After a year of falling stocks, and just days after the FTC announced a $62 million settlement for allegedly deceiving consumers, Opendoor announced a new partnership with its former competitor, Zillow.
According to a joint company statement, Zillow customers can now get an instant cash offer for their home—an offer fulfilled by Opendoor.
If the customer accepts the cash offer, Zillow receives a referral fee from Opendoor.
“A deep integration”
On a call with analysts Thursday, Zillow CEO Rich Barton reportedly said, “This isn’t just a lead-in distribution deal. This is going to be a deep integration.”
He goes on to say that everything they learned in their previous iBuying stint would be valuable lessons they can bring to this partnership.
Zillow’s goal is not merely to earn a referral fee from Opendoor but to provide the consumer with additional services like mortgages, closing services, and a connection to their premier agents.
Zillow Chief Operating Officer Jeremy Waksman said in a statement that customers will be able to evaluate their selling options, which includes selling on the open market with a Zillow Premier Agent. It is unclear how the “open market” option will be presented to consumers.
We know choice is important for customers and they can make the best decision when they see all of their selling options up front — including selling on the open market with a Zillow Premier Agent partner and getting a cash offer from Opendoor. This exclusive partnership will pair Zillow’s audience and brand power with Opendoor’s selling solution in one easy place, so customers can evaluate their selling options and easily package it with other Zillow services to buy and finance their next home.
Different marketing angle
In the statement from Opendoor about the partnership, the company is wisely no longer claiming that the consumer will save any money. Instead, it states consumers will “save themselves the stress and uncertainty of a traditional sale process.”
This is a departure from their earlier messaging, which led to Opendoor’s recent trouble with the FTC.
Q2 earnings for Opendoor and Zillow
Opendoor announced its second quarter numbers (link to BAM roundup article) on August 4, 2022, showing revenue growth of 254% with 10,482 total homes sold and a gross profit of $486 million (up 206% from 2021) and a NET LOSS of $54 million (improved from a net loss of $144 million a year ago).
Now back in the iBuying business via Opendoor—as agents continue to give them all their money—Zillow also announced its second quarter earnings, showing an $8 million profit, exceeding Wall Street expectations.
Whether this partnership benefits both companies—as well as the consumers they aim to serve—remains to be seen. Reactions from real estate agents are likely to be mixed.