re-done? Every single thing that everybody thinks about when they sell their house, and now you have to go find people to do it. Now, you got to get bids and estimates and hope somebody doesn’t no-show. Then you have to select the person and then they’re booked out for three weeks. Now, by the time you realize, it could be two, three months before your house is in the kind of condition that you wanted to put it in. So in your mind, you might be going back thinking, I should have just sold it for 230. I put in all this time and money and effort to try to maximize that to 240 but, really, it’s been a lot of stress and inconvenience and a burden on me. Those same people can come to Offerpad, and if that house is worth 230 at the time that they come to us, and we see that there’s opportunity to increase the value of that home by doing all the things that I just mentioned, Offerpad will take that responsibility on. We will do that before the home is getting listed, and it’s Offerpad employees, it’s our renovation team. You’re not going to be sitting there waiting two or three weeks for your carpets to get replaced or your house to get painted. Offerpad is going to be able to nearly immediately make all of those changes and improvements, and then get your home on the market to maximize that value. You pay nothing out of pocket. There’s no service fees. There’s no extra cost to it. No labor fees. Everything has a MSRP with us being one of the largest renovation companies. You can imagine the significant discount that we’re able to get when we buy things in bulk or come back to recurring manufacturers. So a lot of people really have taken advantage of this. They’ll close, they’ll make more money on their home than it was worth two months before with us, and then they pay us any of the renovation costs back at closing, so it’s nothing out of pocket to you. You’re not putting it on a credit card. You’re not spending money on a home that you’re actually trying to move out of. We have seen an increase since we’ve offered this. Month over month, we began to see an increase. I do believe that those that want to list their home and feel like they can get more for it, they are going to come to us for that because we’ve made it super efficient and easy. You can imagine all of the million phone calls alone that you’re going to be taking out off if you just came to Offerpad for that service.
Deidre Woollard: The general contractors that are doing the work, they’re actually Offerpad employees?
Cortney Read: It varies per market. A lot of them are Offerpad employees. It depends though. We’re headquartered in Arizona where we have different weather conditions than in Raleigh, one of our other markets. So we have different people on our renovation teams and crews by market if maybe we need more roofers in one market than we do in another. Then there are times where we will partner with third-party vendors to also work with our general contractors, our renovation teams. It is all dependent on the home. Every home is different. Those vendors do have to be approved. They go through a process, they learn what we call the Offerpad way, they understand our culture, what we’re trying to do for our sellers. Anybody, any vendors, we encourage them to go to our website and they can share more information about why we may want to look at partnering with them.
Deidre Woollard: Interesting. That brings up another question I’ve been thinking about. I know that a lot of the iBuyers, they start in markets where the housing stock is relatively homogenous, like Arizona and Raleigh as well. One of the
things that is interesting to me is as iBuying expands into markets where you have older housing, where you have maybe more of a mix, is that going to be a challenge in terms of both pricing homes and in terms of renovating because you might be dealing with more repair issues on a house that’s 100 years old? How’s Offerpad thinking about that?
Cortney Read: That’s a great question. When you go to a launch in a new market, there’s a lot of things that we take into consideration. We’re going to be in Denver and Nashville on March 1st, which themselves are two completely different markets. We have to evaluate the real estate market per market. That’s why we have local real estate expertise in an office in each one of our markets. We have somebody who’s driving that market, and they’re the head of it, and they’re watching all of the real estate projections, we’re making our own projections, the trends, things like that. Then we have the local real estate agents that know street by street. The real estate team in each market is amazing. Then we’re able to develop those renovation teams in each market as well for those specific market needs. It does change the way that we have to look at it. If a home is five years old or if it’s 50 years old, we have to know what we’re purchasing because we need to make sure that we are putting into account the work that may need to be done on the home after we close. We need to take into account how long the home may sit on the market. When you’re looking at different price points, a $300,000 home may go much quicker than a million dollar home. All of that is taken into consideration when we’re developing out our offers.
Deidre Woollard: How long does it take to start a new market and how do you decide where you’re going to go next?
Cortney Read: For us, we I believe announced in December that we are going to Denver and Nashville. They were markets that we’ve been looking at for quite some time. We have a whole team that analyzes the markets and determines which ones that Offerpad wants to go into next. I would say the consistency is that they have to have a strong economy. For us to work, we need to make sure that people are actually looking to move frequently in those states. Wouldn’t makes sense for us to go to a market or a city where there’s just not a lot of real estate traction of buying and selling. We do look at the economy for each individual market. We look at the trends from the past, the projections. There’s a lot that goes into it. Then we start developing up that team for each market. We’re the only ones in our space that actually has those local real estate market expertise in each market. It’s valuable because those are the ones that are going to be developing the offer. The people that are headquartered in Arizona are not going to be developing an offer on a house in Charlotte. It’s the Charlotte real estate operations teams that are going to be developing it. They know that market, they know the area, the streets, where the malls are, what the schools are like, the traffic. They know everything there, so they’re going to be providing those accurate offers. But we did announce at the end of the year that we’re going into Denver National and we’ll be live there in March. March 1st, we’ll be live.
Deidre Woollard: As iBuying expands, do you think it’s going to be a challenge when you start getting into smaller markets? Most of iBuying right now has been focused on relatively large cities. As it gets into smaller markets, does that become more of a challenge in terms of figuring out pricing?
Cortney Read: Every market is definitely going to vary. I would say one of the things that Offerpad does is, outside of just looking for new markets for us to go into, we expand in the current markets we’re in. Phoenix is a great example. Phoenix was our first market that we had opened in 2015, and now, we’re in hundreds of cities in Arizona. It’s not just that Phoenix metro market. We’re able to go all the way up two hours away to Tucson. We’ve expanded, and that allows us to get more integrated into the community, watching the housing prices, what are the conditions, what are the neighborhoods. So us, that’s really important that we continue to expand but while we’re selecting new markets. We evaluate every home on an individual basis. When that request comes into us, we have our own proprietary platform that’ll help determine what the offer is, but real human eyes evaluate that offer before it’s sent to that seller within 24 hours because they can make the adjustments that really only a human would know. That’s extremely important for us to always still have those real estate experts’ eyes on there so that we can evaluate each home. Whether it’s a smaller community, or an older home, or on larger, more acres, we evaluate that home individually. Let’s say you and I are neighbors. Our offers most likely will look different. If I have a corner lot, if I have a pool, it’s not just a straight algorithm that we shoot out. It’s based on that specific home.
Deidre Woollard: In terms of those human eyes, is that someone who’s an appraiser, or an inspector, or an agent? What’s the background of the people that are doing that last check?
Cortney Read: They all have real estate backgrounds. The majority of Offerpad has a real estate background either from mortgage lending, real estate, traditional worlds, any kind of property investment. There’s a lot of real estate experience and talent at Offerpad. The real human eyes are evaluated. Those people are evaluating the offers in that market, not so much our real estate agents, although we have our real estate agents and a lot of our employees who were agents prior. But it’s our team of acquisitions, the real estate experts in, let’s say, the Tampa market, those are the ones that are evaluating that offer and making adjustments higher or lower based on what they know in the local real estate market.
Deidre Woollard: One thing I’m wondering about is, this podcast is for real estate investors, and I know some real estate investors are maybe concerned that iBuyers make it harder for flippers to find deals. Do you feel the Offerpad and other iBuyers, are they competing with individual investors or is it really a different thing?
Cortney Read: We do work with investors as well. But really, it depends. Offerpad, we’ve been shouting from the rooftops for five years that we’re not fix-and-flip. It’s taken a long time of education for consumers to understand how we’re different in the service that we’re trying to provide. We’re not looking to be an investor that’s going to be coming and undercut somebody on the price of their home, put a little bit of money in it, and flip it. That’s the complete opposite of our model. Our model is to come as close as to what we think that that consumer believes their house is worth, put our own money into it, and then when we go to sell that home, if there’s any increase in the cost of what the home is selling for, it’s because Offerpad’s renovations have increased the value of that home. I think it’s a little bit different because every investor may be looking at it differently depending on the kind of [inaudible 00:41:50] the homes that they’re buying. But with Offerpad, we do work with investors. They do buy some of our homes. It’s not really any major competing thing like that.
Deidre Woollard: As we wrap up, just wanted to know some future plans for Offerpad. Also, people are probably wondering if Offerpad has any plans to go public in the future.
Cortney Read: Future plans, you can expect to see a lot more solutions coming from Offerpad in 2021, more consumer-focused. Really, we listen to our customers, we understand their pain points, and we want to know what demands they have for the best experience, and so you’re going to see new products and offerings coming out. You’re going to see our market expansion. We talked about Denver and Nashville, but that’s just the first two markets that we’ve a
nnounced for 2021. We have plans for additional expansion this year. As far as going public or anything like that, I’m not able to provide any direct insight on that.
Deidre Woollard: How many markets are you in totaling now?
Cortney Read: We are in 14. But again, we’ve expanded in a lot of those markets. Without counting Denver and Nashville, we’re in about 900 cities to date.
Deidre Woollard: Interesting. Do you start off toward the center and then expand out into the suburbs?
Cortney Read: Yeah. We usually start more in that major metro market where you see a higher number of transactions occurring and then we do branch out. Florida is a great example. Tampa and Orlando have been successful markets from us since nearly the beginning of Offerpad. Now, we are in several more, we’re in Jacksonville now. Then even in Jacksonville and Tampa and Orlando, we even expanded out there, so the radius of coverage is so significant. Texas is another great example. We’re in Dallas, Austin, Houston, and San Antonio. We have a very wide coverage of all of those major metro markets, but then all of their surrounding cities too. You’re talking hundreds of cities just in Texas.
Deidre Woollard: One last final question. What one trophy house would you dream of picking up through iBuying?
Cortney Read: Well, let me tell you that in Arizona, where I’m based, there’s some beautiful, beautiful properties that even just recently when I was on the website, I was even thinking personally myself, some beautiful five-bedroom, pools [inaudible 00:44:08] to a man-made lake. There’s definitely some amazing properties that we have. But then I also will go on our Raleigh sites and I’ll see the difference in the houses there and all the acres and the beautiful woods and backyards. Personally, I would definitely love to move into a larger area, larger home, just like everybody else, my own extra office space during this time right now.
Deidre Woollard: [laughs] Have you found as your website’s traffic increases, people are dream browsing?
Cortney Read: Yeah. Our brand recognition has just really skyrocketed, I would say, over the last couple of years. I’ve been with Offerpad for, I want to say, three and a half years or so. When I first started here being based in Arizona and living in Arizona, some friends and family couple of years back not understanding what kind of company I worked for. If you look at where we are today and iBuying, just that term alone, everybody knows what that means now. They may not have experienced it because it’s not like you’re buying and selling a house every day, but they’ve heard of it and it’s something that they’re going to consider. We have a significant amount of people, web traffic that come to us first to get an offer before they’re even talking to anybody else about selling their home with us since it’s that free no-obligation offer. They can come to us, maybe they’re just kicking around the tires wondering what their home is going to be worth. They’ll come to us. So yes, month over month, we’ve had significant increase. We’re excited to offer more products too because they can only imagine how many more consumers we’re going to be able to help find their dream home, sell their current house, and just really do it their way, whatever works best.
Deidre Woollard: Thank you for your time today. You can always find more information on offerpad.com. Stay well and stay invested.