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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

Camera that spins, zooms on its own – perfect for remote working

(TECHNOLOGY) Video conferencing tool, Meeting Owl Pro, helps bridge the communication gap in remote teams with a camera that spins and zooms on who is speaking

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As someone who has spent the bulk of their career in a remote setting, I’ve definitely noticed some elements of communication that differ from an on-site job. Rather than being able to pop into your boss or coworker’s offices, you have to shoot them an email or try and catch them on their phone.

Enter the COVID-19 times…

Remote work can get even more complicated when the whole team is remote and you’re attempting to get everyone on the same page. Or, think about when you’re working remote and you have to video conference into a meeting with people who are on site. Even with video conference chatting, there can still be some kinks in trying to follow the voices and stay on top of who’s speaking.

Luckily, Owl Labs took this issue into consideration and whipped up Meeting Owl Pro and Meeting Owl First-Gen, which are the only 360° camera, mic, speaker smart devices on the market today. This is ideal for teams who have both an on-site and remote team collaborating together (or will again soon).

The Owl sits in the middle of the on-site table and moves in a complete 360° manner that picks up who is speaking and moves the camera to focus on them. That way, the people who are calling in remotely can clearly see who is speaking and follow the meeting as if they’re actually in the room.

Both versions of Meeting Owl are compatible with the big video conferencing platforms, such as: Zoom, Google, Skype, etc. They operate as plug and play devices that connect to Wi-Fi, which allows for automatic updates.

According to the tech team, the specifications of the Meeting Owl Pro 360° smart camera has an enhanced Owl Intelligence System™, 2X sharper camera with 1080p resolution and 2X louder 360° in-room speaker. With the Meeting Owl Pro, customers can expect their meeting spaces to become increasingly intelligent over time with new smart integrations and capabilities, the first of those features being a new Smart Zooming functionality that identifies, locates, and magnifies the person speaking.

This will help to bridge common communication barriers that are felt between on-site collaboration with remote teams. Additionally, it will help with team-building as everyone will have more of an opportunity to spend face-to-face time with their coworkers who work remote from them.

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Real Estate Technology

AI being used to better understand the COVID-19 pandemic

(REAL ESTATE TECHNOLOGY) The intersection of the coronavirus and AI is here and it’s trying to making the world a better place. AI can read and collect data faster than humans.

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AI and the coronavirus

As the world scrambles to figure out the best way to prevent the spread of the Coronavirus and halt the ongoing pandemic, researchers are searching for a cure. In order to do so, it is beneficial to track patterns in the virus’s behavior.

Since the virus’s initial spread in December, thousands of papers have been written about the Coronavirus, or COVID-19. It would take weeks, if not months, for a person to collate all that information into some valuable data. This is where AI comes in to help.

Earlier this week the White House announced that they were working in collaboration with tech companies and members of academia to provide the huge amount of Coronavirus research to AI researchers and their algorithms.

The AI will be able to comb through all of the research we have to-date and search for patterns that could help those in the research field to find a cure and those in the medical field to better treat their patients. According to Wired, companies and institutions such as the National Library of Medicine, Microsoft Research, and the Allen Institute for AI (AI2) are currently working to gather and prepare the nearly 30,000 papers related to the virus so they can be processed by AI.

Hopefully, the AI’s algorithms are able to see something we cannot. It could find new connections that researchers have not been able to make and speed up the process.

The CEO of AI2, Oren Etzioni, is hopeful that this project will show people the brighter side of AI. “High tech, in general, has gotten a bad rap, but something like this crisis shows how AI can potentially do a world of good.”

There is no question that AI can help us find some answers as we face this pandemic. Whether or not this can all be arranged quickly enough to actually help mitigate the current crisis is the question. Some are wondering if U.S. resources would be put to better use by helping to address the shortage of Coronavirus test kits.

Experts are imploring people to think of the big picture. The issue of open access to medical and scientific research has been a topic of conversation among researchers for years. The pandemic has only highlighted the need. Now governments across the globe are calling on scientific publishers to open access for research on the Coronavirus so we can all work together in this time of global crisis.

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Real Estate Technology

How telecom, power companies are helping customers during COVID-19 outbreak

(REAL ESTATE TECHNOLOGY) Telecom and power companies have also tried to help their customers, while the Coronavirus makes its rounds, by extending service.

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According to Fox News, Mark Cuban, owner of the Dallas Mavericks, promised to take care of the employees at the American Airline Center during the NBA shutdown. The employees would be paid as if the games were still taking place. Many of the other leagues have made the same promise. Unfortunately, not every employee works for a business with those types of provisions.

Thankfully, many organizations are responding to the COVID-19 pandemic with special accommodations to help residential and commercial customers deal with financial issues and staying home to prevent the spread of the virus.

Companies helping out customers

Comcast is offering 60 days of free basic internet service to new customers. It’s also not disconnecting or charging late fees. Current customers are also being provided with unlimited data. AT&T is offering the same types of things for its users, unlimited data and suspending terminations, as is T-Mobile.

Closer to home, the City of Austin has decided not to disconnect customers’ services for non-payment. Evictions are also halted. Austin Energy is reconnecting users who were recently disconnected for non-payment. The company is working with customers to help them get on track with their electric bills.

Customers without power do need to reach out to Austin Energy for a courtesy reconnect, because the bill cannot be restarted without speaking to the customer. The Public Utility Commission has asked all Texas power companies to work with customers during these uncertain times. TXU Energy has also waived late fees and is extending payment due dates.

Contact your utility providers

If your finances are being affected due to COVID-19, talk to your landlord and other providers now to work out a plan going forward. You’ll have less stress when you know you won’t lose your power, water or home. Companies are willing to work with families who have been impacted by the pandemic.

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