Good evening. Thank you for attending today's Offerpad Q3 2022 Earnings Call. My name is Megan, and I'll be your moderator for today's call. I will now turn the call over to Stefanie Layton, Vice President of Investor Relations and ESG at Offerpad. Stefanie? Thank you, and good afternoon, everyone. Welcome to Offerpad Solutions Q3 2022 Earnings Call. Our Chairman and Chief Executive Officer, Brian Bair, and our Chief Financial Officer, Mike Burnett, are here with me today. During the call today, management will make forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently uncertain, and events could differ significantly from management's expectations. Please refer to the risks, uncertainties, and other factors relating to the company's business described in our filings with the U.S. Securities and Exchange Commission. Except as required by applicable law, Offerpad does not intend to update or alter forward-looking statements, whether as a result of new information, future events, or otherwise. On today's call, management will refer to certain non-GAAP financial measures. These metrics exclude certain items discussed in our earnings release under the heading Non-GAAP Financial Measures. Direct reconciliations of Offerpad's non-GAAP measures to the comparable GAAP measures are available on the financial tables of the Q3 earnings release on Offerpad's website. I'll now turn the call over to Brian. Thanks, Stefanie. Hey, everyone. Appreciate you joining us today. I'll cover some company highlights, market trends, operational updates, and our focus for the remainder of the year. Mike will share our Q3 2022 financial results and our Q4 expectations. In the Q3, we maintained an average time from home acquisition to sale below 100 days, kept inventory aged over 180 days at 5% or 150 homes, earned a 93% customer satisfaction rating, and grew our listing and buyer closings by 100% year-over-year. Given the macro and real estate market conditions in the Q3, these accomplishments really speak to the flexibility of our model and the value our products offer to homeowners. In the Q2, we shared that the softening of the real estate market was here. Since then, the economy, consumer sentiment, and the real estate market have changed significantly. An increasingly hawkish Fed, persistent inflation, substantial increases in mortgage rates, and further escalation of global conflict have put the financial and credit markets on edge. The downstream impact left residential consumers in a temporary state of shock. Since we launched in 2015, most of the U.S. has experienced a seller's market, but the value proposition we provide is even stronger in a buyer's market. When sellers can't go from listing to pending in days, and instead it takes weeks or months, iBuying becomes even more attractive. If we are smart about how we underwrite homes in the market, there is an opportunity for enormous growth. We aren't there yet. Right now, we are in between a seller's market and a buyer's market, and expectations between the two parties are vastly different. Sellers are holding on to the idea their home is still worth what it was six months ago, and buyers aren't willing to engage at those prices. This in-between phase is the most challenging period for the entire real estate market, including iBuyers. I'd like to discuss today how we have planned for and are navigating this time. Offerpad's core strategy of providing a comprehensive suite of real estate solutions is more important than ever right now. Because of our diverse product offerings, including our asset-light listing service, Offerpad has continued to provide customers more certainty and control. In addition, we are continuously innovating to create new products that can help mitigate many of the challenges homeowners are facing. For example, in addition to increasing the scope of renovations on certain properties to position our homes to sell first when competing inventory is present, we are also offering customizable renovation services. We recently started testing our new service called MyWay in our Phoenix market. With MyWay, homeowners can select paint, flooring, countertops, and appliances from a list of options that match their own personal style. Updates will be completed before they move in, and the cost of upgrades can be rolled into the mortgage. The breadth and efficiency of our renovations team is a key differentiator and an important asset as we grow. This offering aligns perfectly with our mission to provide customers with a more convenient and streamlined homeownership experience. On the operations side, we continue to adjust as the market evolves. Specifically, we updated our underwriting to account for increased risk, extended holding times, and depreciating prices. In fact, the difference between homes underwritten in the first half of the year compared to the second half is so distinct that I can tell the day a home was underwritten just by looking at our closing summary sheet. In the Q3, we also revised our buy box by applying the purchase price cap we implemented in select markets during the Q2 to all markets. Instead of turning away customers with homes outside new parameters, we have been offering our listing service. Leaning into our select listing service has allowed Offerpad to continue helping customers through the current market conditions while lowering the financial risk to the company. Customers working with one of our local licensed agents can receive free show-ready services, including landscaping and cleaning services, in addition to a home improvement advance. Also, customers continue to save by bundling a home sale, home purchase, and Offerpad Mortgage. Our FLEX listing and buying service has grown from 7% of our transaction volume in the Q2 of 2020 to 29% of our transaction volume in the Q3 of 2022. With gross margin profile of 31% year-to-date, we expect our listing service will continue to be an important product supporting our long-term gross margin target. The ability to use our renovations department as a risk mitigation tool and differentiator, along with the ability to grow our asset-light listing service, provides Offerpad the flexibility to navigate through changing market conditions. Our presence in 28 markets across the country provides another risk mitigation opportunity. While markets like Phoenix, Denver, and Las Vegas are still experiencing rapid and significant pullback, we are starting to see signs of stabilization in some of the more affordable markets. By relying on our local experts, we are strategically deploying our capital into locations with more stability and better line of sight, while maintaining a more conservative acquisition approach in markets with higher volatility. The diversification we have today has been thoughtfully and intentionally established over the last seven years, supporting the resiliency of our business. To provide some historical context, in 2016, we were operating in only four markets. At that time, our largest market accounted for 84% of our revenue. In the Q3 of 2022, no market accounted for more than 10% of our revenue. This highlights the clear benefit and risk mitigation that comes from strategic market diversification. Lastly, we continue to demonstrate a conservative and disciplined approach to managing our expenses. Like many others, we recently made an adjustment to the size of our internal team to reflect the current state of the market. When conditions change, Offerpad adapts. We have made some difficult but responsible decisions over the last quarter, and we will continue to adjust as the market evolves. Given the current macroeconomic environment, we do expect volatility in the real estate market will likely extend beyond the duration of historical market transition periods. Revolutionizing a $2 trillion industry isn't easy, especially in times like today. Yet the simplified services we have introduced to the consumer over the past seven years confirms there is a better way. The value of Offerpad's brand and the future potential value we can add by encompassing more services are reasons why we expect more and more people to come to Offerpad first. We are more than just an iBuyer. We are a real estate partner using technology and deep real estate expertise to serve our customers. I firmly believe technology-enabled solutions that simplify the homeownership experience will define the future of real estate. The iBuying industry is in its early days with only two major players. The upside potential is tremendous. As it becomes harder for homeowners to sell and the pain points from the traditional model we service, more sellers will be looking for an easier solution. Being one of the country's largest home buyers in what we expect will soon be a strong buyer's market could significantly amplify our opportunity to grow. As a real estate solution center with cash offers, listing services, mortgage, and a leading renovation team, I believe Offerpad is well-positioned to excel. On that note, I'll turn the call over to Mike. Thanks, Brian. Despite some of the most challenging conditions in residential real estate, we continue the disciplined execution of our business strategy. The dramatic drop in demand for housing, driven by affordability issues resulting from the significant rapid rise in interest rates and elevated home prices, was further extended in the Q3. Given the expected continuation of these conditions, we are keenly focused on selling our existing inventory that was acquired in the first half of the year before the disruption in the housing market at the best available price. We are utilizing real-time market data, analytics, and our years of real estate experience with thousands of transactions in our individual markets to do that. We are making tough decisions in uncertain times with a commitment to aiming for the best outcome given the circumstances. Right now, that often means accepting losses on homes that we believe may decline further in the short term to be able to conserve or redeploy that capital more effectively. We are making these decisions on a market-by-market and home-by-home basis to optimize the outcome. At the same time, we have temporarily but significantly reduced the number of homes we are acquiring during this period of transition. At times of considerable market dislocation, we narrow our buy box to limit the homes that we are evaluating and adjust the input variables in our underwriting model to be more conservative. This results in us acquiring fewer homes, but acquiring homes that we feel will generate the underwritten return in this market. Though the sample size is small at this point in time, we are seeing positive tangible results from the homes that were acquired after the change in mortgage rates that have sold in September and October. We believe this process of selling through inventory acquired in the first half of the year should essentially be completed by the end of the Q1, with the proportion of sales from older inventory decreasing from Q3 and Q4 into Q1. This would position us well to capitalize on our strategy for profitable growth in what is expected to be a buyer's market. We continue to expect an annual contribution margin after interest of 3%-6% once the market stabilizes and to increase that margin over the longer term. Turning now to our Q3 results. In the Q3, we generated $822 million of revenue, exceeding the top end of our Q3 guidance range and a 52% increase year-over-year. This increase was supported by the sale of 2,280 homes, reflecting a 36% year-over-year increase and an average sales price of $357,000 compared to $321,000 in the Q3 of 2021. We reported Q3 gross profit of $2.2 million, net loss of $80 million, and Adjusted EBITDA of -$64.3 million. Each of these amounts includes a $27.5 million inventory impairment charge. Absent this charge, each of these metrics would have been $27.5 million higher, including Adjusted EBITDA, which would have been -$36.8 million. Contribution margin after interest for the quarter was -$4,500 per home. Our focus on selling existing inventory and minimizing our aged properties can be seen in our Q3 results. Importantly, as of 30 September, our aged inventory over 180 days was at 5% or 150 homes, nearly half of which were under contract. The total number of homes in inventory on 30 September was 3,128, a 12% decrease from our 30 June inventory and more than 20% below our summer peak. This planned reduction in inventory is the result of our primary focus on dispositions and our temporary decrease in acquisitions during this time of price dislocation. Our acquisition of 1,847 homes in the Q3 represents a 50% sequential reduction from our Q2 acquisitions this year. Given the current outlook, we expect that our Q4 acquisitions would again be less than half of what we acquired in Q3. Our time to cash increased to 97 days in the Q3 from 83 days in the Q2. This marks the nineth consecutive quarter with time to cash below our 100 day target. However, we do expect to be above this target during periods of slower market conditions. From a cost management standpoint, we are taking a responsible approach to appropriately size our operations given the current environment, but also balancing that with our expectation of this slowdown in transactional activity being temporary for us. As a result, we reduced our operating expenses by 14% in the Q3 compared to the Q2 of 2022. This reflects reductions in headcount and sales and marketing in addition to an overall emphasis on cost reduction. With a continued focus on risk management and cost efficiency, we ended the quarter with a cash balance as at 30 September of $197 million. Looking forward, in the Q4, we expect to sell between 1,425 and 1,850 homes, generating revenue of between $500 million and $650 million. We also expect Adjusted EBITDA to be between -$40 million and -$60 million, reflecting the continued near-term variability in market conditions. During Q4, we expect the initial sequential improvement in Adjusted EBITDA to begin. By Q1 of 2023, homes that were acquired in the second half of this year would likely make up the majority of homes sold in the quarter and would therefore be expected to further generate sequentially higher margins and ROI. While many things in the macro environment are uncertain, we do know that the current state is temporary and that the real estate market will settle. Right now, we are positioning the company to capitalize on the next wave of opportunities. As the first iBuyer with proven profitability, a holistic solution center approach, and a highly efficient and value-additive renovations offering, Offerpad has the structure and strategy to deliver long-term value to both customers and shareholders. Our platform, products, and operations have continuously improved over the years, allowing us to navigate through the current dislocation with an established, mature and stable foundation. We are focused on executing through the immediate challenges while emphasizing and expanding the products in our portfolio to improve the balance of higher margin capital-light offerings and reigniting growth further into 2023. I'll now turn the call over to the operator to begin the question and answer session. Thank you. If you would like to ask a question, please press Star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press Star followed by two. Again, to ask a question, press Star one. We do ask that you limit yourself to asking one question and one follow-up. If you have additional questions, you may reenter the queue. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. Our first question comes from the line of Dae K. Lee with J.P. Morgan Chase. Your line is now open. Great. Thanks for taking the questions. On the first one, you talked about the instability in some markets that you operate in. So what are you seeing in those markets that's driving that? How long do you think it'll take for other markets to kind of see a similar behavior to stability? Secondly, how far along were you in selling the homes acquired before the market conditions deteriorated? It seems like you guys are expecting the mix of homes sold to shift more towards newer homes [uncertain]. Is Is that right? Of the homes that remain on your books, what are some of the reasons those are taking longer to sell? Yeah. Hey, Dae K. Lee, it's Brian Bair. As far as the market conditions that we're seeing, specifically, a lot of it has to do with the affordability. We're seeing that primarily in the Midwest markets. Think Indianapolis, Fort Wayne, Columbus, Ohio, those markets where they didn't have the home price appreciation as you saw in some of the other markets. I think affordability is a lot driving that. You still have less than a month, a month and a half supply of homes in those markets as well. That's where we're seeing. As far as when we're gonna see the other markets kind of settle in a little bit, I think it's gonna be pretty volatile till the end of the year, especially in places like Phoenix and Denver and some of the really high home price appreciation markets that we saw. Due to affordability, I think you're gonna see an increased seasonality. Obviously we're watching that closely. You know, there's spots in other markets that we're seeing, but a lot of it has to do with the median home price and affordability is what we're focused on. Hey, Dae, it's Mike. Just in terms of your second question there on the homes and inventory, what I'd tell you is, generally speaking, I think, you know, we will continue to sell through those, you know, in the Q4, in Q1. That is our expectation. You know, we are anticipating that, you know, based on what we're seeing in the market and our current pacing, that by the end of the first quarter, we should be predominantly through that older inventory, anything, you know, call it acquired pre up through July of this year. You know, that's driving, you know, some of the negative results, you know, in the guidance for Q4 because more of the homes, you know, that we sell there will be from that vintage. As we move into Q1, I think you start to see that weighting shift to some of the newer homes, but we'll still need to be working through that at that point in time. Based on what we can see right now, that's our expectation. Yeah. One other thing, Dae, I'll just add to that is, you know, remember what's in real estate, a lot of this, a lot of the data is trailing, and so what will happen is on the underwritten side, for example, you know, if we underwrite a home and the seller chose to close in 45 or 60 days from when we underwrote that home originally, and then we have to, you know, get the house, put it through renovation, get it on the market. So that's where, and I mentioned this in my remarks before, but, you know, when we underwrote that home is the most important part. What we're seeing, the stuff that we're underwriting under current market conditions, those properties are starting to see. You know, it's early, but starting to see, you know, good signs in how those homes are performing. It's the more of that legacy that were underwritten under completely different market conditions that we're working through right now. Just as a quick follow-up. With that said, is it safe to say Q4 is going to be the peak quarter of your, I guess, older underwritten homes being sold, and Q2 being a second bigger than Q1, seeing a smaller number of those homes getting sold? Yes. That is the expectation, is that the majority of those will come through in the Q4. Thank you. Our next question comes from Ryan Tomasello with Stifel. Your line is now open. Thank you for taking the questions. Considering the decline in book value this quarter, and presumably, you know, the pressure that will persist into the end of the year, can you talk about, you know, your conversations with your financing partners, how you feel about financial covenants? Overall, I guess, how you're thinking about protecting the capital base to maintain the financing capacity required to scale this business beyond, you know, this market correction that we're going through? Yeah. Hey, Ryan, it's Mike. Without a doubt now, you know, these periods are when you need to be, you know, in regular communication, you know, with your financial partners and your banks, and we do that regularly. You know, we've got a great team, you know, in the finance and treasury group over here. We've got good relationships and built up a very good, you know, working group on the debt capital side of the equation. You know, we're in close contact with them. You know, we're proactive in our communications with them and try to give them, you know, good visibility because they're, you know, critical, you know, to our, you know, collective success. You know, we are in compliance with our covenants. You know, it is something that, you know, we look at all the terms and conditions there to make sure that we're, you know, abiding by those and in line with those. You know, we ended the quarter with, you know, just short of $200 million, you know, in cash. The other thing to consider too is that as we go through now, and the end of the year and into the first quarter, you know, our inventory and debt balances will be coming down, you know, as we talked about in our prepared remarks with, you know, slowing intentionally, temporarily slowing the pace of buying. Those outstanding amounts, you know, come down, you know, part and parcel to that as well. You know, again, something, you know, very critical in terms of partnerships with them. you know, we've had these relationships in some instances for the past four years. We've added to them as we've gone along, and they've been, you know, good supporters of the company. Thanks. Thanks for all the color, Mike. On the guidance for 4Q, can you provide some color around what growth and contribution margins you're baking into that forecast? Beyond that, you know, how we should think about phasing in a recovery as you work through this inventory into 2023. On the OpEx side, you know, you alluded to some of the workforce reductions there. If you can maybe frame the amount of costs that you've stripped out of the system and how we should be thinking about run rate OpEx following those efficiencies, however you prefer to define OpEx. I think you mentioned about a 14% reduction quarter-over-quarter. Yeah. Okay. A lot there. You know, come back to me if I skip over anything. First, on contribution margin, we don't specifically guide to that, but bear in mind that our contribution margin calculation is really aimed at taking into account the total cost of ownership of a particular home. In that calculation, we're aggregating the costs that come and go even if it's not in a particular period. That being said, you know, we believe that Q4 is probably gonna be the bottom drop of contribution margin with Q1 then coming back up in terms of recovery. Just in terms of the recovery on your question on that, you know, kind of tough to say. I mean, you know, we run all sorts of different scenarios under different conditions. You know, ideally, you know, as we said earlier, if we can move through the legacy inventory and then get ourselves in a position where, you know, we can begin to rebuild back where we're comfortable at points in buying, you know, in 2023, that's the objective. You know, the timeframe for doing that, you know, is really just tough to call at this point. In terms of the reduction in force, we did, you know, go through a process that, you know, resulted in reducing our workforce by about 7%. We had earlier in the year, that was in September. We had earlier in the year put measures in place where we were pausing hiring, tightening the belt on the cost structure. We're actually from our peak employment over the summertime, we're actually down about 12% from that peak due to just hiring pauses and natural attrition, you know, in the business. We'll continue, you know, with that through the end of the year here. That, you know, I would expect about a $2 million benefit, you know, for that, you know, this year. You know, you can, you know, annualize that. That's about a quarter's worth, you know, in 2022 for next year. Ryan, one thing I'll just add to that is coming back to the Q3 again. What was unique about the Q3, I said this last time, is that, you know, the market cycle kind of changing, I don't think was a surprise, it was the speed. What we saw in the Q3, that's where you're gonna see the Q4 us moving through it a lot, you know, more and more of these homes, is that, you know, there was a pause as buyers who thought they were qualified for a certain amount, mortgage rates increased, and so there was a shock there. There was basically kind of a log jam in the system of buyers and their ability to move and what was affordable, wasn't affordable. There was kind of a state of shock that happened there. You know, we're starting to, like I mentioned, we're starting to see that settle a little bit. You know, and you know, we're looking at our homes weekly and moving through this. We've been moving through inventory at a you know, and at a pace that feels slow. Obviously, you know, in these conditions, I'm actually happy with what the team and what we've been doing, moving through the inventory right now. Thank you. Our next question comes from Nick Jones with JMP. Your line is now open. Great. Thank you for taking the questions. You mentioned earlier on the call kind of an expectation that the volatility will last longer than a typical transition. How are you able to kinda box that in and kind of what, you know, how long that might be or how you're thinking about it? Do we kinda need to see where peak rates go, and then do spreads starting to tighten and then that's when, you know, there'll be more kind of confidence in affordability for home buyers? If you just kinda put a finer point on that, and then a follow-up. Thanks. No. It's what's happened, and when we talk about volatility, obviously, that's a really loose term. What volatility is, it's really the sales price on the selling end of it that's really volatile. Because, you know, we can buy under, you know, any kind of market conditions, whether the market's going up or the market's going down, and depending on how fast it's going down. What we look for is consistency in that. For example, a certain market or certain segment of home, if it's going down, you know, another downturn that I've been involved before, it's going down 2%-2.5% a month, we can build that in. Where this has been unique, and when I say the height of volatility, is because, you know, 2007-2010, it was the opposite problem. It was people had no equity in their home, and so people were trying to squeeze out what they could to basically pay off their mortgage and move through. What we're seeing today is people have so much equity in their home. You know, there are $250,000-$300,000 of equity in a home. So what's happened is you're seeing really inconsistent pricing out there from sellers. That's what we're watching really closely, and especially the high HPA markets that we're watching closely. I think with what we're seeing in, like I mentioned, some of the Midwest markets overall, obviously affordability is key. We're expecting to see volatility as far as pricing and as far as the amount of equity that sellers have, and just kind of where that gets a little bit more consistent and people start moving through inventory a little bit. Buyer shock, that's kind of what I call it, is getting more consistent on that end. You know, I'm anticipating the first part of next year, we'll start seeing, you know, depending on what happens with the Fed and what and with there. I think we're gonna start seeing more consistency, at least in what we're underwriting, which is the most important factor that we're looking for. Again, it's just the consistency. Got it. That's helpful. Mike, could you kind of touch on how you feel about the cash position? I know you know you spoke to some cost cuts, freezing hiring. It sounds like there's about $8 million benefit next year we should look for. How do you feel about kind of the cash position, kind of heading into next year, you know, to the extent that the you know the macro environment stays challenged maybe a bit longer? Thanks. Yeah. Nick, it's you know, we ended the quarter in a good position there. You know, obviously, as we work through some of these you know, losses, you know, in the next quarter, that's something that you know, we just have to manage closely. I'll tell you, it's absolutely been a hallmark you know, of the company for you know, the past six years. We've always been very cost conscious. We've you know, been very efficient in how we run the organization. We run very lean and we'll continue to do that. It's obviously something that is you know, high on our radar. We'll continue to monitor it and you know, manage the business appropriately. Nick, the one thing that I'll also add just to that. You know, right now we're hyper-focused on obviously our current inventory, but also more of our asset-light products. Flex, for example. And working with our SFR partnerships and not just our disposition homes, but being able to buy and, you know, they'll sell, you know, buying some of those homes from us as well. As we continue to make it through, again, what I'll say the volatility, we're also being smart on the way that we're approaching it from the asset-light side of it as well. As I mentioned, I think even last call, you know, being a solution center is not just to provide more solutions to the consumer, but it also gives us levers during times of volatility that we can focus on different products that we can, you know, highlight and roll out to the consumers. Thank you. Our next question comes from Justin Ages with Berenberg. Your line is now open. Hi. Thanks for taking the question. First, on the renovations, you know, I do think it's a key differentiator. I think you disclosed about $22,000 average cost of renovations, which is up from where it's historically been. Has that been an impediment to getting homes sold? That even though you have to put in a little more money to make them more attractive, it's, you know, making the houses cost more? No, it's actually just the opposite. What we're doing is we're you know, when we're underwriting any new inventory we have, we're being definitely more conscious about how we're underwriting it for the renovations needed for that home. Once we own that home, we're intentionally increasing the amount of renovations that's needed. As you know, in the supply and demand, you know, in normal times, what you want is you want to, you know, you can make money through your service fee and by maximizing the price of your home through renovation. In times like this, what you wanna do is you wanna make sure that your home sells before the other homes. We've been able to use our renovation teams to add different upgrades like granite and appliances and different things that are gonna make our homes unique in the markets, to make sure our homes are prepared to sell first, and a good product. We're intentionally doing that. With the ability of our renovation, it's. Some of those things are not. They're leading to a little bit longer renovation times, but it's very much worth it because it's reducing the time on the market. But right now that's been our focus. To your point earlier, Luis, and I've mentioned this for the last six years, is when there's a market transition, the importance of renovation, because of everything that we just mentioned, being able to control the renovations, your cost, your efficiency, your timing, and that is gonna be really important just again from a supply and demand. We We want our homes to sell first. All right. That's helpful. Thank you. Along those lines with this introduction of MyWay, has the response been good? I think you said you introduced it in October, and has it been, you know, well received enough that you're, you know, also considering expanding to other markets outside of Phoenix? Thank you. Yeah. I would say it's really early right now. There's two things. What I like about MyWay, the timing of MyWay. We've been working on this product for a while. The timing is key because now it's a buyer's market and it's really a buyer's product. You know, as we renovate an Offerpad home, you know, we're choosing before the house goes to market what we're gonna renovate. Sometimes there's just a personal preference of what someone wants to have in their house, and so we're able to do that through MyWay. For that, the first phase is just the Offerpad product. The next phase of that will be, the secondary phase of that is we use it outside of Offerpad products. A buyer that our Flex teams are representing will be able to go in there and customize the house that they want in a kind of a non-Offerpad home. I am very bullish on where we're going with MyWay. The response is it's just an early indicator of customers' favorite product that we have. They love the ability to choose the finishes on a house like you would in a new home. They really like that. We are hyper-focused on rolling that out in our other markets. Like I said, it's early, but my plan is to get that rolled out very quickly as it's gonna be great timing for buyers in a lot of our other markets. Thank you. Our next question comes from the line of Brett Knoblauch with Cantor Fitzgerald. Your line is now open. Hi, guys. Thanks for taking the time. I guess my question is, you know, rates have continued to go up by about 100 basis points since the end of September. If anything, the pace of home price decline should theoretically accelerate. I guess, what gives you confidence that the homes you're purchasing now, when prices have yet to fully adjust to call it normal levels, won't face the same issues you're currently facing with the older vintage of homes that you guys had as of pre-July? Yeah. I agree overall with your overall take. You know, we're obviously extremely focused on that. It's very market specific of what we're doing. You know, where the markets that are the most volatile that we're expecting more depreciating prices in, we're being extremely careful in those markets, and you're gonna see it with the volume that we buy in those markets. You know, places like Phoenix and Denver, Vegas. Those markets, you know, we are expecting still a good decline in those markets. We're underwriting those with a decelerator, you know, per month, and with very wide margins. In areas like the Midwest, like I mentioned before, Indiana's and some of the markets up there, Kansas City, that you're not seeing nearly the impact that you're seeing in some of these other markets. You know, we're buying more homes in those markets. Even places like Charlotte and Raleigh are areas. How we prevent that, one, is remember, we're underwriting under new conditions than we did with our older inventory. We're underwriting with what's more wider margins, more assumptions, especially with purchase price and knowing that that home in a lot of these markets is not gonna be worth what it is when we underwrite that. Like I said, the early signs, those markets are performing well. The other thing that we're doing in the markets that quite bluntly we're pushing more and more people to use our flex, where we'll help them market their home for them. We'll even add upgrades and you know renovation to their home and have them you know have us work with them on selling the home on the open market. But that's not anything that we're going to buy just because of the uncertainty in the market. I think the other thing I'll just add. This is just more for the areas specifically and what you're seeing in most markets around the country. The outlying areas are the areas that are getting hit the hardest. You're seeing much higher depreciation in those or home prices decline, more of the, you know, places that 30-45 minutes outside the main metros. Those are. We're very sensitive about buying in any market, anything there. Anything next to new home builders, they're very aggressive on what they're doing with their pricing and that. We're just being very selective of what we're buying right now and pushing more people to the flex product right now. buying it and moving it to a single-family rental company. Also, no, that makes sense. Maybe just a comment, like another call it $27.5 million inventory impairment. You know, should we expect that to moderate, or how should we think about that going forward? That's always a tough one from a prediction standpoint. What we do at the end of each quarter is go through our existing inventory, and, you know, we have a very thorough process that we involve, you know, our local, you know, folks all the way down to each of the marketplaces. We run that back up through, you know, our regional operations head to our, you know, chief real estate officer. It's a thorough process. It considers, you know, the markets, the homes, the neighborhoods specifically. You know, we mark them to market basically at that point in time. The inventory balance, you know, is expected to be below where we're at now. Between that and the markdowns that we take, I would tell you sitting here today, I would expect, you know, lesser of an impact as we go along, and hopefully, you know, we start to see the market settle out a little bit. You know, candidly, it's impossible to predict at this point. Thank you. Our next question comes from Jay McCanless with Wedbush. Your line is now open. Hey, good afternoon. Thanks for taking my questions. I guess the first one I had, assuming all else equal, rates, I guess what is the difference between the top end versus the bottom end of the home sales guidance you have out there for the Q4? What are some factors that would keep you from getting to the top end? I think first and foremost, it's really just gonna be where, you know, what the demand characteristics are, you know, in each of the markets. That's really been, you know, the root cause of, you know, from affordability standpoint, the slowdown, you know, the demand prospects. You know, the other thing that, you know, we have, you know, in our sights, too, is that Q4 from a seasonality standpoint, you know, is usually the most pronounced. How typical seasonality comes into play in an environment like this, I'd say there is some uncertainty there. That's why, you know, we've put a little bit of a wider range similar to what we did, last quarter to try to account for some of that variability, Jay. Got it. I guess the other one. Just Oh, go ahead, Brian. Yeah, I was just gonna say, one of the things that we're seeing right now in some of the most volatile markets is, you know, the nice-to moves are not happening right now. Someone who wants to upgrade their home or their kitchen, that's just not happening. The majority of the transactions are coming from people who need to move for lifestyle for whatever reason. You know, and that's leading to the volatility as well, right? You know, the transaction volume is the big question mark that we're seeing and, you know, just to Mike's point. Of course, we're watching that closely, you know, it's because that leads into buyer demand for anything that we buy. We wanna make sure that anything that we acquire, we're able to sell it, and you know, buy, renovate, and sell it within 100 days. Then also if not, then to push it into flex. Assuming that mortgage rates stabilize, have you put any type of expansion plans on hold right now, or are you still looking to possibly enter new markets at some point? Yes, we still, you know, we've been on pace the past couple of years of adding about seven to eight new markets. I would say right now, you know, we still have that in our sights next year, but we're gonna have to play it by ear. It really needs to be something that is geared more towards the second half of the year first. Then secondly, you know, we would again probably have more of a bias towards, you know, in our model, we can open up, you know, larger hub markets, and then we can also open up, you know, more satellite-type markets. You know, right now, given circumstances, I would say, you know, our position is, you know, we'll push out, see how the first half of the year looks, and then have a little bit more of a bias to some of the satellite or adjacent markets first. Thank you. The question and answer session has concluded. I will now turn the call over to Brian Bair, Chairman and CEO of Offerpad Solutions Inc. for closing remarks. The thing I'm most proud of is that over the last seven years, we've created momentum ensuring real estate will never be the same. We are being realistic about the world around us, but I believe even more strongly today in our mission and our people. I'm excited to be part of the solution that can revolutionize a $2 trillion industry. Thank you all for joining us today. That concludes the Offerpad Q3 2022 Earnings Call. Thank you for your participation. You may now disconnect your line.