Todd Warlik thought the offer that hybrid real estate/tech company Opendoor made to buy his house near Powell Butte last February seemed high.
But Warlik, who works in Portland for a health care company, figured it wasn’t his responsibility to tell the company—which he describes as “super-easy and super-nice” to work with—that the $387,000 all-cash offer, less convenience fees, could well be more than he and his husband might get on the open market, without all the hassle of preparing their house for sale.
Turns out, his hunch was right. Out of curiosity, he tracked the resale of his former home, which went on the market for $427,000 after Opendoor made some cosmetic upgrades, and wound up selling for $380,000.
“I didn’t feel like there was necessarily a clear understanding of the finer points about the neighborhood and the area,” Warlik says carefully. “They were buying up homes and wanting to be a part of this hot market. It was a business transaction; they are looking for properties to sell.”
So it goes with Portland’s evolving iBuying market, which was jolted earlier this fall when its biggest player, Zillow Offers, abruptly announced it was pulling out of the iBuying game entirely, citing a glut of homes nationwide for which it had overpaid.
The iBuying process works like this: Sellers upload photos of and information their home to firms like RedfinNow and Opendoor. The real estate firms use that information and proprietary algorithms to come up with an immediate offer. Sellers get to avoid the stress of having to stage a home and host open houses, can set their own closing dates and can be sure that they’ll have an offer in hand; on the flip side, they pay a convenience fee and give up the chance to spark a bidding war on the open market.
In Portland, which was late to the iBuying trend, far behind strongholds like Dallas, Phoenix, and Las Vegas, Zillow's exit leaves two major players: RedfinNow and Opendoor. Representatives for both firms say that, despite Zillow’s pullout, they remain iBuying true believers and are in Portland to stay.
One reason it took a while to catch on in Portland is that our patchwork of housing stock—here a Craftsman, there a midcentury ranch, there a Victorian—doesn’t lend itself to accurate algorithm forecasting. Now, iBuying might be most likely to find success in the southwestern suburbs, where home styles are more uniform, and more modestly priced outer Multnomah County.
“We are in a position to weather any type of market conditions,” says Mark Melikian, RedfinNow market manager. “You have probably heard about our three Cs: certainty, control, and convenience. That may not be for everyone, but it will be for some who want a cash buyer, don’t want people in their house every day, and can pick their escrow closing date.”
At RedfinNow, which is the newest entrant to the Portland market, having just started up in the city in June 2021, Melikian says they’ll try to avoid the Zillow pitfall by not relying entirely on computer analysis, but pairing that with on-the-ground agents who can assess not just a home but its surroundings.
“Just from anecdotal comments customers would make, we would hear, 'Hey, Zillow gave us an offer $50,000 above yours, can you match it?’ And we would say: ‘There is no way we can match that. Our advice to you is to probably take that offer.’ It all reinforces our strategy to grow at a measured pace, and not go hog-wild. We don’t want to jump into the market and open up the floodgates right away, because we would overwhelm not just the RedfinNow team, but the renovations team and our brokerage partners. When we acquire a property and it is ready to go back on the market, we need to make sure the brokerage has bandwidth to handle that.”
(Warlik, by the way, says he checked with Zillow to see if they could beat Opendoor’s offer, and was told no dice. The Opendoor offer was plenty to set them up comfortably in a new Hillsboro home, he says.)
Opendoor’s growth in Portland has been steady after a dip right at the start of the pandemic, says Cesar Hernandez, a general contractor with KNC Renovations, who often works on the company’s house flips. For a while, he says, Zillow was everywhere in the market, and he suspected they were overextending themselves. Their departure, he says, clears the way for Opendoor and other, more cautious iBuying competitors—and more work for his firm.
“There are always going to be those people who haven’t fixed up their homes, for whom it becomes too expensive and too much to renovate, who are stuck in a situation,” Hernandez says. “That’s where Opendoor can offer them options, and that’s why they keep growing. We haven’t reached our full potential. There’s a lot more to this home-flipping.”