Episode 547: Offerpad CFO Peter Knag on Transforming How Americans Sell Homes

Lance (0:12)

Welcome into another episode of the Inside the ICE House podcast. Today's guest is Peter Knag. He is the CFO of NYSE listed Offerpad. Peter, thanks so much for joining us inside the ICE House. Happy to have you here.

Peter Knag (0:23)

My pleasure, Lance. It's a pleasure to be here, back at the New York Stock Exchange.

Lance (0:27)

So I want to start for listeners who may not be as familiar with Offerpad, because I know leading up to the conversation before I started my research, I wasn't as familiar with Offerpad as I am as we start this conversation. But when you think about how to describe the company, not just in a sort of one line definition, but the full experience, right? How Offerpad really helps a customer, how do you explain the role the company plays in today's real estate ecosystem?

Peter Knag (0:52)

So we are on a journey, and we're going to disrupt the way people sell homes in North America, at least for starters in North America. This is the vision of our founder and our current chairman and CEO, Brian Baer. And we're, I would say, probably, who knows, a third of the way there. Right now, most people who sell their home, go through a traditional list, and there's nothing wrong with that process. It's been the process that's been in place for many, many decades. But there are ways to improve it, especially in this day and age, with technology and data and all the information that we have compared to what we had 50 years ago.

So what we are looking to deliver to the customer, which is a person selling their home, and we're starting with homes that are easy to comp and easy to price and very similar. So not a bespoke home in New York City or San Francisco or a fancy home in Miami, but think of the Sunbelt cities and Ohio and lots of areas of the country where there's many homes that are very similar. And so really aren't that difficult, especially with the use of data and intelligence as opposed to a local market feel to price. And so our goal is to get to a place where less than 1% of those homeowners across the 25 or so markets that we're in sell their home in a very easy manner through a marketplace instead of going through a two, three month process. And they just sell to us in a marketplace and we price it based on a market, not that far off from an exchange.

And again, so we're starting with homes that are more similar because like a Carbona model, sometimes it's easy for people to understand what we do or what our goal is by calling it a Carbona for homes. And that's really what we do. You have a 300,000, 400,000, 500,000 home in Alpharetta, Georgia, or in Plano, Texas, or in the suburbs of San Antonio or in Nevada and Las Vegas. You can just come to us and sell the home for really the same price that you're going to get if you go through a longer process. And so that's what we deliver. That's why this is something that the market, that we know that the market will go after once we have time to break through and get people to understand what it really is.

Lance (3:59)

And so obviously from your role as CFO, right, you're looking at a lot of the different financial aspects of the, I guess, real estate market, right? I actually, full disclosure, recently purchased a home, so I'm sort of just getting out of the whole real estate market, the whole real estate cycle. Obviously a big deal for me, big moment for every American or everyone in the world who buys their first home and is able to move from, I moved from apartment to home, but so on and so forth. And I'm sure a lot of the things you're looking at, right, whether it be acquisition pricing, you're looking at market timing, you're looking at renovation costs, so on and so forth.

What are some of the key economic levers that you pay attention to the most that help you dictate how Offerpad should position themselves in the current market?

Peter Knag (4:44)

Sure. I mean, interest rates are really important.

But we are creating a business that can be successful in any real estate environment. But real estate or interest rates are important because lower interest rates stimulate the real estate market, the residential real estate market. And anytime, right now, over the past couple of years, it's been high threes, low four million transactions per year in the United States. But going back historically, it's been 50% higher than that. And so anytime that we're in an environment where there's more transactions, that's good for us, and we're going to have more volume. Our model, so that's probably the biggest factor, and economic policy and how that ties into it. Legislation is important, and there's some things going on around that as well that we think are going to be neutral or even potentially positive for us.