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The process of buying or selling a home is one of the most strenuous and frustrating out there. Imagine this: You find a home and make an offer, but that home already has multiple bids so, after a long bidding war, you finally get the home of your dreams. But now after a clean inspection, the appraisal falls through and you ask yourself, ‘Why is this so complicated?’
Ian Wong and Opendoor asked that same question. On this episode of IT Visionaries, Ian discusses how his team built one of the biggest disruptors to the real estate market, and he shares an under-the-hood look at the science powering the Opendoor technology.
Key Discussion Points
- How Opendoor uses both structured and unstructured data to help price their homes, plus where Wong and his team gather this data in the first place.
- In what ways technology can step in to transform and streamline outdated processes (such as home buying and selling).
- Where Wong sees Opendoor and the real estate industry as a whole heading in the future.
For a more in-depth look at this episode, continue below.
There is no process more vexing and arduous than the buying or selling of a home. With many variables determining the cost of a home — location, square footage, and age — it can be overwhelming. Ian Wong, the Co-founder, and CTO of Opendoor, joined IT Visionaries and discussed how his company is hoping to ease those tensions during the home-buying process by making it a more seamless process.
Established in 2014, Opendoor set out to reinvent one of life’s most important transactions with a new, radically simple way to buy and sell homes by empowering the homebuyer with the freedom to move by delivering cash offers and negating the worry of a transaction falling through. To date, Opendoor operates in 21 markets and has secured more than 75,000 transactions.
Wong helped foster the idea for Opendoor in 2014, but it took a winding road of decision making, filled with a lot of questions and very few answers, that led the company down its current path.
“The first few months it was like, ‘Hey, is this something that people want? Is this just a conjecture that we have that isn’t really going to stick? How do we make sure that we have product-market fit and is this really something that people truly wanted?’”
Six years later, Opendoor remains one of the biggest revolutions in the real estate industry. Disrupting everything from mortgage lenders to real estate brokers. And it all started with a simple question: Why is this so difficult?
So why has the housing industry been so reluctant to change? According to Wong, there were a few contributing factors including age — first-time homebuyers are typically 32 years old — and time between transaction — around 10 years in between houses — leading people to believe that there wasn’t a real need for change.
“It was glaringly obvious to us back in 2014 that something is off with real estate,” Wong said. “If I were to tell you the only way you can sell your car is if you have to do test drives, you have to allow people to do test drives any given weekend for three months and there was a one-in-seven chance you can’t sell your car, and you have to pay a 6% fee on top of the whole thing, you would say that’s absolutely insane, but for some reason, we’re okay with that for housing.”
From there Wong and his team went to work, strategizing how they could take a stressful process and make it advantageous for the homeowner. According to Wong, the average home sits on the market for three months, a problem made worse because one in every seven pending contracts falls through. Knowing those stats, Wong said their objective was simple: utilize technology to take away the stress of selling your home.
“The tech is actually just woven to everything that we do,” Wong said. “So you can almost say that we are a technology company. You can also say that we’re an operations company and, of course, a real estate company.”
To simplify the selling process, Opendoor created the strategy of setting fair-market prices for homes and issuing cash offers, bypassing the typical 45-60 day window it takes to close on a new home. But with the housing market being an inexact science, what steps were Wong and his team forced to take to make sure they were offering competitive bids to the homeowners?
“We have to understand housing in a super deep way,” he said. “We have to collect a ton of data about properties across the country, and then we have to develop the right machine learning techniques and data science techniques to get the most out of that data, to predict what that home is really worth. And there’s a ton that goes into that.”
To streamline this process and make sure Opendoor was pricing homes accordingly, Wong said they had to get down to the smallest detail and create home checklists that can change region-by-region and state-to-state. To accomplish this task, Opendoor spent a lot of time on computer vision and crowdsourcing techniques.
While Opendoor began as a single-step process where homeowners could just quickly sell their home, the company’s goal is to serve the customer from end-to-end, from the selling process, to the mortgage and finally buying a new home.
“In order for you as a shopper to have a really seamless experience, we actually went and bought a mortgage company called Opendoor Home Loans,” Wong said. “And so the idea is that by being full-stack, our goal is it should just be a few clicks. It should be very similar to Amazon with a checkout flow.
“At the end of the day, it’s about making the buying and selling journey for consumers really easy,” Wong said. “Our goal at OpenDoor is to take a step back. and just to provide super simple, seamless, safe ways for people to sell homes, buy homes, and trade-in homes.”