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How OpenDoor became a unicorn (a company valued at over $1B)

(BUSINESS NEWS) Good news for direct home sales and fans of adorable mythical quadrupeds – OpenDoor is a unicorn. What does its billion dollar valuation mean for the modern real estate market?

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Online direct home sales is officially a thing. That was probably inevitable, given increasing automation of sales (robots are coming for your jobs – not that they can do them yet!), an ongoing Disrupt All The Things mentality amongst entrepreneurs, and sellers’ frankly understandable desire for a smoother, easier way to get rid of their people boxes.

Seriously, the Holmes-Rahe Life Stress Index puts selling a home above quitting freaking smoking in terms of medically significant stress. People are understandably interested in making that suck less.

Enter OpenDoor.

The OpenDoor offer is direct online sales. TL;DR – OpenDoor gets information from the customer, then sets a price for the property being sold, sight unseen. On top of that price, OpenDoor charges a risk fee, a flat 6.7 percent on top of the stated value, to guard against depreciation. In exchange, OpenDoor takes over the selling process, spiffs up the house and sells at a profit. As CB Insights says in its excellent analysis of OpenDoor, it’s basically high tech house flipping.

The OpenDoor pitch is that their system benefits both seller and buyer. They’re impressively honest about the math: They say their flat 6.7 percent is pretty much comparable with the costs and fees associated with traditional real estate sales, which is true. The advantage comes in, says OpenDoor, because the property is then out of the seller’s hands, no muss, no fuss.

That spares them from the hassle of home sales, but it’s also easier on the prospective buyer than the usual peer-to-peer approach. No need to balance two mortgages, no deals contingent on the house selling at a certain price. The house has already been sold at a certain price. Pony up and it’s yours.

We could argue pros and cons all day, but that’s not the point. The point is that, on a small but growing scale, the OpenDoor offer is working. OpenDoor currently operates in and around Atlanta, Las Vegas, Orlando, Phoenix, Raleigh-Durham, and my own fair hometown of DFW. OpenDoor focuses on second-tier real estate markets, avoiding the fluctuations and complex variables of Realty Madness as it is to be found in NYC, the Bay Area and so on.

In those cities, since its start as a spindly little startup in 2014, OpenDoor has served better than 10,757 total customers.

Per the CEO, it currently accounts for 3 percent of home sales in Phoenix and Dallas. Chump change that ain’t.

They’re already thinking expansion. San Antonio and Charlotte are the next towns slated for Missy Elliot treatment. For those of you who missed the 90s, Missy Elliot treatment is of course “put the thing down, flip it, and reverse it.” Surprisingly apt! Seriously, OpenDoor’s missing a trick if they don’t license that one.

Catchy but unpronounceable hooks aside, OpenDoor is taking a fair amount of risk along with their more than fair amount of money. In particular, focused as they are on moving up in the world, OpenDoor is carrying a lot of debt. As of fall 2017 they had borrowed on the order of $600 million to fund home purchases.

At their current 7.4 percent average gross margin on home sales, that’s sustainable, but it’s a whole lot of money to gamble on a new thing continuing to work. A housing downturn or even a comparatively minor shift in value could easily throw that balance out of whack, and while OpenDoor executives state that the debt would still be supportable in a downturn with an increase in risk fee, there’s always the possibility of chilling an already shaky market with too big a jump.

To state the obvious, avoiding that kind of risk is literally why there are Realtors, and why the real estate market in general works the way it does.

Distributing the risk between bank and homeowners, rather than having one organization take it all, minimizes the possibility of failure. OpenDoor has decided to take that risk, and is confident its model will be enough to ameliorate it. Whether that’s the case or not is an open question.

Most unicorns are just shiny horses standing under the right branch. But if OpenDoor can sustainably deliver on its core offer, then score one for the mythical horsebeast.

This editorial was originally published January 9, 2018.

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Matt Salter is a writer and former fundraising and communications officer for nonprofit organizations, including Volunteers of America and PICO National Network. He’s excited to put his knowledge of fundraising, marketing, and all things digital to work for your reading enjoyment. When not writing about himself in the third person, Matt enjoys horror movies and tabletop gaming, and can usually be found somewhere in the DFW Metroplex with WiFi and a good all-day breakfast.

Real Estate Technology

Using text message marketing? This class action lawsuit may change your mind

(MARKETING NEWS) A new class action lawsuit may have your team reconsidering whether or not text message marketing is worth the risk.

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Imagine sitting on the sofa with your family and your phone vibrates. It’s a text message! You’re expecting your brother to let you know if he’ll make it to dinner tomorrow.

But it’s a text from a real estate brokerage, loudly proclaiming an “OPEN HOUSE THIS WEEKEND” in all caps, with a link to the listing.

How did they get your number? Why are they yelling at you? Why doesn’t the link have a brokerage name in the URL? Why would I click that link? Why am I being bothered during family time? Why, why, why?

Most people would block the number and move on, or text “stop,” in hopes that the future barrage of unsolicited texts would stop. We all get them from every direction, nearly every day now.

But not Floridian Steve Grossberg, who took a screenshot of a text message from a Coldwell Banker agent, and hired an attorney. A class action lawsuit has since been filed in the Southern District of Florida, and a court date is set for this Friday, April 12, for Judge Federico A. Moreno to review the case.

The lawsuit claims the text messages were sent without written permission from the recipients (required by the Federal Communications Commission (FCC) since 2012), causing the Defendants “injuries, including invasion of their privacy, aggravation, annoyance, intrusion on seclusion, trespass, and conversion.”

Class action status is being sought for this case – Grossberg’s attorneys claim individual cases for all those impacted would overwhelm the court system and be too financially cumbersome for potential individual plaintiffs.

They’re seeking up to $1,500 in damages for each violation, which they say exceeds the $5,000,000 threshold for federal court jurisdiction under the Class Action Fairness Act (CAFA). The “Class” would include anyone in the past four years that have texted by Coldwell Banker or anyone on their behalf, using automated equipment (or an automatic telephone dialing system (ATDS)). Interestingly, in the “Class” description, the attorneys don’t include permission status at all, just “anyone” that has been auto-texted by the brokerage.

Court documents outline in detail the technologies used that allegedly violate federal statues, and Grossberg isn’t just suing the local agent or brokerage, but the international company, Coldwell Banker Residential Real Estate, claiming the text messages sent violate the Telephone Consumer Protection Act (TCPA).

The lawsuit does not outline in such detail, the chain of permission that was or was not given.

Real estate professionals that hire a marketing firm or a tech startup that promises to modernize their marketing, have an expectation that their money is being spent on something that is in compliance with all laws, be they local, state, or federal. Especially if that is what the company being hired specializes in.

Laying it at the feet of the end user (brokerages) is unfair, and it is curious that no service provider is named as the Defendant. Perhaps Coldwell Banker’s pockets seem deeper.

Additionally, the topic of permission is convoluted, as website visitors will often fill out their information when viewing homes, and the IDX provider will use that contact information to send even more information, thus written permission to contact.

Lumping the above activity in with telemarketing spam would be inaccurate. If a brokerage bought a list of phone numbers to cold text without consumers’ permission, that would, however be illegal.

Regardless, in the text message showcased in the lawsuit, the URL provided (ishomenow.com) forwards to listingstoleads.com – Listings-to-Leads (L2L) which says it is a “leading inbound marketing platform with a lead generation system.”

It appears to us that the lead generation company is the originator of the text message, not a specific Coldwell Banker agent or broker.

This Friday will determine next steps in this case, but for now, it is worth investigating your own text message marketing efforts (whether done yourself or through a third party) to make sure proper permissions have been obtained, and that all use is within current federal guidelines, because a potential $1,500 per text message sent in violation of the law would hurt any brokerage.

Be sure to read the lawsuit in its entirety as it outlines the specific behaviors in question, and review this potentially helpful compliance checklist in the meantime.

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Real Estate Technology

The app for pros that rely on their network for sales

(TECH NEWS) When you network frequently as part of your sales strategies, connections can get confused and become impersonal. This app intends on fixing that.

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Part of any successful professional’s life is networking in person, be it within your network, or among consumers. But keeping everyone straight takes a lot of brain power and skill.

You can never have too many apps when it comes to networking. Which is why I’m thrilled that with the arrival of Hippo, we have a meaningful entry in the field.

Like its distant cousin “personal finance and budgeting,” there are more apps out there than I have fingers and toes. Yet Hippo is attempting to do what dozens of other networking apps are trying to do as well: Get and keep your attention.

That said, it appears that Hippo is trying to tap into your vein of nostalgia by letting you know that networking is akin to happiness. In other words, the more people you know, the happier you are – their premise is supported by a giant TED talk on their website’s landing page.

The Hippo app lets you personalize your entries: names, ages, descriptions, personal notes, special dates.

For anyone involved in sales, Hippo could offer one hell of an advantage.

For those of us used writing things down about the people you meet, Hippo makes your conversations instantly searchable. Hippo can find notes using any obscure keyword you can remember. The search is brilliant.

The app promotes the idea of the “Farley file,” wherein Franklin D. Roosevelt’s campaign manager, James Farley kept notes of every single person they came across, including personal details that could be accessed by Roosevelt days, weeks, or even months later to improve the personal touch of any conversation. This was not the standard method at the time and many believe it changed how politicians were expected to communicate.

Hippo is just waiting to be downloaded.

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Real Estate Technology

Partners in Grind is an accountability match-making site

Partners in Grind is a website that strives to help you find an accountability partner – something that could really help with inspiring productivity.

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We all have that friend who serves as our “partner in crime,” the one they go on crazy adventures with and have great stories to tell as a result. For me, all of my friends fall into this classification; but I digress…

While these relationships are fun for “every once in a while” behavior, not everyday needs to be an adventure. But, it is difficult to find the day-to-day friends that encourage good, even productive, behavior.

This is now possible with Partners in Grind which strives to help you find an accountability partner – something that could really help with inspiring productivity.

Speaking from experience, it can be extremely difficult to find self-discipline and motivate yourself to work; especially when working in a freelance role. However, when you have someone else in the know of your work, you are likely to try harder.

According to the company, “Partners in Grind is match-making tool for accountability partners to promote proper habit building. Habits are everything – our daily habits dictate the quality of our lives.

Research shows social accountability is critical during the formation of habits, but finding someone to kick ass with can be HARD.

“Partners In Grind will handpick an accountability buddy based on the specific Success-Habit you want to add to your life. Build new habits like Working Out, Eating Healthy, Meditating, Reading, and Mastering Your Mornings with an accountability partner. As an added bonus, every week you receive a mini present in your inbox of pro-tips and inspirational clips specific to that habit.”

This free service works with the ideas of science, support, and challenge. With science, studies show the significance of social accountability. Having the support of someone on your team to contact at anytime for motivation is priceless; and this leads to challenge because playful competition is likely to transpire.

To find your “Partner in Grind,” you can fill out a sign-up form, which leads to personalized guidance, then receive challenges and tips. And, if you are your partner are incompatible, you have to option to be re-matched.

Stay in touch with your partner through text, Skype, or email. Being able to share with someone else the completion of a project is incentive enough.

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