Does it have a problem of $ 2.2 billion or a chance of $ 2.2 billion?

As a real estate company, open (Nasdak: open) The market is close to a unique direction as a buyer and seller for thousands of homes every year. Even other companies like Zillow I have come out of this business model, OpenDoor still operates in 50 markets today, and has thousands of homes in its stock.

These homes, which are worth $ 2.2 billion at the end of last year, are a challenge and opportunity for OpenDoor.

OpenDoor describes its task as converting the American residential real estate industry, but simply, it buys homes with cash and then resles in the hope of obtaining a profit for every sale.

The attractiveness of dealing with OpenDoor is that it allows sellers to avoid time, expenses and uncertainty in selling home through the traditional process. The seller can take a comfortable offer for OpenDoor without passing through repairs and renovations or hosting an open house.

Once the deal is completed, the company operates the house with the aim of selling it at a higher price than it has paid (including any costs of reforming the property and keeping it).

Although this business model may seem, its implementation in a profitable way has not been proven easy. The real estate market differs from one area to another, and it takes time to sell some time, which means that some houses will make “idle” on the company Public budget For weeks, if not months at a time. This is where the inventory number comes – 6,417 houses worth $ 2.2 billion is a lot of money to link it to the company’s public budget.

These two people rose more than 20 % of the end of 2023, a large leap that stands out as OpenDoor bleeds red ink.

There is another complicated factor here too. OpenDoor intent on purchasing patterns, so you will get more real estate in “Offseason” (fourth and first quarter) and then sold this stock during “ONSASON” (second and third quarterly).

Real estate activity is the highest in the months of spring and summer, so the concentration of sales in the season can affect the company higher. On the other hand, capturing inventory during the external period can lead to better acquisition rates. The company believes that this approach “must enable (IT) to better benefit from model seasonal fluctuations and increase value in each treatment.”

The problem with this strategy is that the houses that OpenDoor buy in the fourth and first quarter will end in the sessions on their public budget for a longer period. The company reported the percentage of its stock, which was on the market for more than 120 days, and this number increased from 23 % at the end of Q3 2024 to 46 % in the next quarter. As you can see, the new OpenDoor approach comes in Market Market Sexicality with its own challenges.