What changed in this filing

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Item 1. Business

2022-02-24 compared with 2021-03-04 · 218 added, 153 removed, 120 unchanged (76% of the section changed)

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We are a leading digital platform for residential real estate.

In 2014, we founded Opendoor to reinvent one of life’s most important transactions with a new, radically simple way to buy and sell a home with more convenience, control and cost savings than ever before.

By leveraging software, data science, product design and operations, we have rebuilt the entire service model for real estate and have made buying and selling possible on a mobile device.

We believe our digital, on-demand experience will be the future of how people buy or sell a home.

Our goal is to redefine residential real estate, the largest undisrupted category in the United States.

In 2020 alone, more than 5.6 million existing homes were sold, representing nearly $1.9 trillion in transactions.

Additionally, with 66% of Americans living in a home they own, housing is the single largest consumer expenditure in the United States, ahead of transportation, food, insurance, and healthcare.

Yet, in a world with purchases increasingly migrating online, the real estate transaction has largely remained unchanged.

In 2014, we founded Opendoor to reinvent one of life’s most important transactions and make it possible to buy, sell, and move at the tap of a button.

By leveraging software, data science, product design and operations, we have rebuilt the service model for real estate and have made buying and selling possible on a mobile device.

We believe that the end state for the real estate marketplace will inevitably be a marketplace powered by technology.

Residential real estate is the largest undisrupted category in the United States.

In 2021 alone, more than six million existing homes were sold, representing nearly $2.3 trillion in transactions.

Additionally, with approximately two-thirds of Americans living in a home they own, housing is the single largest consumer expenditure in the United States, ahead of transportation, food, insurance, and healthcare.

Yet, in a world where purchases are increasingly migrating online, the real estate transaction has largely remained unchanged.

The typical process of buying or selling a home is complex, uncertain, time consuming and primarily offline.

A traditional home sale requires countless decisions, often brings unexpected costs, and takes approximately three months from start to finish.

A traditional home sale requires countless decisions, an average of six intermediaries, often brings unexpected costs, and takes approximately three months from start to finish.

Ultimately, the consumer is left dissatisfied with a broken, disjointed experience.

We streamline the process of buying and selling a home into a seamless digital experience, eliminating uncertainty for sellers.

Sellers can go to Opendoor.com, receive an offer, sign and close on the date of their choice.

Buyers can download the Opendoor app, tour and visit homes in a few taps with self-tours, shop for financing at competitive rates, and make an offer, all with just a mobile device.

We streamline the process of buying and selling a home into a seamless digital experience that is simple, certain, and fast.

Sellers can go to Opendoor.com, receive an offer, and sign and choose their closing date.

Buyers can download the Opendoor app, tour and visit both Opendoor and non-Opendoor homes, and make an offer, all with just a mobile device.

Homebuyers and sellers can also integrate our current suite of adjacent services, such as title and escrow and Opendoor Home Loans to complete their transaction.

We have built a simple, on-demand way to buy and sell a home.

Over the past five years, customers have shown their desire for our digital, on-demand real estate solution.

Since launch, we have bought and sold over 80,000 homes, making us one of the largest buyers and sellers of single family homes in the United States.

Over the past seven years, customers have shown their desire for our digital, on-demand real estate solution.

Since launch, we have bought and sold over 140,000 homes, across the United States.

We have historically achieved growth at scale, with revenue growth of over 100% in each of the four fiscal years preceding 2020, when the COVID-19 pandemic impacted our business.

In 2019, we sold almost 19,000 homes and generated $4.7 billion in revenue.

In that year, more than 560,000 consumers requested an Opendoor offer on their home, averaging approximately one every minute, and our homes were visited over 1.6 million times, averaging over 4,500 visits per day.

Importantly, we have been able to achieve this growth while focusing on delighting customers, as reflected in our average Net Promoter Score of 70 from our sellers.

In 2021, we sold over 21,000 homes and generated $8.0 billion in revenue, which represents a compound annual growth rate of 83% since 2017.

Importantly, we have been able to achieve this growth while continuing to delight customers with an average Net Promoter Score of over 80 from our sellers.

Since our initial market launch in Phoenix in 2014, we have expanded across the United States and operated in 44 markets as of December 31, 2021:

Atlanta, Austin, Charlotte, Dallas-Fort Worth, Denver, Houston, Jacksonville, Las Vegas, Los Angeles, Minneapolis-St.

Paul, Nashville, Orlando, Phoenix, Portland, Raleigh-Durham, Riverside, Sacramento, San Antonio, Salt Lake City, Tampa and Tucson.

More importantly, we have just scratched the surface and believe we are in the early stages of the digital transformation of real estate.

Over the coming years, we plan on increasing our market share, launching additional cities across the country, and expanding our products and services to become a digital, one-stop shop for buyers and sellers of residential real estate.

Asheville, Atlanta, Austin, Birmingham, Boise, Charlotte, Chattanooga, Cleveland, Columbus, Corpus Christi, Colorado Springs, Columbia, Dallas-Fort Worth, Denver, Greensboro-Winston, Greenville, Houston, Indianapolis, Jacksonville, Kansas City, Killeen, Knoxville-Morristown, Las Vegas, Los Angeles, Miami, Minneapolis-St.

Paul, Nashville, Northern Colorado, Oklahoma City, Orlando, Phoenix, Portland, Prescott, Raleigh-Durham, Reno, Riverside, Sacramento, Saint Louis, Salt Lake City, San Antonio, San Diego, Tampa, Tucson, and Washington, DC.

We believe we are still in the early stages of the digital transformation of real estate.

Over the coming years, we plan on increasing our market share in existing markets, launching in new markets across the country, and expanding our products and services to become a digital, one-stop shop for buyers and sellers of residential real estate.

Market Overview

Residential real estate remains the largest undisrupted market in the United States:

Residential real estate is a massive offline market.

Approximately 66% of Americans are homeowners, and many more aspire to be.

In 2020, there were approximately 5.6 million sales of existing homes, totaling approximately $1.9 trillion of transaction volume with a median home price of $296,700.

Online penetration represents less than 1% of home transactions, based on iBuyer (companies that use technology for online residential real estate transactions) volumes in 2019 and 2020.

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With transactions totaling approximately $2.3 trillion in 2021, online penetration based on iBuyer (companies that use technology for online residential real estate transactions) volumes represented less than 1% of 2021 real estate transactions.

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The current landscape is highly fragmented.

Today, almost 90% of residential real estate transactions involve an agent.

There are over two million licensed real estate agents in the United States, who on average complete less than six transactions per year and many of whom do not solely work in real estate.

Today, 90% of residential real estate transactions involve an agent.

There are over three million licensed real estate agents in the United States, who on average complete less than five transactions per year and many of whom do not solely work in real estate.

The result is often an inconsistent and frustrating experience for consumers looking for guidance in what is typically the largest financial decision of their lives.

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While the majority of home buyers browse for homes online, the transaction is still largely offline, requiring real estate agents to access homes and requiring physical closings.

COVID-19 has increased the demand for digital-first experiences as consumers prioritize safety and convenience.

This tailwind has been further heightened by 72 million digitally-native millennials who are jumpstarting their path to homeownership as they work from home, explore less densely populated areas, and pursue more space.

The COVID-19 pandemic catalyzed an increase in demand for digital-first experiences with consumers prioritizing safety and convenience.

It has also accelerated the adoption of remote work, facilitating greater geographic mobility as consumers explore less densely populated areas, and pursue more space.

The traditional process of buying or selling a home is a lengthy and stressful experience for both the seller and buyer.

For the nearly 90% of sellers that list their home on the market using an agent, this is their typical experience:

For the 90% of sellers that list their home on the market using an agent, this is what their experience typically looks like:

• Find a listing agent.

Before the seller can list, they must find a qualified agent.

75% of sellers contact only one real estate agent before listing.

Over 80% of sellers contact only one real estate agent before listing.

• Prepare the home for listing.

The seller often needs to get the home “sale ready” and this preparation requires time and money.

Homeowners spend an average of $6,400 to prepare their home for sale just on paint, cleaning and staging, and this spend can be significantly higher if upgrades are necessary to the kitchen, flooring or bathrooms.

The seller often needs to get the home “sale ready”.

This preparation, including cleaning, staging and any necessary upgrades, typically involves a lot of guesswork, time and money.

• List the home.

A home needs to be listed for over 30 days on average before it goes into contract.

A home typically needs to be listed for 30 days or more on average before it goes into contract.

• Host open houses and home visits .

During the process, the seller will host dozens of strangers walking through their home, and deal with the hassle of cleaning up and clearing out, often on short notice and during inconvenient times.

During the process, the seller will typically host dozens of strangers walking through their home, and deal with the hassle of cleaning up and clearing out, often on short notice and during inconvenient times.

• Receive an offer.

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Finally, there is an approximately 20% chance the contract falls through between signing and closing (based on average multiple listing services (“MLS”) contract fall through rates in our markets in 2021), forcing the home seller to start the entire process all over again.

Additionally, we estimate approximately two-thirds of home sellers are also home buyers.

Additionally, we estimate over two-thirds of home sellers are also home buyers.

These customers face an additional set of challenges to line up their home purchase with their sale:

• Contingencies.

Many Americans cannot purchase their next home until they sell their existing home.

Many Americans are reluctant to sell or cannot purchase their next home until they know with certainty what they can afford for their next home.

Few Americans can qualify for two mortgages and few have enough money for two down payments.

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• The “double move”.

Alternatively, homeowners can sell their current home, move into a rental, and then buy a new home, forcing them to move twice and bear those costs.

Alternatively, homeowners can sell their current home, move into a rental or hotel, and then buy a new home, forcing them to move twice and bear those costs.

Opendoor is an end-to-end real estate platform enabling consumers to buy and sell a home online.

We also offer a number of services that revolve around customers who sell directly to Opendoor (what we consider our core transaction), including those that may also be buying their next home, as well as for buyers touring our homes independently via our app or website.

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We expect these adjacent services to be highly accretive to our unit economics over time.

Today, our product and service offerings include:

A modern way to sell.

• Opendoor Complete.

Launched in late 2021, Opendoor Complete brings together all of our products and services into a single, streamlined experience so customers can move seamlessly.

It provides customers with certainty on the equity in their existing home with our all-cash offer, the power to make a stronger offer on their next home with our cash backing, and the ability to line up closing dates and avoid double moves or mortgages.

Customers are able to track and manage their move via a consumer dashboard and interact with Opendoor through a single primary point of contact, significantly streamlining the process of selling and buying their home.

• Sell to Opendoor.

By selling to Opendoor, homeowners can avoid the stress of open houses, home repairs, overlapping mortgages and the uncertainty that can come with listing a home on the open market.

Using our mobile app and

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website, sellers can receive a competitive cash offer online.

Post offer, we conduct a virtual interior home assessment and a contact-free exterior assessment to verify the home data information.

Using our website, sellers can receive a preliminary offer online.

We then conduct a virtual interior home assessment and a contact-free exterior assessment to verify the home data information and finalize the offer, taking into consideration the home’s condition.

Sellers can then select their preferred closing date and close electronically (where permitted).

We also recently launched “List with Opendoor” in select markets.

This broadens our product suite for potential home sellers and gives them the choice between two superior sales options.

For customers who sell directly to us, we collect a service charge that covers the costs of buying, maintaining, marketing and selling the home.

In 2020, our service charge was typically 5% to 8% and varied by market.

Our final offer provides the homeowner with certainty and transparency as to their expected sale proceeds.

This compares favorably to the traditional listing process, which typically includes an average broker fee of 5% to 6%, as well as a number of additional costs, such as resale concessions, inspection costs, double mortgage payments on two homes, and additional moving and storage costs.

For customers who sell directly to us, we charge a service fee.

We also ask for a repair credit that relates to our assessment of home condition.

Beginning in the first quarter of 2021, our service fee was set at 5% across all markets.

This can compare favorably to the traditional listing process, which can include a broker fee of 5% to 6%, depending on location, as well as the potential for a number of additional costs, such as resale concessions, inspection costs, staging costs, double mortgage payments on two homes, and additional moving and storage costs.

Many of these expenses may be unforeseen by the homeowner at the outset.

Customers have responded positively to this modern way of selling.

As a result, we achieved a real seller conversion rate of over 30% in 2019 and 2020 (excluding March through August 2020 when we were not fully operational across all markets) .

Our final offer, inclusive of purchase price, service fee, and repair credit, provides the homeowner with more certainty and transparency as to their expected sale proceeds, while removing the hassle of doing any repairs to get the home “sale ready.”

Customers have responded positively to this modern way of selling, enabling us to achieve a real seller conversion rate of over 35% in 2021.

We define real sellers as homeowners who are intent on selling their home and either enter into a contract to sell their home to Opendoor or list their home on the MLS within 60 days after receiving an offer from us.

At a 6% service charge, we found that over 40% of real sellers chose to sell their home to Opendoor.

Even with a higher service charge of 10%, approximately 20% of real sellers still chose to sell to Opendoor.

More importantly, due to our focus on delighting the customer, we have a best-in-class Net Promoter Score of 70 from our sellers.

A modern way to buy.

Opendoor has built an on-demand, seamless and digital home buying experience.

Unlike the traditional process that is intermediated by agents, Opendoor home buyers can use our app or website to self-tour or virtually tour homes at their convenience, shop for financing, submit an offer and close on their timeline.

In 2019, we also launched “Buy with Opendoor” in select markets, which is a seamless buying experience that taps into Opendoor’s capabilities such as cash offers, home operations, and digital, automated fulfillment for all homes listed on the market.

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A modern way to move.

For customers who are both selling and buying, we have built a trade-in product that enables customers to buy and sell in a coordinated transaction, eliminating resale contingencies, double moves and double mortgages.

A digital one-stop shop.

A large number of services revolve around and are dependent on the home transaction.

After we have earned our customers’ trust, we are able to introduce a range of services adjacent to the core real estate transaction in a highly convenient and integrated way.

Currently, we offer:

• Buy with Opendoor.

Opendoor has built an on-demand, seamless and digital home buying experience with the launch of Buy with Opendoor in 2019 and the Opendoor Backed Offers feature in early 2021.

Buy with Opendoor is currently offered in 16 markets.

Unlike the traditional process that is intermediated by agents, Buy with Opendoor customers can use our app or website to self-tour or virtually tour both Opendoor and non-Opendoor homes at their convenience, shop for financing and submit an offer backed by Opendoor’s cash.

In these transactions, we collect the buyer’s agent commission from the seller.

With Opendoor Backed Offers, qualified buyers can present the certainty of an all-cash offer to the seller, free of financing, appraisal, and home sale contingencies, thereby increasing the attractiveness of their offer and their chance of being able to purchase that home.

In certain instances where the buyer takes longer than expected to obtain financing, we leverage our expertise in the home acquisition process to acquire the home.

Once the buyer has obtained financing, the buyer can purchase the home at the price Opendoor paid.

Customers interested in Opendoor Backed Offers can also quickly pre-qualify with Opendoor Home Loans in available markets and conveniently integrate mortgage financing with the competitive and time-sensitive home bidding process.

• Opendoor Home Loans.

In late 2019, we launched Opendoor Home Loans, a tech-enabled mortgage platform for customers looking to buy or refinance a home.

Since then, we have expanded our market coverage for this product to 26 markets across nine states.

We have built this platform from the ground up with the goal of combining savings, convenience and certainty into a simpler, more transparent mortgage process for customers.

In 2021, we acquired the assets of RedDoor, a digital-first mortgage brokerage, which will help accelerate our ability to make buying a home as easy as a tap of a button with a 60-second pre-approval process and digital, mobile-first app experience.

• Title and Escrow.

We offer customers seamless and integrated title insurance and escrow services through our affiliated companies.

In the markets where our affiliates offer title insurance services, we provided title insurance services for over 80% of Opendoor home transactions that closed in 2020.

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We offer customers integrated title insurance and escrow services through our subsidiaries.

Currently, we offer title insurance services in a majority of our markets and on both the acquisition and resale side of the transaction.

In the markets where our title services are offered, we provided title insurance services for over 75% of Opendoor home transactions that closed in 2021.

Our title companies charge buyers and/or sellers fees related to settlement and escrow and these fees vary by market.

Additionally, as agents for national title insurance companies,

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• Home Loans:

In late 2019, we launched Opendoor Home Loans, a tech-enabled mortgage platform for customers looking to buy or refinance a home.

We have built this platform from the ground up and have combined savings, convenience and certainty into a simpler, more transparent mortgage process for customers.

Proprietary Data and Pricing Accuracy in Home Valuation

While the real estate industry lends itself to the use of a plethora of publicly sourceable data, much of this data lacks the quality and specificity essential to accurately price homes.

Since Opendoor’s founding, we have built world-class data science capabilities and systematized tooling to gather, aggregate and synthesize an expanding catalog of proprietary, hyperlocal data in order to improve and automate pricing decisions.

they charge title insurance premiums based on promulgated rates or rates filed by national title insurance companies, which vary by market.

Our Business Model

The vast majority of our revenue and margins today are generated by acquiring homes directly from individual sellers and reselling those homes to buyers.

We also provide additional services to home sellers and home buyers, including title and escrow services, Buy with Opendoor, Opendoor Home Loans and Opendoor Complete.

To achieve our long-term margin objectives, we must continue to provide competitive offers that customers choose, provide value-added adjacent services that our customers will increasingly adopt, and launch new adjacent services over time.

We plan to achieve operating leverage by growing our revenue at a faster pace than our fixed cost base, which includes general and administrative as well as technology and development expenses.

In the near term, given the size of the opportunity ahead, we plan to continue to invest aggressively in our business and appropriately balance trade-offs between growth and margin as we scale.

We generate demand for our services through organic awareness and word-of-mouth, paid media spend, and partnership channels such as our relationships with homebuilders and online portals.

Home sellers can visit our website or mobile app and answer a few questions about their home’s condition, features and upgrades.

For eligible homes, customers receive a preliminary offer, which can be refreshed at any time through their personalized seller dashboard.

All of our preliminary offers are algorithmically generated and require minimal human intervention.

In order to finalize our offer, we conduct a virtual interior home assessment and an in-person exterior home assessment to verify the condition of the home and determine what kind of repairs will need to be performed after we acquire the home.

We ask for a repair credit that relates to our assessment of home condition.

We have developed purpose-built software to guide home assessment workflows and collect over 100 unique data points regarding a home’s condition and quality.

In addition to informing the offer price for that particular home, we incorporate the proprietary data that we collect during home assessments as structured data into our underlying pricing models.

After all the data has been collected and incorporated, each offer is reviewed and finalized by members of our pricing team, allowing us to marry the best of our algorithmic insights with human judgment.

We produce the purchase agreement for the seller inclusive of repair charges.

Our objective is to provide a transparent and competitive cash offer and a customer experience that is simple, certain and fast.

We closely track the number of potential sellers who accept the Opendoor offer versus listing their home on the MLS.

This conversion rate is an important measure of the strength of our value proposition and driver of future growth.

Home acquisition and repairs

Once a seller has received and accepted our final purchase offer, we enable the seller to close the transaction on a flexible timeline.

This is a particularly important feature as over two-thirds of sellers are also buyers, who are often looking to line up the timing of these two transactions to ensure they have their next home to move to before locking in the sale of their home or to avoid double moves or mortgages.

This feature further differentiates our service from a traditional sale.

Following acquisition, we bear the subsequent risk of conducting repairs on a timely and on-budget basis.

The scope of our repair work before resale is focused on ensuring the home is in market-ready condition.

We engage third-party contractors within each market to conduct repairs, and continuously refine and adjust our repair strategies based on our operating experience in markets and reviewing neighborhood-level resale outcomes.

After we complete the repairs and list the home for resale, we market our homes across a wide variety of channels to generate buyer awareness and demand.

These channels include the Opendoor website and mobile app, local MLS and syndication across real estate portals.

We also generate buyer awareness through Opendoor signage for listed properties.

The majority of our sales are to individual consumers, with a minority sold to institutional investors.

Efficiently turning our inventory, inclusive of repairing, listing, and reselling the home, is important to our financial performance, as we bear holding costs (including utilities, property taxes, maintenance and insurance) and financing costs during our ownership period.

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As part of the listing and marketing process, we determine an appropriate resale strategy for each home.

As the principal rather than the agent in the transaction, we are in a structurally advantageous position as seller, relying on data-driven decisions against a large, diversified portfolio of homes.

Our proprietary pricing engine helps automate many of these steps, including relevant adjustments over time.

We manage and measure our inventory performance by acquisition cohort and by market, and our pricing models can incorporate granular, relative demand signals to optimize pricing and sell-through across the portfolio.

Our resale models, in conjunction with our pricing team, are designed to enable realized margins within our targets while maintaining appropriate transaction velocity and inventory portfolio health.

When we receive an acceptable offer on a given home, we enter into a resale contract.

Buyers will then typically conduct an inspection on the property, finalize their mortgage application process and ultimately take possession of the home upon closing of the transaction.

Industry-Leading Pricing Capabilities

Our ability to price homes competitively is fundamental to our business model.

Since our inception, we have prioritized investment in our pricing capabilities across our home acquisition processes and our forecasting and resale systems.

Our pricing function focuses on ensuring we are providing competitive offers to customers while managing acquisition volumes and resale policy decisions to meet our underwriting and risk management objectives.

These investments pair with a strong risk management focus that is embedded in our pricing, finance and operations teams.

To create our home offers, we algorithmically produce both an estimated offer price and an assessment of our confidence level in that estimate, and we then further validate that estimate with in-depth underwriting and risk assessment, including additional review from our in-house pricing associates, to finalize the offer.

We dynamically adjust our offers to account for the level of certainty in pricing each home.

This degree of certainty can be impacted by factors such as macro conditions, the condition or attributes of a home, or depth of home comparables.

We are constantly recalibrating our view of pricing and where market values are trending using high-frequency detailed metrics across all segments of our business, including numerous inputs related to the dynamics of market demand and supply across markets, home types and time periods.

While the real estate industry generates a wealth of publicly sourceable data, much of this data lacks the quality and specificity essential to price individual homes.

Since our inception, we have focused on making significant investments in our research and data science teams, modeling capabilities, and systematized tooling to gather, aggregate and synthesize an expanding catalog of proprietary, hyperlocal data in order to enhance and automate pricing decisions.

We have also made significant investments in acquiring various third party data to improve our pricing models and forecast quality.

Our proprietary models are informed by hundreds of data points that have been collected and synthesized in a structured way.

• Proprietary offline data.

We have conducted over 180,000 home assessments during which we collect over 100 data points on each home and its surroundings.

We have conducted approximately 375,000 assessments during which we collect over 100 data points on each home and its surroundings.

We have invested in building custom inspection and operator tooling to systematically source and translate home features into a robust data library.

Once we have purchased a home, we can collect additional proprietary home-level data through visitor feedback, visitor traffic and duration of visits.

These proprietary data points have led us to make over one billion annotations and corrections to MLS and tax assessor data, as well as build out new, non-traditional geospatial data assets, such as power line proximity and road noise level.

The additional home level data we collect from local vendors provides structured feedback on each home and further strengthens our data moat.

• Pricing accuracy.

These proprietary data points have led us to make approximately 1.4 billion annotations and adjustments to MLS and tax assessor data, as well as build out unique geospatial data assets, such as power line proximity and road noise level.

Once we list a home for resale, we collect additional home-level demand data such as home visits and visitor feedback, which enable us to continuously calibrate our resale strategy and acquisition home pricing.

• Responsive feedback loop.

Advancements in model sophistication and the integration of systematic modeling and human insights have accelerated our feedback loops, such that our pricing system can dynamically adjust to leading market indicators and human insights, and react to macro- and micro-economic conditions on a daily basis.

This responsiveness is critical to quality pricing processes and maintaining margins, especially in periods of volatility.

• Pricing competitiveness.

Our unique data works in concert with our pricing algorithms.

These algorithms use machine learning to drive pricing decisions through demand forecasting, outlier detection, risk pricing, and inventory management.

Over time, we have improved the pricing accuracy of our models as we add new data inputs and refine model logic, improvements that compound with experience and scale.

As we have continued to demonstrate improving accuracy, we have also been able to increase our number of fully automated home valuations.

Advancements in model sophistication have accelerated our feedback loops, such that our systems can dynamically adjust to leading market indicators and react to real-time macro- and micro-economic conditions.

Our pricing algorithms are designed to dynamically adjust to leading indicators and market conditions so that the business can react to real-time economic conditions.

This responsiveness is critical to pricing accurately and maintaining margins, especially in periods of volatility.

These algorithms use machine learning to drive pricing decisions through modeling of observed home sale prices, demand forecasting, outlier detection, risk assessment, and inventory management.

Over time, we have improved the quality of our pricing models as we add new data inputs and refine model logic, improvements that compound with experience and scale.

Robust Risk Management Framework

Forecasting and managing our business to seasonal and macro market changes is important for our overall results and balance sheet health.

Since our inception, we have prioritized investment in our pricing capabilities across our home acquisition

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processes and our forecasting and resale systems, and expect to continue to do so.

These investments pair with a strong risk management focus that is embedded in our pricing, finance and operations teams.

We evaluate the quality of our pricing models and processes using high-frequency detailed metrics across all segments of our business, including home acquisition, resale strategy and inventory health .

All of our pricing decisions are managed centrally, giving us a high degree of control over our overall growth and margin objectives.

While residential real estate markets are subject to fluctuations, as with any market, we believe we are well-positioned to manage our risk exposure due to the following:

• Our business model is based on transaction velocity and short-duration hold times.

We have historically concentrated our home purchases on those segments of the residential real estate market with the highest transaction volumes, thereby limiting the risk of involuntarily holding a home for longer than our target average days in possession.

Moreover, residential real estate prices tend to move gradually relative to other asset classes, which reduces our exposure to price fluctuations during our ownership period.

• Our pricing models and inventory management systems are designed to recalibrate to market signals on a daily basis.

Accordingly, changing market conditions are reflected in our pricing for new acquisitions, largely leaving previously-acquired inventory at risk to potential market volatility.

In addition, we employ sophisticated resale pricing management systems that allow us to optimize sell-through and margin using real-time, local market demand information, including down to an individual home level.

We believe that the quality and scale of information we utilize in our inventory management decisions and our ability to manage these decisions across a scaled, diversified portfolio provides us with a structural advantage over individual sellers or agents in the traditional home selling process.

• Our operations across 44 markets and a range of price and home types allow us to benefit from significant diversification effects.

Individual buyers and sellers are exposed to price and behavioral effects that are associated with specific markets or home segments.

Our scale and diverse coverage allow us to mitigate such exposures across a wider range of markets and home segments so that our overall risk per home decreases as we increase the breadth of markets, price points and home types across which we operate.

• Our listed homes are not occupied and are in sale-ready condition given the repairs and renovations we perform.

We believe that this increases the attractiveness and liquidity of our portfolio.

• At any moment in time, a significant portion of our inventory is under resale contract;

this means we have already found buyers for those homes and are in the process of closing the resale transactions.

This further limits the exposure of our inventory portfolio to macro market changes.

Low Cost Transaction Platform

Each component of our real estate business and our customer experience has been custom built from the ground up, focused on creating a scalable and vertically-integrated transaction platform that will delight customers.

We have built world-class capabilities in pricing, home operations, fulfillment, capital markets and customer service.

Instead of relying on the traditional, inefficient processes in place, we have intentionally developed our systems around technology, automation and centralization.

We have demonstrated transaction velocity of over 100 homes per day during our busiest quarters, and our systems have the capacity to support substantially higher volumes.

This platform is the foundation of our lower cost structure which allows us to drive down our costs per unit as we scale and, ultimately deliver a lower cost service for customers.

We have established a network of hundreds of local service providers that use our proprietary technology to identify and complete home repairs and maintenance, which optimizes our system to reduce delays, eliminate waste and improve quality, while also capturing additional data.

Due to our scale, we have also driven down the cost of materials employed in our home repair processes through volume discounts.

We continue to invest in having the lowest cost platform, which allows us to provide more competitive offers to home sellers and accelerate our growth.

Each component of our real estate business and transaction experience has been purpose-built to delight our customers through a streamlined, scalable and vertically-integrated platform.

We have reimagined the traditionally inefficient and labor-intensive processes required to purchase, repair, and resell each home.

We have invested in developing technology that enables automation, centralization and virtualization, in order to reduce cost, increase speed and improve quality of execution.

Our proprietary construction management technology enables us to drive efficiencies across all home servicing functions, tying together pre-acquisition assessments, pricing, repair scoping, centralized back-office operations, and renovation project management.

Our systems and processes facilitate the centralization of previously local labor, which provides staffing flexibility, cost economies, training and quality enhancements, and faster turnaround times, all of which result in a superior customer experience.

One example is our virtual home assessment capability where home sellers are able to take our operators on a virtual, guided tour of their home.

Our centralized team of construction experts then determine home condition or flag for any outlier risk prior to acquisition, leveraging a combination of industry best practices and big data.

Virtual and self-service assessments have reduced our turnaround time to provide a final offer, as well as our dependence on local third-party labor, while preserving the quality of our home assessments.

We have also established a network of more than 700 trade partners and local service providers that use our proprietary technology to complete home repairs and maintenance.

By leveraging our technology platform and directly interfacing with our trade partners, we reduce delays, eliminate waste, and improve quality of repairs while capturing data at every step to continuously improve the system.

Due to our scale, we have driven down the cost of materials used in our home repairs through

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volume discounts.

In addition, we have designed our home inventory management processes and home access technology to ensure our homes are regularly cleaned, well-maintained and safe to enable our on-demand, self-tour experience.

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Increase penetration in existing markets.

Approximately 1.3 million homes were sold in our existing markets in 2020, and our resales represented approximately 0.8% of all transactions in those markets, driving $2.6 billion in revenue.

In 2019, approximately 1.1 million homes were sold in our existing markets and our resales represented approximately 1.7% of all transactions in those markets, driving $4.7 billion in revenue.

In 2019, our last full year of operations before the onset of the COVID-19 pandemic, we estimate that only 6% of sellers in our markets received an offer from Opendoor and either sold their

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home to us or subsequently listed their home on the MLS within 60 days.

We are focused on driving penetration and growing market share in our existing markets as we increase awareness and more home sellers and buyers look to transact online.

We are focused on continued growth in our existing markets — greater scale improves awareness, trust and adoption, operational cost efficiencies, and pricing competitiveness from more data.

Across all of our markets, we estimate that less than 10% of sellers received an offer from Opendoor and either sold their home to us or subsequently listed their home on the MLS within 60 days.

This low penetration gives us a significant runway for growth.

We will continue to expand our customer base through partnerships and marketing campaigns that increase awareness and engage customers early in their home selling and buying research.

Expand to new markets.

At 21 markets as of December 2020, we are just scratching the surface today.

We believe we have a massive opportunity to expand our reach to the top 100 markets in the United States.

Nearly 90% of existing homes in these markets fall into the price range of $100,000 to $750,000, which represents housing inventory that we are confident is in the addressable market for our products and services.

In addition, we plan to double the markets we serve in 2021.

We select new markets by looking at drivers of supply, demand and affordability, housing stock, cost structure and expected pricing accuracy.

We have centralized many of our core pricing, operations and customer service functions, enabling us to efficiently launch new markets and maintain lean teams within each of our markets.

Decision making for each home is informed by centralized, robust, data-driven playbooks that allow us to drive consistency across our markets and reach profitability in new markets more quickly.

At 44 markets as of December 31, 2021, we are making good progress towards our long-term goal of being able to deliver for customers nationwide.

We select new markets by looking at drivers of supply, demand and affordability, housing stock, cost structure and expected pricing competitiveness.

We have honed our market launch playbook by centralizing many of our core pricing, operations and customer service functions, enabling us to efficiently launch new markets with limited in-market physical presence.

Our largely centralized and scalable framework for new market entry enabled us to more than double our market footprint in 2021.

Furthermore, decision making for each home is informed by centralized, robust, data-driven playbooks that allow us to drive consistency across our markets and reach profitability in new markets more quickly.

Expand product and service offerings.

In line with our focus on delivering a seamless experience, we are building a digital one-stop shop to move.

In many of our markets, we already offer tech-enabled title insurance, escrow and mortgage services.

We plan to add additional services over time to further simplify the transaction and delight customers, such as home insurance, home warranty, moving and storage, and home repair and maintenance.

Our sales and marketing efforts utilize a multichannel approach, including paid advertising, earned media and partnerships, with a focus on efficiency and low-cost growth.

As our market footprint has expanded, we have optimized our marketing strategy with advanced audience segmentation methodologies and improved targeting and attribution, and have recently added broad reach channels that allow us to responsibly scale brand awareness.

Earned media and online real estate partnerships with leading industry brands diversify our media mix and reduce the cost of customer acquisition.

housing market is highly competitive and fragmented, with over five million residential real estate transactions per year.

We compete directly with traditional, offline real estate brokers and agents, other iBuyers, and a range of industry service providers, including mortgage originators, title and escrow companies, and home warranty and home insurance providers.

We believe that our customer-focused values, vertically-integrated business model, and technology differentiate us from our competitors and provide a meaningful and sustainable competitive advantage.

Our north star is to build the best end-to-end digital experience for every home buyer and seller.

We are focused on continuing to refine our best-in-class seller experience and to drive additional scale and efficiencies;

making investments in enhancing the buyer experience with Opendoor Home Loans and Opendoor Backed Offers;

and continuing to integrate the seller and buyer experience via Opendoor Complete.

Over time, we plan to launch additional services that are adjacent to the core real estate transaction, bringing us closer to our vision for a digital one-stop-shop that powers all transactions.

We utilize a diversified, multichannel approach in marketing, with a focus on efficient growth.

In addition to earned media and online real estate partnerships with leading industry brands, we leverage a diverse range of channels and platforms within paid advertising, including paid online channels, direct mail, television, radio, and outdoor advertising.

As our market footprint has expanded, we are focused on increasing our investment in broad reach and national channels such as television and sponsorships, to efficiently drive awareness and build trust with consumers in a new category.

We also continue to build our prospective customer base by maintaining relationships and re-engaging with homeowners who might not have been ready to sell during their first interaction with Opendoor.

With over two-thirds of sellers also being buyers, these homeowners represent a large part of our marketing funnel that we are focused on converting when they are ready to transact.

As more consumers start their home journey with Opendoor, we expect this prospective customer base to continue to expand over time.

housing market is highly competitive and fragmented, with over six million residential real estate transactions per year.

We view our primary competition as the 99% of transactions that are done offline.

As such, we compete directly with traditional, offline real estate brokers and agents.

In addition, we also compete with other iBuyers, and our adjacent services compete with a range of industry service providers, including mortgage originators and title and escrow companies.

We believe our singular focus on an end-to-end digital solution, our best-in-class pricing engine, and our low-cost operational platform differentiate us from our competitors and provide a meaningful and sustainable competitive advantage.

Our Values and People

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We put in the hard work to delight customers, even when no one is looking.

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• BPs for Breakfast.

We eat “BPs (or basis points) for breakfast” — meaning we are always looking for where we can take costs out of the transaction —so we can put more money in the pockets of our customers.

We will win by building the lowest cost platform.

• Act from ownership.

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We assume good intentions and treat feedback as a gift.

• BPS for Breakfast.

We eat “BPS (or basis points) for breakfast” — meaning we are always looking for where we can take costs out of the transaction — so we can put more money in the pockets of our customers.

We will win by building the lowest cost platform.

• 1% Better Every Day.

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We honor and respect our diverse workforce and actively work to ensure everyone feels represented.

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• Results matter.

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We work tirelessly for our customers and teammates so we take the time to celebrate moments large and small.

As of December 31, 2020, we employed 1,048 individuals in our offices across the United States.

As of December 31, 2021, we employed 2,816 individuals.

None of our employees are currently represented by a labor organization or a party to any collective bargaining.

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We rely on trademarks, domain names, patents, copyrights, trade secrets, contractual provisions and restrictions on access and use to establish and protect our proprietary rights.

As of December 31, 2020, we have 20 trademark registrations and applications, including registrations for “Opendoor” and the Opendoor logo.

As of December 31, 2020, we have 15 pending patent applications covering various technologies including our home management technology and our back office management technology.

We are the registered holder of a variety of domestic domain names, including “opendoor.com.”

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As a result, we are currently subject to a variety of, and may in the future become subject to additional, federal, state and local statutes and regulations in various jurisdictions (as well as judicial and administrative decisions and state common law), which are subject to change at any time, including laws regarding the real estate and mortgage industries, settlement services, insurance, mobile and internet based businesses and other businesses that rely on advertising, as well as data privacy and consumer protection laws, and employment laws.

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In particular, the advertising, sale, and financing of homes is highly regulated by states in which we do business, as well as the U.S.

federal government.

Regulatory bodies include the Consumer Financial Protection Bureau (“CFPB”), the Federal Trade Commission (“FTC”), the Department of Justice (“DOJ”), the Department of Housing and Urban Development (“HUD”), and various state licensing authorities, various state consumer protection agencies, various state financial regulatory agencies and various state insurance agencies.

Regulatory bodies include the Consumer Financial Protection Bureau (“CFPB”), the Federal Trade Commission (“FTC”), the Department of Justice (“DOJ”), the Department of Housing and Urban Development (“HUD”), and various state licensing authorities, consumer protection agencies, financial regulatory agencies and insurance agencies.

We are subject to compliance audits of our operations by many of these authorities.

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Additionally, laws, regulations, and standards covering marketing and advertising activities conducted by telephone, email, mobile devices, and the internet, may be applicable to our business, such as the Telephone Consumer Protection Act (“TCPA”), the Telemarketing Sales Rule, the CAN-SPAM Act, and similar state consumer protection laws.

Through our various subsidiaries, we also originate mortgage loans, buy and sell homes, provide real estate brokerage, title insurance and

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settlement services, and provide other product offerings, which results in us receiving or facilitating transmission of personally identifiable information.

Through our various subsidiaries, we also operate a mortgage lending business, buy and sell homes, provide real estate brokerage, title insurance and settlement services, and provide other product offerings, which results in us receiving or facilitating transmission of personally identifiable information.

This information is increasingly subject to legislation and regulation in the United States.

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These laws also can restrict our use of this personal information for other commercial purposes.

In order to provide the broad range of products and services that we offer customers, certain of our subsidiaries maintain real estate brokerage, title insurance and escrow, property and casualty insurance and mortgage licenses, and we may in the future apply for additional licenses as our business grows and develops.

In order to provide the broad range of products and services that we offer customers, certain of our subsidiaries maintain real estate brokerage, title insurance and escrow, property and casualty insurance, mortgage and general contract licenses, and we may in the future apply for additional licenses as our business grows and develops.

These entities are subject to stringent state and federal laws and regulations, including, but not limited to, the Real Estate Settlement Procedures Act (“RESPA”) and those administered by applicable state departments of real estate, banking, insurance and consumer services, and to the scrutiny of state and federal government agencies as licensed businesses as noted above.

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and OD Homes Brokerage Inc.

(formerly known as Open Listings Co.), hold real estate brokerage licenses in all our markets and certain other states.

(formerly known as Open Listings Co.), collectively, hold real estate brokerage licenses in all our markets and certain other states.

• OS National LLC, and its subsidiaries, OSN Texas LLC and OSN Alabama LLC, are licensed as title agents in 27 states.

In addition, OS National LLC is licensed as an escrow agent in six states.

• Opendoor Home Loans LLC holds mortgage banking/lending licenses in eight states.

In addition, OS National LLC is licensed as an escrow agent in six states and is authorized to conduct the business of title insurance in four additional states that do not require entity and/or individual licensing.

• Opendoor Home Loans LLC holds mortgage banking/lending licenses in nine states.

• Digital Opendoor Insurance Services LLC holds insurance producer licenses for property and casualty lines in Arizona, California and Texas.

Mortgage products are regulated at the state level by licensing authorities and administrative agencies, with additional oversight from the CFPB and other federal agencies.

These laws generally regulate the manner in which lending and lending-related activities are marketed or made available to consumers, including, but not limited to, advertising, finding and qualifying applicants, the provision of consumer disclosures, payments for services, and record keeping requirements;

These laws generally regulate the manner in which lending and lending-related activities, including mortgage brokering, are marketed or made available to consumers, including, but not limited to, advertising, finding and qualifying applicants, the provision of consumer disclosures, payments for services, and record keeping requirements;

these laws include, at the federal level, the RESPA, the Fair Credit Reporting Act (as amended by the Fair and Accurate Credit Transactions Act), the Truth in Lending Act (including the Home Ownership and Equity Protection Act of 1994), the Equal Credit Opportunity Act, the Fair Housing Act, the Gramm-Leach-Bliley Act, the Electronic Fund Transfer Act, the Servicemembers Civil Relief Act, the Military Lending Act, the Homeowners Protection Act, the Home Mortgage Disclosure Act, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, the Federal Trade Commission Act, the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, the Bank Secrecy Act (including the Office of Foreign Assets Control and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act), the TCPA, the Mortgage Acts and Practices Advertising Rule (Regulation N), the CARES Act, all implementing regulations, and various other federal, state and local laws.

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For certain licenses, we are required to designate individual licensed brokers of record, qualified individuals and control persons.

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For information regarding the seasonality of our business, please see “ Part II – Item 7.

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Corporate History and Background

Social Capital Hedosophia Holdings Corp.

II (“SCH”) was initially formed on October 18, 2019 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.

We entered into a merger agreement (the “Merger Agreement”) with SCH on September 15, 2020.

Pursuant to the Merger Agreement, Hestia Merger Sub Inc., a newly formed subsidiary of SCH (“Merger Sub”), merged with and into Opendoor Labs Inc.

Upon the completion of the transactions contemplated by the terms of the Merger Agreement (the “Closing”) on December 18, 2020, the separate corporate existence of Merger Sub ceased and Opendoor Labs Inc.

survived the merger and became a wholly owned subsidiary of SCH.

On December 18, 2020, SCH also filed a notice of deregistration with the Cayman Islands

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Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which SCH was domesticated as a Delaware corporation, changing its name from “Social Capital Hedosophia Holdings Corp.

II” to “Opendoor Technologies Inc.” We refer to these transactions collectively as the “Business Combination.”

The Business Combination was accounted for as a reverse recapitalization, in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Under the guidance in ASC 805, we were treated as the “acquired” company for financial reporting purposes.

Opendoor Labs Inc.

was deemed the accounting predecessor of the combined business, and we, as the parent company of the combined business, were the successor SEC registrant, meaning that our financial statements for previous periods will be disclosed in the registrant’s future periodic reports filed with the SEC.

For further information regarding the Business Combination, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

was formed through a business combination with Social Capital Hedosophia Holdings Corp.

II (“SCH”), a Cayman Islands exempted company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).

The Business Combination, pursuant to which Opendoor Labs Inc.

became a wholly owned subsidiary of SCH and SCH changed its name from “Social Capital Hedosophia Holdings Corp.

II” to “Opendoor Technologies Inc.,” was completed on December 18, 2020 (the “Closing”), and was accounted for as a reverse recapitalization, in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Available Information

We file electronically with the SEC our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other information.

Our SEC filings are available to the public at the SEC's website at http://www.sec.gov.

We make available on our website at www.opendoor.com, free of charge, copies of these reports and any amendments as soon as reasonably practicable after filing or furnishing them with the SEC.

Our website is www.opendoor.com.

At our Investor Relations website, investor.opendoor.com, we make available, free of charge, a variety of information for investors, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, proxy statements and other information, as soon as reasonably practicable after we electronically file that material with, or furnish it to, the Securities and Exchange Commission (“SEC”).

We also use the Investor Relations page of our website for purposes of compliance with Regulation FD and as a routine channel for distribution of important information, including blogs, news releases, analyst presentations, financial information and corporate governance practices.

The information found on our website is not part of this or any other report we file with, or furnish to, the SEC.

Our SEC filings are also available to the public at the SEC's website at http://www.sec.gov.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business