Residential Magazine

Heather Harmon, Opendoor Finance

Opendoor bets that the digital revolution is just starting

By Jim Davis

Zillow sent shockwaves through the real estate world in November 2021 when the company abruptly closed Zillow Offers, its business that bought and sold homes. Zillow wasn’t the only instant buyer, or iBuyer, in the marketplace.

Several companies continue to use technology and algorithms to instantly make digital offers on homes. Opendoor was the pioneer of the iBuyer business model. Since opening in 2014, Opendoor has reportedly conducted more than 160,000 transactions. The company offers services in nearly 50 major markets, started its own mortgage business in 2019 and expanded that channel last year by purchasing digital mortgage brokerage RedDoor.
The San Francisco-based company predicts that the real estate industry is still in the early stages of a digital transformation. Scotsman Guide spoke to Heather Harmon, head of Opendoor Finance, about how Opendoor conducts its financing piece. After this interview but prior to publication, Opendoor agreed to pay $62 million in a settlement with the Federal Trade Commission over misleading marketing practices. The company disputed the FTC’s allegations.
What are the biggest misconceptions people have about your business model?
A lot of people associate Opendoor with our first product, which launched in 2014. That’s selling your homes directly to Opendoor. Even though that remains a core part of our business, we’ve built an entire suite of products that serves the customer at every point of the transaction from selling and buying to financing.

We all realize that real estate is antiquated and the mortgage approval process is no exception.

What is Opendoor doing right that Zillow did wrong?
I can’t really speak to all those nuances of the entire Opendoor operations and how that differentiates us, because I’m focused primarily on building Opendoor finance. This is a complex business and there’s so many aspects from pricing to operations to capital markets. In all of that, what I see is Opendoor is purpose-built, and that’s allowed us to scale and perform over eight years.
How does the financing piece work with Opendoor?
Opendoor’s app, OD Homes Brokerage (launched in California this past June) enables homebuyers to self-serve their loan preapproval in less than two minutes. In that package, the customer has the opportunity to have a simple and transparent way to instantly understand exactly what they’re preapproved for with zero impact to their credit. We started that in California with the intention to reach additional customers in the future. We want to expand that in the future.
Another point is our tech uses proprietary processes and technology, and it quickly identifies loan options that are available across dozens of lenders based on the customer’s qualifying criteria and their needs. We all realize that real estate is antiquated and the mortgage approval process is no exception. In fact, it’s the least optimized part of the transaction at this point. Our app streamlines that experience and makes it more intuitive.
How do you do things like verify income with the app?
We have all kinds of integrations and customizations built into that process to do it instantly on the borrower’s behalf. They give consent to be able to have income, assets and employment verifications done, and we can do that on their behalf.
Should mortgage originators be concerned about iBuyers?
With this Opendoor finance app, we are elevating the expertise of mortgage originators through our technology so they can focus on delighting the customer. We automate as much of this process as possible, streamlining communications within a chat system as well as translating loan options across lenders and calculating max buying power.
How do you connect with originators?
Our loan originators work for us. The customer is connected to one through the process of asking for their preapproval process through the app.
What else should I have asked you?
The opportunity to give a customer an empowered experience versus a sales experience is pretty powerful. We’ve been able to do that through digitizing and automating the process.
We’ve had our customers have this experience standing in line at Disneyland and at halftime for the NBA Finals. We’ve had a bartender get preapproved while he was serving happy hour. We’ve had a nurse get preapproved while she’s on break at the hospital. It’s just that easy and that simple. ●


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