Monetary Musings

Can Opendoor Ever Be Fixed?

Is iBuying is structurally broken?

OPEN -0.86%? is the news again and its got me thinking, I’ve been following this company since its early days, I had a few friends from FundingCircle who worked/are still there. What is the dream vs reality?

The Pitch vs. The Math

The original iBuyer promise was intoxicating, What if selling your home could be as easy as selling shares of Apple?

Click a button, get a fair price, close in days — liquidity in a market that normally takes months. Opendoor pitched itself as the market maker for homes. It would do what Wall Street did for equities: stand in the middle, buy from sellers, and resell to buyers.

The reality? Housing is not equities. It’s illiquid, lumpy, and capital intensive. Every home is idiosyncratic. Renovations, carrying costs, interest rates, and local market swings all pile into the spread.

Instead of acting like an exchange, Opendoor has looked more like a house flipper at industrial scale — and the margins show it. On $5 billion of revenue, they’re scraping 8%. One bad quarter of home price declines wipes that out.

What started as a fintech story quickly looks like a low-margin, high-risk balance sheet business — closer to a REIT than to a tech company.

The Core Problem: Thin Margins

The numbers bear this out:

On billions of volume, Opendoor ekes out an 8% gross margin. That’s not a tech margin. That’s a grocery store margin.

For context:

Opendoor, meanwhile, is stuck playing a balance-sheet game with margins that vanish the second home prices dip or renovation costs rise. It doesn’t take a housing crash — a quarter-point in mortgage rates, a 5% swing in local prices, or contractor cost inflation can erase the entire spread.

This is the iBuyer paradox: huge revenue, fragile economics. Scale doesn’t help if every dollar is this thin.

The Attach Fantasy

The bull case for Opendoor often pivots here: “Sure, flipping is thin, but we’ll make money on the extras — mortgage, title, insurance, warranties, solar…”

It sounds familiar. Carvana says the same thing about extended warranties and financing. Airlines say it about baggage fees. The story is: the attach is where the margin lives.

So I ran the math.

The reality: attaches are gravy, not salvation. They make a good business better, but they don’t turn a broken business profitable.

In fact, for attaches alone to cover the losses, penetration would have to exceed 70%.

That’s fantasy land.

The Rental Pivot: Flipper or Landlord?

One alternative bull case is simple: what if Opendoor stopped flipping and just became a landlord? Buy homes, rent them out, and build a recurring cash-flow portfolio.

Modeled Scenario

That NOI is actually larger than the iBuyer EBITDA projection (~$414M by 2030). On paper, rentals look more stable and more profitable.

But here’s the catch:

So yes, the rental pivot makes money. But it’s a different business with a lower multiple. You don’t get to be valued like a fintech disruptor — you get valued like a REIT.

Tech Leverage: Flipping vs. Renting

If there’s any hope for Opendoor, it has to come from tech leverage. The question is: where does AI and automation actually move the needle?

In the flipper model:

In the rental model:

The takeaway:

If Opendoor wants to stay a “tech company,” the leverage is in flipping. Renting might stabilize earnings, but it drags the company into the world of property management — where software helps, but never dominates.

How to “Fix” iBuying

If there’s a way to make iBuying work, it won’t come from cosmetic changes — it has to be a redesign of the engine itself. The levers look like this:

Without these changes, iBuying stays what it is today: an asset-heavy, low-margin gamble. With them, it might resemble a scalable liquidity platform.

My Thesis

After all this analysis, here’s where I land:

I want Opendoor to succeed — the promise of instant liquidity in housing is compelling. But I can’t see a path where this works.

Sometimes the simplest answer is the hardest to accept? You can’t scale a business on 8% spreads in the most volatile asset class in America. You can standardize, you can automate, you can attach insurance and mortgages. But unless the core iBuyer engine fundamentally changes, is Opendoor just a clever idea with broken economics?

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