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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.

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

Value privacy? DuckDuckGo is the answer to breaking up with Google

(TECHNOLOGY) DuckDuckGo is a search engine that doesn’t listen to home recordings, sell you stuff, or track your every movement. They just provide search results.

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DuckDuckGo search engine

A recent Wired editorial caught our eye, urging folks to consider using DuckDuckGo instead of Google. As someone who does use DuckDuckGo as my default search engine, it made me smile.

In the modern world of telecommunications, the only real currency is trust. When you buy an iPhone or an Android, you’re not really buying a set of features. You’re buying assurance that the cell phone company you’ve chosen isn’t going to screw you over too badly. You have a device in your pocket that tracks you, everywhere you go.

Even when you have location services off, your smartphone knows where you are through a combination of the Wi-Fi networks nearby and your phone’s motion sensor. Here’s an article from nearly a decade ago talking about how this process is 90% accurate. How much better do you reckon it’s gotten since then?

The thing is, Apple and Google both kinda suck at the privacy thing. Here’s an article about Siri recordings being made when Siri isn’t meant to be turned on, and the quality assurance contractors who then have to listen to people having sex. (Apple is ending the contractor program, after a public outcry.) Here’s an article about a big ol’ leak of Google Home recordings, many of which were made without the user activating Google Home. Here’s an article about Amazon leaking 1,700 audio recordings from someone’s Alexa to a complete stranger!

So your phone companies don’t really protect you that well. Apps take advantage of this too. If you still have the FB app, you should probably delete it! Here’s a story about a psychiatrist realizing that Facebook was suggesting that her patients add each other!

So privacy matters, and Google sucks at it. Google is also a HUGE business. It’s an enormous company that wields so much influence on ours lives that there is an entire industry now called “search engine optimization” dedicated to unraveling its whims.

And what whims! One major update a few weeks ago caused a 30-40% drop in traffic for some websites. These updates are pretty opaque, and a whole constellation of websites has arisen to help the search engine optimization workers (or SEOs, for short) untangle what those updates mean, and why their traffic has suddenly gone down.

And at this point, Google only kinda wants to serve you results. Mostly they wanna serve you ads, and highly-optimized shopping results. One of the big problems facing SEO workers right now is that you can bust your ass to get a company to the front page of results, and it may not matter if you don’t crack the top 3. Because people do most of their Internetting on their phones now, and ads take up most of the screen space when someone Googles.

So Google isn’t great at privacy AND their priorities are skewed. But this is an article about DuckDuckGo, right? And we’ve barely covered it! So let’s talk about that a little.

DuckDuckGo doesn’t save your searches. It forgets everything you search. And you know what? That feels incredible. There are drawbacks. When I type the letter L into DuckDuckGo, it doesn’t immediately suggest “Leonard Bernstein shirtless” like Google does. But the ten seconds it takes to type that out is worth the knowledge that my data isn’t being stored by my search engine.

And yes, Google pours a ton of money and attention into their algorithms, and they’ve got a years-long head start on DuckDuckGo. But usually, DuckDuckGo still manages to get me exactly what I want. Sometimes, it’s even better at giving me what I want. Because it’s not serving me ads, or trying to second-guess me. It just…gives me the thing I asked for.

There are still some instances that send me to Google. If I’m looking for a specific image or gif, for instance. Or if I’m looking for a certain news story. And there are certain niche searches where Google’s experience is necessary. But for the vast majority of what I need, DuckDuckGo is there, serving up only what I want and protecting my privacy while it does. And it feels GREAT.

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Real Estate Technology

VR can calm cows to produce better milk. What can VR do for us?

(REAL ESTATE TECHNOLOGY) If VR can help reduce anxiety in cows and help them produce better milk, what could it do for humans with its wide variety of uses?

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VR productivity

From virtual reality (VR) roller coasters to immersive theatre with VR headsets, we sure have gotten creative with the use of this relatively new technology. But why should humans have all the fun? Recently, a Russian farm has started to put customized VR headsets on its cows.

Yes, you heard us right: these cows are being immersed in the virtual realm of a beautiful summer field.

According to Moscow’s Ministry of Agriculture and Food, there’s actually research that shows cows yield better milk production when they’re in a calm environment. Not only can they produce more milk, but sometimes it’s even higher quality milk!

The virtual reality experiment tested if a simulation of a calmer environment could produce similar yields, and initial results say yes! In fact, the entire herd’s mood improved after the short term study. The study will continue long term and if good results continue, it will likely expand.

If VR can be beneficial for cows, what could it do for humans?

One study explored its potential as a pain reliever. Burn patients were tested on pain levels while being treated (an extremely painful procedure) and reported feeling significantly less pain while playing VR! It’s likely because immersing someone forces the brain to focus on the virtual world, rather than the pain. Virtual reality has also been used for rehabilitation, like helping individuals with Parkinson’s disease improve their muscle control.

Stanford’s Virtual Human Interaction Lab is also studying various capabilities of virtual reality. Many experiments center around whether or not immersion can change attitudes and behaviors in the real world. They’ve created simulations to try to increase anything from empathy for the homeless, an understanding of racism, to kind acts in the real world. Although these are all initial studies, the results have been promising!

And yes, just like with cows, studies are finding that virtual reality could help reduce anxiety in humans.

Of course, as far as technology goes, virtual reality is still in its infancy. From reducing pain in humans to increasing milk yield in cows, we’ve really only scratched the surface of virtual reality’s potential applications.

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Real Estate Technology

Emoji ladened tweets are not accessible to the blind; let’s fix this.

(REAL ESTATE TECHNOLOGY) Emoji have created a funny inventive way to communicate in modern times, but they may be unintentionally excluding blind people.

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If you can't read this you are now in the same situation as the blind trying to read an emoji tweet

Blind blogger Holly Scott-Gardner went viral in mid November when she tweeted out a video of her screen reader struggling to make sense of an emoji-laden meme tweet. The meme form features an all-caps message in the center of a sea of emoji hands. The hands encompass the full spectrum of skin tones and surround the message on all sides, as though a crowd of people are all gesturing towards it for emphasis.

It takes Scott-Gardner’s screen reader a full two minutes to read the tweet, which consists solely of the words “STOP CENSORING SEX-POSITIVE CONTENT.” The majority of the video consists of her screen reader rattling off emoji, row by row from left to right, at blazing speed. Not only is the description of the tweet useless, it’s also a little terrifying to imagine how long it would take the reader to describe the tweet in a normal speaking speed.

Scott-Gardner gamely fielded questions from people, including “how is there not some kind of alt-text option for tweets?” Her answer is that there is one. (You can turn it on here and start writing alt-text for your own tweets.) However, it only works for images, not for memes made out of emoji.

Of course, she can turn off the emoji, but as linguists Lauren Gawne and Gretchen McCulloch point out, emoji are gestural, not symbolic. They hold a key part in modern written language. Since it’s impossible to read body language and facial expressions across the digital divide, emoji have come to take their place. They’re crucial to understanding context and tone.

Scott-Gardner followed up with a second video showing what ASCII art sounds like on a screen reader, and it was similarly incomprehensible. (She did her audience the favor of slowing the screen reader down a bit for the follow-up.)

It goes without saying that Internet access is a necessity to meaningfully participate in modern society, and questions of accessibility are more important than ever if the Internet truly is going to be the democratizing force it was heralded as when it first came along.

Domino’s Pizza recently made headlines when they argued in court that the Americans with Disabilities Act (ADA) doesn’t apply to digital spaces. Guillermo Robles, a blind California resident, sued the company for violating the ADA when neither their app nor their website were accessible to his screen reader.

Rather than spend the $38,000 they estimated were necessary to make the changes, they decided to appeal the decision all the way to the Supreme Court. (The Supreme Court declined to hear the case, letting Domino’s loss in a lower court stand.

You may know that website accessibility principles like alt text help your SEO. You hopefully know that having an accessible online presence is important from a “basic human decency” perspective. But in addition to those things, it’s also a huge liability issue that companies would do well to make sure they’re addressing. If you need a place to start, the UK Government has a handy primer on the basics of accessible web design.

And if you’re interested in hearing more from Holly Scott-Gardner, she keeps her writings and her Working Blind podcast at her website.

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