Hi everybody. I'm Nick Jones, Internet Analyst here at Citizens. Really excited to have Offerpad here. We have Co-founder CEO Brian Bair. Thanks for being here. Thank you. Hey everyone. Maybe to just kind of kick things off, I mean, I think people kind of understand what iBuying is or at least have heard of it. Can you maybe speak to Offerpad's core business for those who are maybe new to the name or just learning about it? How's it evolved from inception through today? And I think you have a bigger vision than just iBuying for Offerpad. So maybe kind of just speak to that kind of holistic. Good. I'll give you a short, then I'll give you a long. The short is what iBuying is, is basically a direct home buyer. So people can come, they spend 3 to a seller will come to us, spend 3 to 5 minutes telling us about their home, and then they'll get a cash offer within 24 hours. That's our cash offer business. The longer answer is from the solution center side is when I founded Offerpad around 7 years ago, it was to be a solution center and basically to take care of the hardest part, and that's the transaction. So when there's numerous marketplaces, websites, or everyone wants to say out there that will give customers a kind of a platform going, "Hey, go here, go here." What we want to do is take care of the transaction. We have four product lines: our Cash Offer business, our renovation business, our Direct, what we call Direct Plus business, which I'm sure we'll talk about, and then our listing business. So residential real estate has had some ups and downs over the last four or five years, to say the least. Really highs, and I guess it's been kind of low recently. What do you see Offerpad is solving in the ecosystem? You listed off a bunch of segments you're competing in. There is competition in those segments, but you clearly see a problem that needs to be solved. Can you kind of elaborate? More than anything else, what we want to solve is the friction in real estate. That's where Offerpad was founded to do, is that real estate, if you look at it, is done the same way. People People can go to a website and see what their house is and see pictures online, but everything else is really done the same way it was in 1985. So what we want to do is be able to remove that friction and give customers certainty and control. And so that's really the base of everything that we're focused on. And so, like I said, one of the biggest foundations of what we do is allow people to choose their closing date. That's big. But that's where the friction and giving them certainty and control is really important. Maybe taking a big step back on macro, which I think we have to talk about in anything kind of residential real estate related. There's been noticeable fluctuations in home prices. How are you thinking about home prices from here? Are we finally stable? Do they come down? Do they go up? Let me tell you. Home prices and people talk about a normal market. I've been knee-deep in real estate for 20 years. There's really no such thing as a normal market. There's always different zones, different impacts. One market's doing okay, another market's doing something different. And so there's always something that is there. But as what we've seen over this last really year and a half, it's more of a unicorn. We've never seen anything like it. You have sellers that have the lock-in effect of their current mortgage rates, and then you have an affordability issue happening with buyers in there. And so there's this kind of tug of each thing, and it's so sensitive. But what we're anticipating for this year, we're seeing we're anticipating 2024 transaction volume remain about the same of what they've been. And we're not expecting a big uptick. Now, I'll tell you, if interest rates reduce 25 to 50 to 75 bips, I mean, that'll be a game changer. But you can just see that sellers and buyers, like I said, are just you still have people that are wanting to transact, but there's that issue, right? You have to convince sellers to leave their 3.5% mortgage to whatever the new mortgage rate is. And buyers, they're squeezing in from the affordability side of it. So it's very sensitive right now. Maybe just quickly touching on the rate dynamic. I mean, the longer transaction volumes are down, do home sellers kind of tolerate higher rates? And is there any evidence that that thesis is true? Yeah. Well, and they will tolerate a higher rate to a point, right? And so when we saw interest rates get above 8%, they definitely didn't tolerate that. It was too much of a shock there. I mean, for an example, I think if interest rates were around that 5.5 range, I think you'd see everyone jumping right back into the market again. Now, will they get there? Who knows? But I think there is a trade-off of people saying, "Hey, they're locked into their home, but they're willing to pay more for a different home." But it's just depending on what those rates are. So when it gets above the 8 range, it's hard to justify right now. It's a pill to swallow. Home prices generally have some seasonal patterns, kind of softer on 1Q and 4Q, stronger in 2Q, 3Q. I mean, while volume is maybe flat and as investors try to think about Offerpad's ability to kind of price homes and resell them, is normal seasonality coming back despite maybe some of these other? Yeah. It's been interesting. The last maybe 7 years-ish, 10 years, you haven't seen really normal seasonality. You've seen normally markets shut down in November, December, January range. You see seasonality. But we've seen still pretty active markets during those times. We did see more of an intense seasonality this year, but still stronger than you would anticipate. But seasonality right now, we're seeing pretty good active buyers in the marketplace. We see showing activity. The advantage of having so many homes like we do, we get to see a lot of activity of different markets and just the sensitivity of all. But we are seeing that people are back into kind of that buying season, the spring, which is normally the time that people want to buy a home. So we are seeing an uptick, but nothing like we saw a couple of years ago, obviously. Okay. We touched on interest rates and how that can maybe unlock volume or at least increase the demand. How do interest rates impact Offerpad's model? You have to finance homes. You have to hold them on your balance sheet. How exposed and how easily can you kind of mitigate changes in? People never look at this this way, but we're as much as logistics and risk as we are anything else. And so when we underwrite a home and you look at interest rates, for example, when interest rates go above 8%, when we underwrite a home, somebody comes to us, wants to sell us their home, we have to anticipate a longer time to cash. So basically, we're going to hold that home for a longer period of time. I'm sorry. We have to make more assumptions. They're going to need maybe closing cost help. They're going to need different things. And so it's a balance of just adjusting those things as far as what interest rates are doing. When interest rates go down, they got down to, even in December, almost a 6.5%-6.75% range. You don't have to account for more of those things. And so it's always a fluctuation of risk versus reward as you underwrite homes. Got it. So maybe let's focus more on iBuying. And I know you're getting into some new businesses, but we've touched on the macro influences on iBuying and kind of the psychology of the buyers and sellers. How has the go-to-market changed for the iBuying business given kind of the boom kind of during the pandemic and then the prices have come down quickly? So have you changed how you position the offering to folks? Yeah. I mean, listen, it's all about risk, right? For example, so our buy box has changed dramatically. So we were post-pandemic, you would see our buy box was anywhere from $100,000-$1.5 million. Our buy box now is so focused on affordability of what people can afford. And that's normally around the median home price in the area. So anywhere between the $200,000-$400,000-$500,000 price point on that end. But what we continue to do is, again, we want to meet sellers where they're at, and that's even from the price point, but also give them other products that they might need as well. And so the one is crazy as the market's been since interest rates went up so quickly. The one caveat that's been really good is we have been able to focus on those asset light side from our renovations, doing renovations for other people instead of just ourselves and some of the other allowing other investors to buy off of our platform and different things like that. So that has been really, really good because when we're buying a third of the properties that we were buying in this market because transaction volume, it's able to open up all the asset light side, which has been really, really good. And maybe as you think about renovations, and you're not kind of offering as a service, but has your kind of philosophy or approach to renovations changed? Are you taking on more, taking on less, or are you still kind of doing what you've always done? Yeah. So there's a lot. Renovations, it's its own world. I could talk about it for an hour. But in general, renovations, when it's a buyer's market, you want to do more in renovations. When it's a seller market, you want to do less. That's kind of the platform of renovations. And it fluctuates. But for right now, because people from the affordability issue are basically squeezing into their home, they don't have a lot of money to spend on the home after they own it. So we're upgrading or updating the home a little bit more than we normally do because we want our home to sell first once it hits the market. And that's been important. And depending on the market, we are putting a little bit more renovations in right now. So. Which we are seeing, that. I mean, our homes normally sell faster than most on the market because, again, they're then buying just a traditional home on the market. They can get in there and they can get some of the upgrades and things that they want when they get in there, and they can obviously finance that. So you mentioned setting closing dates for home sellers. It's kind of buying an updated home. What's the key benefit to the seller and the buyer? Is the seller kind of being able to select the closing date and having certainty? And for the buyer, how would you position? Yeah. I would think overall, what we're seeing in the market today is most people moving, they're for a while. We were all. I mean, just right now, what you're seeing people that are moving, it's a life moment. It's something that they have to move, right? Why they're trading that 3.5-7, it's because there's a life moment, job, divorce, something that's happening in that end of it. And on the buying end of it, there's been these buyers sitting on the sidelines that really couldn't buy a home when the market was escalating like this because they were getting pushed out of the market. So that's kind of what we're seeing on that end of it. On the renovation side and where we're tying that all together, it's trying to give them a great product they can move into that, again, they can afford. The affordability and the renovation tie together there too. Got it. Let's switch to asset-light services. Yes. You've. Been a hot topic lately. Yeah. Yeah. It is. It is. You have Direct Plus. You renovate. Listing services. These kind of solutions continue to demonstrate significant progress. I think it was around 43% of transactions last year. Could you kind of discuss these services and their role in Offerpad's long-term strategic vision? Do you have these much bigger than iBuying? Is it augment iBuying? Well, let me just explain the four products we're going. So one is our Cash Offer, which we talk about the iBuying business, right? And the ability, which is the core of our business, to buy, renovate, and sell a home in 100 days is key to everything because that allows others to plug into our real estate operations platform. So because we have to renovate our own homes, allows other for example, I mentioned this in our last earnings call, but when we compare, we have anyone on our renovation business, which means other businesses can come in and say, "Hey, we want to outsource. We want to basically use Offerpad's renovation teams." They have great margins, but we already have a ground game, people on the ground there that can help renovate their homes. When we go side to side because we renovate on our own behalf, normally we save costs. We save timing. We can renovate a $30,000 or $40,000 home in sometimes less than two weeks. And so it's just the way of, again, of the advantage of doing it on our own behalf. So you have the cash offer business. We have what we call kind of the listing business. So we give people a choice. If they don't like their cash offer, normally because of price, we can help them list their home on the open market, see if they can gain more for their home. If not, they can keep our cash offer in the backup position. Then, of course, the renovation. The other thing that's key is what we call Direct Plus. That's allowing other investors. When I started Offerpad, I didn't want to own the most homes in America on our balance sheet. That was never the intent. The intent was really taking the friction out of real estate. You'll see that evolve more, that now where we're taking 80% of those homes. Eventually, you'll see 50/50 of those homes through other investors. It's a win when investors come in. So if Mary Smith submits an offer to Offerpad, she'll get the same Offerpad experience. But when we submit an offer or when we underwrite that home, if there's somebody else that's, say, a single-family rental company that can pay more than we can because they underwrite it differently than we can, then if they can pay more, that seller is going to get more for their home. It's a win for the seller. It's a win for us because we collect a fee. It's a win because the single-family rental company gets a home that they can rent. Those are the four core products that we're hyper-focused on. Those are the things that we're making, even in this environment, we're making really good progress on. Can you speak to the share gains of the new solutions and the kind of various segments? If you're making share gains in kind of a tougher market, you're shifting more transaction volume to these. As volume comes back, is the expectation that the share gains will accelerate and you can kind of get more aggressive share? 100%. I mean, listen, the thing that we if you just look at the cash offering, people talk about the cash buyer side of it, it's a super strong product. I mean, you have a 93%-95% customer satisfaction because you remove, again, the friction that people can control their entire journey through that. So the cash offer is always going to be a foundation of what we do. But because we have the ability to offer a cash purchase on that home, it opens up all the other things. So you'll see as the cash offer business grows, the other asset light products grow as well, the other three products that we have. And you'll see those continue to grow. And especially on the Direct Plus side, like I mentioned, what we've seen impacted probably more than anything over the last year is the single-family rental guys. Those guys have really pulled back. And so as things start to normalize, again, you'll see more opportunity there. Let's pivot a little bit to competition. There was a kind of a big player in residential real estate who entered and left. There's still kind of another, I guess, I would say, pure-play iBuyer. What does the competitive dynamic look like kind of in a terminal year long-term? Can there be multiple players? Is it a winner kind of take-all? It definitely could be multiple players. I will tell you, here's my take a little bit. There, during kind of the height. Everybody and anybody wanted to be an iBuyer. I still remember when we went public, I would get questions going, "Well, there's all these iBuyers out there." There's no iBuyers. There's really 3 people buying at volume. It's always been that way, 3 people that are truly most people who want to be an iBuyer use it as a lead generation because of a strong product. But now there's really 2 strong iBuyers or cash offers out there, us and our main competitor. So those will be things that the market is so big. Our biggest competitor is the traditional way of doing things. People have been selling the home the same way for 90 years, 120 years. They only transact once every 7-10 years when they sell that home. And so it's the traditional way. And I would say with the thing that we have really made an impact on, people are definitely changing the way that they look at it. In most of our markets, people will come to us first before even talking to a traditional agent to see what their home is worth. And that's been super impactful. So as we think about competition, I guess this question is kind of through the lens of competition and how Offerpad performs through this. We have this kind of Sitzer-Burnett case going on. There's kind of concerns of buy-side broker commissions maybe go to zero. Other people don't. I mean, there's a wide spectrum of outcomes of what's going to happen here. What does this all mean for Offerpad? Is it good if it goes down? Do you want them to stay high? Well, I think a couple of things. I don't think anything's going to happen quickly there. I think there's been a lot of noise. I think nothing's going to happen quickly there. Two is that I don't know very many people that have paid more co-broke commissions than we have over the last seven years. We paid a lot of co-broke commissions. That's our biggest pass-through fee. So anything that when we underwrite a home to a customer, we have to underwrite that we're going to pay a co-broke commission on 70%-80% of our homes. And so I think it's definitely a net positive for Offerpad on the co-broke commission. And listen, the reality of it is listing commissions have been adjusted forever. People talk about 6%, 3% for listing, 3% on the buyer side. The listings guys have been affected for a long time. It's normally a 5% commission, 2%, and 3%. So I don't know it'll go to zero. I think there'll definitely be some adjustments. But no matter how you look at it, real estate is definitely. I hate to use the word disruption because it's so overplayed, but it does need it. And real estate's going to change one way or another. Take co-broke. Take this. Take that. The consumers need more access and more control and more certainty. And that's what we want to deliver. But that's where you're going to see the traditional sites starting to get. They're going to have to adapt and change. It's that simple. The idea of certainty keeps coming up. When you think about a sell-side agent, how are they maybe turning the corner, if at all, on iBuyers? I think I've heard there's arguments to be made that in their fiduciary responsibility, they're almost obligated to get an offer if they know one's out there to get. Is that true? Can that grow? Yeah. No. That's awesome. We've always been different than others. We've been pro-agent from the very beginning. Again, when I say I want to be a solution center, I don't want to be a solution center for everybody, including real estate agents. And we want to meet sellers where they're at. For example, if they want to be represented by an agent, great. If they want to come to us directly, great. And so we've always allowed agents to come to us and submit a home to us. And we'll pay them a fee on that. And then we'll buy the home from the seller. So we have definitely been more agent-friendly than most. We just announced a program that will now allow if an agent brings us a home, and we'll allow them to list it on the backend of that with some conditions. But we'll allow them. And agents obviously love that. And so we want to meet, again, the seller where they're at. But we also want to grow our brand, whether it's direct to the consumer or through the agents. And that's been really important to us. Great. Great. I know we have a few minutes left. I want to open up to questions if there are any from the audience. Just the pace of iBuying, are you not as opposed to the action? Has the follow-through been what you thought it might be? Or is it sort of as a general piece, a little bit not what we thought? Yeah. I'll tell you, we went public 2.5 years ago. What I would have told you would have been kind of the worst-case scenario was that a market changed the way it happened in this because people focus on iBuying. It's real estate in general that's had this massive shock to it about 1.5 years ago. And so I think the massive win that we've had, and I would say a massive win, is that we are changing the way that a normal seller thinks about selling their home. I'm going to come to an iBuyer first. Let me see what they're going to pay me for my home. That has been a massive win. The thing that we haven't had as much impact as I would have liked because of the market conditions, you had the increase after COVID and the chase there. We haven't seen everything's just been in a very unique market cycle. I don't know if we'll ever see again post-COVID and then what we're seeing today. And so the thing that I'm very happy about is that people are now coming to us for more choices than just the cash offer, which is good. And we've talked a lot about renovation on the B2B side. But eventually, customers will come to us because they want their home renovated. And we can do that and save them cost and time and energy and all those things as well. So it's definitely been a challenging time. There's no question on that. I'd love to see more of a normalized market. We've talked about a lot that Offerpad would be a question I get a lot from investors is, how does it do in a downturn? How's it do in an upturn? And I've always said, listen, in an upturn, we do really well because anything that we buy is going to perform really well in home price appreciation, which we saw post-COVID. It's going to do really well in a downturn because in a downturn, being a buyer in a buyer's market is a really good place to be. I was that before Offerpad. There's a really good and in a normalized market, it's a good place to be as well. This is an interesting dynamic just because you're seeing the transaction volume down, but you're seeing that the sellers locked in and the buyers on this end of it. But I will tell you, and you still see in most of our markets, real estate transactions down 25% or 30%. You could argue they could be down a lot more than that. So the market is just so big. There's still a lot of activity out there. We're having to get smarter. We're having to narrow our buy box a little bit and with the rate uncertainty. But anyway, so it's a long answer. But it's been good where we're at, especially with the asset light stuff. So we're done with the shot clock. We have less than a minute left here. To kind of conclude the conversation, what do you think the biggest misconception is of kind of Offerpad by investors? And what do you want people to walk away from this conversation with? Yeah. I think fundamentally, real estate's going to change with or without Offerpad. Real estate is one of the very few things. People want everything on demand now. Everything in their life is changing, even from the way that they're buying a car now. And so real estate is going to get there. And so I would say one of the things that we're very early to where we think where real estate's going to go. But the other part of it is the product is really strong. We know flat out that people, if you look at all the friction and transaction, they just want their home sold. That's what they want. And we can provide that to them. So we have a really, really strong product. And the other part of it is because we can do that, all the other opportunities that we can give on the asset light, the very, very high-margin business. So it's a really incredible, but this is definitely the early days. We have some work to do and to prove it out. Again, our biggest competition is the traditional way of doing real estate. But that's coming around. More and more people are coming to us first, which is great. And that's what we like to see. Great. Brian, thanks for doing this. Awesome. Of course. That concludes the conversation. Awesome. Thank you very much. Appreciate it.