What changed in this filing

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Item 1. Business

2023-02-23 compared with 2022-02-24 · 125 added, 149 removed, 189 unchanged (59% of the section changed)

Our mission is to empower everyone with the freedom to move.

We are a leading digital platform for residential real estate.

Our mission is to power life’s progress, one move at a time.

We are a leading e-commerce platform for residential real estate transactions.

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.

By leveraging software, data science, product design and operations, we are building a managed marketplace for residential real estate that offers buyers and sellers an enhanced experience as compared to traditional real estate transactions.

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.

In 2022 alone, more than five million existing homes were sold, representing over $1.9 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.

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

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.

A traditional home sale requires countless decisions and 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 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 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 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.

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

Since launch, customers have demonstrated their desire for our digital, on-demand real estate solution with over 215,000 homes bought and sold by Opendoor across the United States.

In 2022, we sold over 39,000 homes and generated $15.6 billion in revenue, the latter of which represents a compound annual growth rate of 85% since 2017.

Importantly, we have achieved this growth while continuing to delight customers, maintaining an annual average Net Promoter Score of nearly 80 from our sellers in 2022.

Since our initial market launch in Phoenix in 2014, we have expanded across the United States and operated in 53 markets as of December 31, 2022:

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.

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

Paul, Nashville, New York-New Jersey, Northern Colorado, Oklahoma City, Orlando, Phoenix, Portland, Prescott, Raleigh-Durham, Reno, Richmond, Riverside, Sacramento, Saint Louis, Salt Lake City, San Antonio, San Diego, San-Francisco-Bay Area, Southwest Florida, 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.

Over the coming years, we are dedicated to building a managed marketplace, where more consumers will be able to transact directly with simplicity, certainty and control over the entire process.

Market Overview

Residential real estate is a massive offline market.

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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Of the $1.9 trillion residential real estate transactions in 2022, iBuyers (companies that use technology to facilitate these transactions) captured only 1%.

The current landscape is highly fragmented.

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.

Real estate will migrate online.

Today, approximately 90% of residential real estate transactions in the United States involve an agent.

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

This can lead to an inconsistent and frustrating experience for consumers looking for guidance in what is typically the largest financial decision of their lives.

Real estate is migrating online.

Consumers are shifting their spend online and demanding digital-first experiences for greater efficiency, certainty and speed.

They are increasingly comfortable with transacting online across retail, food and transportation, and now expect similar experiences in real estate.

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.

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.

They are increasingly comfortable transacting online across retail, food and

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transportation, and they now expect similar experiences in real estate.

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

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

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

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

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

• Find a listing agent.

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• Prepare the home for listing.

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.

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

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

• Host open houses and home visits .

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• Receive an offer.

One in four home sellers reduces their asking price at least once, while a similar percentage of sellers offer incentives to attract buyers.

Once an offer is received, the seller has to negotiate the offer, negotiate the closing date, and deal with any contingencies the buyer may have.

• Negotiate repairs or fix issues identified by buyers.

After the offer is accepted, the buyer conducts an inspection, which often forces the seller to re-negotiate the offer or fix issues, increasing the homeowner’s costs and potentially delaying closing.

After the offer is accepted, the buyer conducts an inspection, which often forces the seller to renegotiate the offer or fix issues, increasing the homeowner’s costs and potentially delaying closing.

• Wait for closing.

Once the contract is signed, it still takes an average of 35 days to close.

Once the contract is signed, it still takes over 30 days on average to close.

The seller is reliant on the home buyer and a disparate set of counterparties — such as their agent, mortgage broker and escrow officer — to coordinate and complete the closing process.

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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:

• 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.

We are building a managed marketplace for residential real estate via two core product offerings:

our first-party (1P) product and our third-party (3P) product.

Together, these two offerings leverage our centralized platform capabilities.

We are working towards a future where both 1P and 3P sales take place on our platform, enabling sellers and buyers to experience a simple and certain transaction that dramatically improves the traditional process.

• 1P Product.

Launched in 2014, sellers utilize our 1P product offering to sell their home directly to us and we resell the home to a home buyer.

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 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.

We then conduct a home assessment to verify the home 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).

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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.

We also charge the seller for expected repairs and home quality improvements that relate to our assessment of home condition and the expectations of buyers in the market.

Our service fee is set at 5% across all markets.

This compares favorably to the traditional listing process, which can include a broker fee of 5% to 6%, depending on location, and 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.

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.

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

Our final offer, inclusive of purchase price, service fee, and repair charge, 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.”

• 3P Product.

Launched in 2022, our 3P product offering connects the home seller with either an institutional or retail buyer, facilitating the transaction without us taking ownership of the home.

For home buyers, we are building an e-commerce-like experience that focuses on unique selection and a simple process.

For home sellers, we are focused on making the experience of selling seamless, with less time and less hassle than the traditional process.

Sellers can request an offer from our network of buyers, while also receiving an Opendoor offer.

There is no need for repairs, extensive home prep, or months of open houses or listings.

We are also giving home sellers control and flexibility, with no upfront commitment.

We have launched our 3P offering in a limited number of markets.

We have decided to keep our 3P product focused on a small set of markets in 2023 so we can iterate on the product experience quickly.

This is consistent with our approach to how we scaled our 1P product across markets over time.

When we are ready to scale the 3P product, we believe we are well positioned to expand it across our existing 1P markets given our ability to leverage our existing 1P infrastructure.

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.

The vast majority of our revenue and margins today are generated by our core 1P product offering, where we acquire homes directly from sellers and resell those homes to buyers.

We also offer title and escrow services to customers as well as to buyers touring our homes independently via our app or website, which are accretive to our unit economics.

We plan to incrementally scale our 3P product offering to expand into more markets over time, which we believe has the potential to reduce our inventory exposure, capital intensity, and macro risk when at scale.

We also believe our 3P product offering has the potential to expand our total addressable market to be able to serve all sellers versus those only within our buybox.

We define “buybox” as the types of homes we are able to underwrite and acquire in a given market based on characteristics such as price range, home type, home location, year built and lot size.

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

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

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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 order to finalize our offer, we conduct a combination of virtual and in-person home assessments to verify the condition of the home and determine what kind of repairs and home quality improvements will need to be performed after we acquire the home.

We typically ask for a repair charge that relates to our assessment of home condition and what it will require to get the home “sale ready.” We have developed purpose-built software to guide home assessment workflows and collect over 150 unique data points on average 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.

We define this as the “real seller” conversion rate, which is the percentage of unique leads who either accept an Opendoor offer or list their home on the MLS within 60 days of receiving an offer from us.

We believe this is an important measure of the strength of our value proposition.

In addition, we provide offers to homeowners who are not ready to transact at the time of the offer.

We add these individuals to our expanding pool of prospective customers, and we re-engage with them over time for when they are ready to transact.

Nearly 30% of sellers who listed or sold their homes have previously entered their home address on

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Opendoor.com across our active markets, which suggests that our registered user base is a powerful source of future sellers that we can use to drive our 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.

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

The scope of this work before resale is focused on ensuring the home is in “sale 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.

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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.

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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.

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 a value and risk assessment, including a combination of virtual and in person assessments of the home, as well as additional review from our in-house pricing analysts, 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.

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

We recalibrate our view of pricing and where market values are trending using high-frequency detailed metrics across all segments of our business, including 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.

Since our inception, we have invested 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 acquired 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.

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• Proprietary offline data.

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

We have conducted approximately 580,000 assessments during which we collect over 150 data points on average for 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.

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.

These proprietary data points have led us to make approximately 1.9 billion annotations and adjustments to MLS and tax assessor data, as well as build out unique geospatial data assets, such as power line and busy road proximity.

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 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.

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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.

Over time, we have added new data inputs and refined model logic, the benefits of which 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.

As noted above, since our inception, we have prioritized investment in our pricing capabilities across our home acquisition processes and our forecasting and resale systems, and we 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.

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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.

• A critical component of our business model is managing inventory exposure and balancing growth, margin and risk.

Transaction velocity and hold times are important inputs to how we manage our inventory exposure and overall risk.

We have historically concentrated our home purchases on those segments of the residential real estate market with the highest transaction volumes, which helps lower the risk of involuntarily holding a home for longer than anticipated.

• 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.

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

In addition, we employ sophisticated resale pricing management systems that is designed to 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.

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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 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 should decrease 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.

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

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Low Cost Transaction Platform

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 continue to invest in having an agile, low cost platform, which allows us to provide more competitive offers to home sellers and adapt to changes in macro conditions.

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

With this in mind, we have invested in developing technology that enables virtualization, centralization, and automation 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.

Our systems and processes facilitate the centralization of certain processes that previously required 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 for our lowest risk homes, where home sellers are able to take our operators on a virtual, guided tour of their home.

Our centralized teams then assess home conditions, leveraging a combination of industry best practices and big data.

This centralization has also enabled us to shift an increasing amount of back-office work to our offshore teams, which we believe will help deliver structural cost improvements over time.

We have also established a network of more than 1,000 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.

This increase in third-party capacity also gives us the flexibility to adapt to macro conditions and adjust our operating expenses commensurate with volume expectations.

Due to our scale, we have procured volume discounts on the cost of materials used in our home repairs.

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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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.

Our largely centralized and scalable framework for new market entry enabled us to rapidly grow the number of markets we served in 2021 and 2022.

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.

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.

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

We are focused on leveraging both our 1P and 3P product offerings to refine our best-in-class seller experience, expand the options available to sellers in our marketplace, invest in enhancing the buyer experience and continue to integrate the seller and buyer journey.

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.

In addition to earned media and online real estate partnerships with leading industry brands, we leverage a diverse range of channels and platforms

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within paid advertising, including paid online channels, direct mail, television, radio, and outdoor advertising.

As our market footprint has expanded, we are focused on 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.

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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.

housing market is highly competitive and fragmented, with over five 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.

In addition, we also compete with other iBuyers, and our adjacent services compete with industry service providers, including 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.

Human Capital Resources

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.

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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, 2021, we employed 2,816 individuals.

As of December 31, 2022, we employed 2,570 individuals, including 2,444 in the United States.

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

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and additional employees.

The principal purposes of our equity incentive plans are to attract, retain, and motivate selected employees, consultants, and directors through the granting of stock-based compensation awards.

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Our business is driven by data and technology at all stages of the home buying and selling process.

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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, 2022, we had 14 trademark registrations and 6 patent registrations.

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

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We operate in highly regulated businesses through a number of different channels across the United States.

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.

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, mobile and internet based businesses and other businesses that rely on advertising, as well as data privacy, consumer protection, and employment laws.

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

federal government.

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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 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.

Through our various subsidiaries, we also 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, 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.

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 general contractor licenses, and we may in the future apply for additional licenses as our business grows and develops.

These entities are also subject to the scrutiny of state and federal government agencies as licensed businesses as noted above.

As of December 31, 2022:

• Opendoor Brokerage LLC, Opendoor Brokerage Inc.

and OD Homes Brokerage Inc.

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• Opendoor Brokerage LLC, Opendoor Brokerage Inc., and OD Homes Brokerage Inc.

(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 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, 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.

The CFPB also has broad authority to enforce prohibitions on practices that it deems to be unfair, deceptive or abusive.

Additionally, state and local laws may restrict the amount and nature of interest and fees that may be charged by a lender or mortgage broker, impose more stringent privacy requirements and protections for servicemembers, and/or otherwise regulate the manner in which lenders or mortgage brokers operate or advertise.

In addition, OS National LLC, and its subsidiary, OSN Escrow, are licensed as escrow agents in seven states and OS National LLC is authorized to conduct the business of title insurance in five additional states that do not require entity and/or individual licensing.

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

• Digital Opendoor Insurance Services LLC holds insurance producer licenses for property and casualty lines in nine states.

• Open Exchange Brokerage LLC, holds real estate brokerage licenses in 15 states.

• Tremont Realty LLC (dba Opendoor Connect), holds a real estate brokerage license in Texas.

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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What changed 10-K

Item 1. Business