Lending reports

Opendoor reports losses on 42% of August transactions

Opendoor Technologies said it lost money on 42% of deals in August as the U.S. housing market falters for builders, flippers and others looking to sell homes, Bloomberg wrote Monday (September 19).

Opendoor has warned investors that it expects to lose up to $175 million in adjusted earnings before tax, depreciation and amortization in the third quarter.

The losses do not include fees charged to customers or expenses incurred in renovating and marketing homes, and losses have been increasing since the housing market has shrunk as mortgage interest rates rise.

The company’s business model, often referred to as iBuying, is based on acquiring homes, carrying out light repairs and reselling the properties, often shortly after purchase.

Opendoor was doing well as house prices rose earlier in the year. But in June, with median home prices plummeting, Opendoor had to sell thousands of properties it had agreed to buy shortly before.

“We have provided guidance for the third quarter in our latest results to reflect lower than normal transaction volume and home price appreciation, as well as longer than normal holding times for our inventory associated with the change. the fastest in residential real estate fundamentals in 40 years. a representative for Opendoor said in a statement. “We acted quickly and decisively to prioritize inventory health and risk management.”

Opendoor did not respond to a request for comment from PYMNTS.

This comes after Opendoor faced a Federal Trade Commission fine for tricking customers into believing they could make more money selling their homes to Opendoor, PYMNTS wrote.

Read more: FTC fines Opendoor $62 million over ‘misleading claims’ about home-buying service

The company allegedly offered “misleading and misleading” information to potential sellers – with most customers earning “thousands less” than they would with a more traditional approach.

FTC Consumer Protection Bureau Director Samuel Levine said Opendoor built its business “using an old-fashioned deception about how much consumers could make selling their homes on the platform. form”.

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https://www.pymnts.com/economy/2022/august-retail-spending-up-against-backdrop-of-falling-gas-prices/partial/