Opendoor trims losses, calls out pressure on commissions 

Despite a tough and slowing real estate market, the industry's leading iBuyer was able to pare its losses heading into summer.

San Francisco-based Opendoor Technologies announced it increased its revenue 28% in the second quarter, compared with the first quarter, and trimmed its net loss from $109 million to $92 million in the same period. The company's adjusted EBITDA also came in at the high end of its guidance.

Revenue is down 24% on a year-to-year basis, however, which is partially attributable to the overall slowdown in home sales.

'Change is coming' for commissions: During the earnings call, Opendoor CEO Carrie Wheeler was asked about the impact of the changes coming on August 17, which include mandatory buyer agent agreements and the removal of offers of compensation from multiple listing services.

She noted that while it's still early, the company has seen about "10 to 15 basis points of pressure" on commission rates in Opendoor's market since April. Typically, commission rates in recent years have been 5-6% split between the buyer agent and listing agent.

"While that's not a huge amount, it's decidedly different than all prior years where that rate has been pretty flat. So change is coming," Wheeler said.

In terms of third-quarter guidance, Opendoor is expecting lower revenue compared with the second quarter and a bigger loss in adjusted EBITDA.

What Opendoor had to say: "During the back half of the second quarter, we began responding to signals that indicated additional slowing in the housing market," Wheeler said. "While the housing cycle will eventually recover, the improvements we are making in the business are enduring. We continue to expect to make meaningful progress in both increasing acquisitions and reducing Adjusted Net Losses this year, as compared to 2023."

Key numbers

Revenue: $1.5 billion, down 24% compared with the second quarter of 2023 and up 28% from the first quarter of 2024.

Cash and cash equivalents: $790 million, down from $999 million at the end of last year.

Net loss: $92 million, less of a loss compared with the $109 million loss in the first quarter.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): A loss of $5 million, improved from a loss of $50 million in Q1 2024.

Units acquired/sold: 4,771 homes purchased, up 38% from  Q1 2024; 1,793 homes under contract, down 31% compared with Q1 2024.

Inventory: 6,399 homes with a value of $2.2 billion, up 19% compared with Q1 2024.

Notable moves

Mainstay, a market intelligence and transaction platform for the single-family rental industry, is separating from Opendoor and becoming an independent, privately held company. Opendoor's share in the company will be less than 50%.

"Mainstay was created with the goal of empowering single-family rental owners and residents in their decision-making," Wheeler said. "Mainstay has an important future ahead in shaping single-family rental industry standards and practices, and we look forward to its future success as an independent company."