Will the tech startup Opendoor end the need for open houses, or is it just the latest upstart?
Anyone who’s considered buying or selling a house this millennium is familiar with Zillow, the online real estate database that’s been around for about ten years.
Much less familiar is Opendoor, a startup that launched about two years ago and, if the model works, promises to change the way homes are bought and sold nationwide.
Opendoor is a company that purchases houses (sight unseen except for one inspection) for a flat price determined by a complex algorithm. The company pays cash and the seller is quickly able to move on with their life—literally.
The exchange happens entirely electronically, except for the inspection to verify the seller-provided information.
Currently, Opendoor operates in two markets: Phoenix, Ariz. and Dallas, Texas. The company only deals in single-family homes, valued between $125,000 and $500,000, that were built after 1960. No fixer-uppers, “has potential” or luxury properties are allowed.
How, exactly, does Opendoor work?
Eric Wu, the 34-year-old cofounder of Opendoor, says that he wants to lessen the pain of moving for both sellers and buyers. To that end he put together a team that built a platform to streamline the process for both sides.
For sellers, that means first contacting Opendoor via their website and providing details about the house to be sold. Opendoor then makes an offer, if interested. If the offer is accepted (and the company aims to make accurate and competitive offers) then an inspection is scheduled.
Sellers then have a 60-day window for a closing date. On the closing date, which is set by the seller, the seller is paid and Opendoor (which handles all the “paperwork” details) owns the home.
For buyers, the process is a big step up from viewing property listings online. In addition to being able to check out the available homes, buyers can be connected to financing options. Another bonus: the ability to tour the home anytime between 6AM and 9PM, daily.
Remember, the houses are empty. Want to schedule a visit on the run? Opendoor’s got an app for that. Offers can be made electronically and reviewed quickly. On top of it, they even have a 30-day, money back guarantee.
The Good, the Bad and the Unknown
The model certainly has financial potential, according to the founders and their investors. Forbes called it one of the next “Billion-Dollar Start-Ups” because it taps into “a market with $1.4 trillion in annual transaction volume that’s been largely undisturbed for decades.”
Opendoor makes money by charging an (on average) 8 percent transaction fee to sellers. That’s obviously good for Opendoor, and the ease of selling is certainly good for the sellers.
But, there’s a downside. Opendoor is faced with the task of turning properties over, just like any real estate agent. Sitting on properties, or selling houses for less than the purchase price, isn’t going to turn a profit for the company.
Then there are the parameters, geographically and otherwise, of the model. Mid-sized markets, with new construction, like Phoenix and Las Vegas (where Opendoor is heading next) might work—but what about more established cities, like Boston, Mass.? Buyers in Boston like historic properties.
Buying into even larger markets, like New York, would also seem to be a non-starter. In 2015 the average price of a single-family home in Manhattan was $1.87 million. Of course, there’s always Queens where the average price was only $452,304.
Finally, while there is certainly a business and financial transaction happening, purchasing a home is an emotional decision as well. An “old fashioned” realtor knows this and can help guide buyers along the ups and downs of the journey.
So far, that’s something no online platform, even Opendoor, can realistically offer.
Digitally savvy equals success for trucks and foodies alike.
Hot dogs, pupusas, kebabs, bamboo rice sticky bowls, fried chicken, falafel, bulgogi, and tacos made from any and all of the above. That’s “Food Truck Food,” New York City style. Every type of ethnic, fusion and fabulous food, prepared fresh daily, in food trucks on every block and in every borough.
Officially there are 4,235 food vendors in New York City, but unofficial estimates (which include non-permitted vendors, as well as rented and black market licenses) are at least double that number.
Entrepreneurial, fun, and, with a rapidly growing market, food trucks are beyond popular. But, it’s also a competitive market so it takes more than wonderful waffles, like the Belgian awesomeness of Wafels & Dinges, to keep customers coming back and to turn a profit.
It takes technology—starting with the right dongle.
No, a dongle isn’t a type of donut fusion with some exotic glaze. It’s the small credit card reader that attaches to phones, tablets and laptops so people can pay using a card.
Square has been the popular choice for this task since at least 2011, according to an article in Mashable. It, and digital tools like it, “make running a mobile business much easier and more efficient, since you don’t have to waste time counting cash or getting change from the bank.”
Square also has services to track sales, set up price lists (including specials!) and manage inventory. Square charges, on average, about 2.75 to 3.5 percent of the sale which makes them affordable on a lean budget. Other, similar, merchant vendor devices and services are offered by PayPal.
Once a food truck has the ability to accept payment in all forms, the next step (a daily step!) is to let customers know they’re open and ready for business.
This requires social media, including Twitter and Facebook, as well as membership with a mapping and food truck-tracking website and app.
Why the need to have multiple, facile, platforms and apps?
The most obvious reason: food trucks are mobile. With traffic, construction, protests and parades trucks need to be able to adapt to ever-changing landscape of city—yet still let people know where to find the food.
Social media lets food-truck-fans follow digitally so that following the path of favorite trucks literally is easier. Also, in order to make ends meet many trucks offer catering and delivery—usually via-online-ordering.
That’s where joining up with a site like RoamingHunger really comes into play. The company has been around since 2009 and has maps of multiple cities where all the best food trucks are listed, mapped (with time as well as place!) and tracked.
Based on the site’s list of popular trucks, including Korilla BBQ which won the Rookie of the Year Vendy in 2011 and is still going strong, connecting to a website like RoamingHunger is mandatory for mobile eateries. It effectively gets the word out and brings customers in.
For those on the other side of the counter, the food-truck-foodies, technology makes finding new options and old favorites easy. In addition to RoamingHunger, FoodTrucksIn offer location and contact information for food trucks (if the truck has “checked in”) as well as a sort feature for hungry foodies to look for the exact type of food in which they’re interested.
Of course, for calorie-free enjoyment there’s always Pinterest and Instagram. Many food truck vendors use these sites to highlight their really “wow” menu items.
Though you may still be uncertain which food trucks to visit for lunch as the weather gets warmer, one thing is for sure: food trucks and technology may both be mobile, but as a pairing they aren’t going anywhere.
The concept of ride-sharing, exemplified by popular services Uber, Lyft and their corresponding apps, is still a fairly fresh transportation trend. Unlike regular planes, trains, and automobiles, ride-sharing apps constitute startup business models that have the potential to disrupt entire transport ecosystems—especially in regards to the already robust taxi fleets in major cities like New York.
Will taxi fleets be a thing of the past, lost by the wayside like horse-drawn carriages? New research out of the Massachusetts Institute of Technology suggests that, if passengers get on board with the car-pooling elements of ride-sharing services, New York City’s transportation network could be supported with just a quarter of its current 14,000 yellow cabs. As few as 3,000 vehicles, researchers say, could service the entire metropolis.
Because the remaining vehicles could be Ubers, Lyfts, Junos, Vias, Getts, or other black car with an app attached, New York City could in theory pull a whopping 85% of its yellow cabs and still service 98% of commuter demand. This would come with huge consequences, both good and bad. As an obvious negative, thousands upon thousands of drivers would lose their jobs. As a positive, congestion could clear up significantly along with pollution.
Of course, these predictions are still largely speculative. They operate on the assumption, first of all, that commuters would be willing to use ride-sharing apps and, importantly, share their cars with other people. Since many people choose cabs to avoid sharing space with strangers, this assumption may be a stretch.
Researchers also factored the rise of autonomous vehicles into the equation. Their algorithms suit autonomous vehicles best, as this technology would in practice plan routes most efficiently. The whole point is that less traffic, smarter vehicles, and ride-sharing would make cab-hailing (and even driving) unnecessary. Without autonomous vehicles, you still get traffic and accidents, meaning more drag-time on the road.
It’s true nonetheless that autonomous technology is progressing rapidly, with investments in the field growing too. But the fact remains that most Americans are simply not interested in autonomous vehicles, and cite a lack of trust as a big reason.
But assume that autonomous cars do catch on in a big way. PBS speculates that this would simply lead to more congestion and emissions, as people would choose go about their professional or personal activities enroute. If people are willing to work, eat, and sleep on the road, this is certainly a possibility. So the question becomes, are New Yorkers more likely to get comfortable in a driverless car for a grueling but hands-free commute, or rub up against strangers for a fast one?
Whatever the case, New York City’s taxi drivers appear to be bracing themselves for change, whatever magnitude it may be and however soon. Though researchers claim that limiting fleet number would be an improvement—the same amount of money for shorter shifts—not everyone is convinced.
The shift is well underway, and taxi drivers are feeling it. According to the New York Times, taxi medallions are going for half of the $1.3 million recorded just three years ago, and the average number of daily taxi trips has been reduced by 100,000 in comparison to six years ago. As more people grow comfortable using apps to catch rides, the decline of yellow cabs isn’t just inevitable. It’s already happening.
In a way, the vanishing of taxis, if and when the time comes, will be the end of an era. Yellow cabs have become synonymous with New York life: a quintessential flash of color in a sometimes gloomy cityscape. It’s hard to imagine the city without them. But nostalgia can’t erase the fact that ride-sharing is cheaper, easier, and more efficient than sticking your hand into the street and hoping to catch a car at random.
If taxis become obsolete, is transport system run by ride-sharing startups ideal? Judging by the recent backlash against the Uber, perhaps not. Ride-sharing companies, still only about decade old, have a lot of kinks to work out in order to prove that they are in the drivers’, employees’ and customers’ best interest. Given the fierce competition, we’ll likely see adjustments in the market to meet the demands and preferences of the public. If the result is black instead of yellow, so be it.
Hint: Yes, and Maybe Sooner than We Thought
While finding shelter may be one of the oldest human instincts, the way we find shelter may be about to change drastically—at least when it comes to buying or renting a new home.
In early December, 2015, a father-son team, Miquel and Ami Berger, of Albany, New York created an app that works with Amazon Echo–one of the many devices currently available in the U.S. that offer electronic virtual assistants. In the case of Amazon, the assistant is named “Alexa.”
Virtual assistants, from Alexa, to Apple’s Siri and Microsoft’s Cortana, respond to vocal prompts and do everything from finding a coffee shop to getting directions to The American Museum of Natural History to turning on the lights in your home– depending on how digitized and wired-up your life is. (For a humorous explanation of the benefits and limits of various personal assistant devices, or “the genie in the hockey puck” read OnComp’s blog.)
So, how does the app work? Pretty much like having a conversation with an agent or relator who has every MLS listing in their head–albeit a formal and limited conversation. First you ask Alexa to “open real estate.” Alexa will then say, “welcome to your virtual agent” and you’re off. Do you want to buy, rent or sell? How many bedrooms? What’s your price range?
The app is being tested in the Berger’s hometown of Albany and is one of only a few on the market.
Does that mean the market is limited? Will people really use a disembodied electronic voice to find a new home? Trends indicate that yes, this is the next technology step in house hunting.
According to the National Association of Relators, in 2015, 51 percent of home-buyers found their house on the internet and 34 percent used an agent. By comparison, eight percent of home-buyers saw a yard sign or an ad for an open house.
Digital assistant apps are, essentially, where the internet and the agent are one and the same.
Still seems far-fetched? Well, remember when phones were only used to make phone calls?
Like smart phones, virtual assistants are getting smarter and more useful every day. In June, Fortune magazine reported that Alexa had more than 1,000 skills, due the multitude of apps being developed for the Echo device.
If the use of digital assistants explodes the way smart phone use in general has—64 percent of American adults now own a smart phone, which is nearly double the number reported in 2011 according to the Pew Research Center– then asking an app to find you a place to live could become common-place. The same Pew survey also reports that phones are already used for everything from checking on health conditions to applying for jobs.
Is it such a stretch, then, to imagine a scenario where a frustrated renter is standing in their tiny, galley, kitchen and walking Alexa, or Siri, through filling out forms for a mortgage? One that will cover a larger home with a real kitchen!
Take into account that 35 percent of the homes purchased in 2015 were by first-time buyers, and that the median age of first-time buyers was 32. These older Millennials, despite their generation’s bad-rap, are tech-savvy grown-ups who need a great place to live.
Where are they going to look for information? Clearly, not the newspaper or yard signs. But asking a personal, digital, agent to find the perfect home?
That’s not just in some far-off, fantasy, future—it’s here.
Slowly but surely, technology is digitizing the real estate market in ways we may never have guessed possible at the turn of the century. Instead of leafing through hefty paper listings, a new web of opportunities has surfaced at tips of our fingertips. These innovations are changing the game for buyers, renters, agents and developers, for better or for worse.
As it is, 68 percent of real estate agents are under 35, while 32 percent are under 25, meaning over half are millennials. They grew up with technology, and the best among them are utilizing their tech-savvy upbringing to cultivate successful careers in the industry.
Here are some of the top apps and services, born from technology, that are giving real estate insiders — as well as those that buy and rent from them — an edge:
Zillow & The Big Three
There’s a new way to find apartments, and while it sometimes goes by the name of Zillow, it’s a wider spread phenomenon with various names and faces — all of which live online.
“I spent hours on Zillow when looking for my current apartment,” said Brooklynite Jackie of her experience. “The map feature is particularly useful, because it compares costs and physical locations all at once.” Jackie was eventually able to find a great deal in Crown Heights.
Zillow is one of several leading rental-finding websites out there. The company owns StreetEasy, known for its quirky NYC subway ads, and Trulia, another serious force in the market (together, they can be considered the Big Three). Before these crop of startups became popular, Craigslist was a popular go-to for renters especially.
Before finding Zillow, Jackie and her boyfriend Matthew used Craigslist to find apartments to extremely mixed results.
“It’s much dicier,” Jackie says of the process. “People can put whatever they want on there, and it’s not always accurate. My mom was scammed once that way, so I definitely don’t trust it anymore.”
Now, the marketplace is rather crowded. Alongside the Big Three there’s Zumper, Lovely, Movement, and Urban Compass, PadMapper, RentHop, Naked Apartments, and plenty more. Many share the map layout, filters, and other search and listing features boasted by Zillow and its acquisitions.
According to BrickUnderground, even the Big Three differ in their algorithms and approaches, so it’s tricky to know what’s best, or even what’s most accurate. Whatever the case, the diversity of options gives renters an edge in finding what they are looking for, and both brokers and agents can find prospective tenants through the platforms. Other than that, it comes down to taste. Jackie says some of her friends use three or more to compare prices.
Of course, some realtors don’t like these services, and there are good reasons for their reservations.
Samuel Wood, NYS Licensed Salesperson for Island Beach Realty on New York’s Fire Island, does not use Zillow or its ilk. “Most of the information and addresses are incorrect,” he said, adding “I don’t regard any of their advertising impressions or views as legitimate leads.”
For other individuals in development and sales, it can potential buyers find their properties, and gives a sneak peak at the pricing of competitors in the neighborhood.
Paper is becoming increasingly unpopular, and worse, burdensome to the real estate industry. When you have to meet in person to sign or mail a document, that’s an extra barrier to entry.
“If I had the choice between two apartments that were equally nice,” Queens resident Ryan said, “I would definitely choose one that had the option of e-signing.” Ryan works long hours and has precious free time to spend. He also needs to move out of his current apartment and into a new one quickly, and can’t afford a delay.
“Once a landlord wanted me to go all the way to his office in the Bronx to sign a lease. That just seemed so unnecessary,” he said.
He’s not the only one, and many realtors and even landlords know it. It’s also easier for them make a deal if they don’t have to track down parties and deal with messy paperwork, after all. Digital signatures have been shown to improve turnaround-time by 80 percent.
Some of the leading e-sign platforms include DocuSign for realtors and DotLoop for brokers. Once this type of technology is adopted fully, paperwork will become much less of a pain, and perhaps fade entirely into obscurity.
Samuel Wood uses Adobe’s E-Signature for family vacation rentals. “Tenants can execute a lease by signing a document with their finger on a smartphone or tablet,” he said. “We receive positive feedback for making the booking process simple and instantaneous.”
Social Media & Marketing
You may still see flyers and magazines here and there, but by and large advertising real estate and real estate services has moved to the web. Getting listings out to buyers and renters, therefore, needs to happen primarily on the online where it can reach the most eyes.
As cofounder Bennat Berger of Novel Property Ventures wrote on his blog, “Disseminating your advertising onto different digital platforms…ensures that the listing isn’t overlooked. It also means that those browsing will have all the answers they want up front in terms of price and amenities, speeding up the process from first sight to lease-signing.”
For this reason, it’s important to take quality photographs of spaces for sale, writing clean and engaging copy, and even better, establish and maintain an online presence. Building your brand identity on Twitter, Facebook, and other high-trafficked social media platforms can help realtors and developers interact with potential customers and show off their expertise. Marketing teams can be huge assets on this front.
For the prospective buyer or renter, the more they can learn about and trust that the offerings meet their needs, the more favorable the entire experience will be.
It’s most helpful for those on the sales sade, however. According to Samuel Wood, the analytics are what make social media worthwhile. “You can create specific ads that target particular demographics, age groups, locations and interests….Digitally-savvy clientele love to get data traffic feedback from their listings.” Essentially, the analytics from social ads can inform whether to raise or lower listing prices.
It’s certainly true that technology has seeped into the industry for good, and it’s only a matter of time before it fully saturates. While disruptions like this will always have their downsides, industry insiders that follow the lead of digital trends are likely to generate the most leads in the end.