This Small-Cap Disruptor Has a $1.9 Trillion Market Opportunity

There are several major players in the iBuying space, including real estate heavyweights Zillow Group (NASDAQ:Z)(NASDAQ:ZS), Redfin (NASDAQ:RDFN), Opendoor Technologies (NASDAQ:OPEN), and last but certainly not least, Offerpad, which is set to go public via a merger with special purpose acquistion company Supernova Partners Acquisition (NYSE:SPNV). In this Fool Live video clip, recorded on Aug. 23, Offerpad CEO Brian Bair discusses how much of the $1.9 trillion real estate market could eventually go to the iBuying industry, and why his company could be well positioned to capitalize. 

Matt Frankel: Your projections in your second-quarter earnings say that you’re going to sell as many as 6,000 homes this year. I believe that was the high end of the range. We’ve seen the statistics, real estate’s a $1.9 trillion market, a few million houses are bought and sold each year. How much of that realistically could become Offerpad’s addressable universe, and how many markets do you see yourself in? Because obviously there’s some small rural markets that don’t make sense for the iBuying business.

Brian Bair: Yeah. We have about $1.9 trillion. The TAM is just so massive. What people don’t talk enough about the TAM, is just how fragmented the TAM is right now. It’s just so fragmented and the way the industry is happening right now with the fragment, it puts a lot of the burden on the consumer. But as we identify different markets as we continue to grow, like I mentioned before, the model can work in most, if not all markets, so there will be some rural markets that might make sense probably down the road a little bit, or even a satellite market that we expand into. But I will tell you, and this is where I’m extremely bullish. Right now, if you take as much noise as you take the big three iBuyers, us and our two competitors, about how much noise we’ve created out there and really revolutionize the way to look at real estate. We all have, together combined, have less than 1% market share. Ninety-nine percent of the people are still going the old way. The TAM in just that market, there’s just so much opportunity, so much runway there. But as you look at the segment, so you’re going to see us rapidly expanding into all markets. The TAM of those markets, especially having different solutions, there’s a lot of different ways to get market share. Not just your iBuying model, but the other products that we’re offering and will continue to offer the consumer, that more market share will, I believe, stronger will come this direction.

Frankel: Kind of to follow up on that, do you see yourselves making the most of your money from iBuying or from all these adjacent services?

Bair: It depends. In a perfect world, as we continue to grow, it will be 50/50. How that evolves over time and what are the education. The first couple of years, the education of Offerpad was,…