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What changed in Offerpad Solutions Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Offerpad Solutions Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+415 added−392 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in Offerpad Solutions Inc.'s 2024 10-K

415 paragraphs added · 392 removed · 284 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

64 edited+31 added−29 removed34 unchanged
Biggest changeBelow is a summary of our current ancillary products and services: • Title and Escrow : We have a national relationship with a leading title and escrow company through which we are able to leverage our size and scale to provide exceptional title and escrow closing services with favorable economics. • Offerpad Home Loans (“OPHL”) : We provide access to mortgage services through our in-house mortgage solution, OPHL, or through a third-party lending partner. • Bundle Rewards : The Offerpad Bundle Rewards program allows customers to receive multiple discounts when selling and buying a home with Offerpad, and by obtaining their home loan with OPHL.
Biggest changeWe have a national relationship with a leading title and escrow company, through which we are able to leverage our size and scale to provide exceptional title and escrow closing services with a favorable economic impact principally in our Cash Offer service.
As our product and service offerings continue to evolve, our new market expansion strategies will as well. For instance, we may enter into new markets to offer our renovation services, but may not offer buying and selling services in such markets.
As our product and service offerings continue to evolve, our new market expansion strategies will as well. For instance, we may continue to enter into new markets to offer our renovation services, but may not offer buying and selling services in such markets.
As our market footprint has expanded, we have optimized our marketing strategy with advanced audience segmentation methodologies, improved targeting, and attribution modeling. Going forward we will focus on increasing our local advertising efforts through a variety of channels as well as establishing a broader national advertising presence to grow brand awareness and brand affinity.
As our market footprint has expanded over time, we have optimized our marketing strategy with advanced audience segmentation methodologies, improved targeting, and attribution modeling. Going forward, we will focus on increasing our local advertising efforts through a variety of channels as well as establishing a broader national advertising presence to grow brand awareness and brand affinity.
We compete with other instant buyers, cash offer providers and online real estate platforms, as well as institutional purchasers of residential real estate; however, we primarily compete with local real estate brokerages and the traditional way of conducting home sales. We believe that companies in our industry compete primarily on the basis of customer experience, available offerings, and price.
We compete with other cash offer providers and online real estate platforms, as well as institutional purchasers of residential real estate; however, we primarily compete with local real estate brokerages and the traditional way of conducting home sales. We believe that companies in our industry compete primarily on the basis of customer experience, available offerings, and price.
Certain licensed entities also are subject to routine examination and monitoring by the CFPB (for mortgages) and/or state licensing authorities. As of December 31, 2023, OfferPad Brokerage, LLC, OfferPad Brokerage “FL”, LLC, and OfferPad Brokerage CA, Inc. hold real estate brokerage licenses in certain of our markets and certain other states.
Certain licensed entities also are subject to routine examination and monitoring by the CFPB (for mortgages) and/or state licensing authorities. As of December 31, 2024, OfferPad Brokerage, LLC, OfferPad Brokerage “FL”, LLC, and OfferPad Brokerage CA, Inc. hold real estate brokerage licenses in certain of our markets and certain other states.
As we increased our scale and improved our workflow optimization in prior years, our average real estate inventory holding period of homes sold improved from 138 days in 2016 to 101 days during 2022 and 97 days during the fourth quarter of 2023, which is consistent with our expected average real estate inventory holding period and our historical norm.
As we increased our scale and improved our workflow optimization in prior years, our average real estate inventory holding period of homes sold decreased from 138 days in 2016 to 97 days during the fourth quarter of 2023, which is consistent with our expected average real estate inventory holding period and our historical norm.
Human Capital Resources Overview We believe that we have a talented, motivated and dedicated team, and are committed to supporting the development of all of our team members. As of December 31, 2023, we employed approximately 350 people, nearly all on a full-time basis. None of our employees are represented by a labor union or covered by collective bargaining agreements.
Human Capital Resources Overview We believe that we have a talented, motivated and dedicated team, and are committed to supporting the development of all of our team members. As of December 31, 2024, we employed approximately 200 people, nearly all on a full-time basis. None of our employees are represented by a labor union or covered by collective bargaining agreements.
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.
Additionally, laws, regulations, and standards covering marketing and advertising activities conducted by telephone, email, mobile devices, and the internet, are 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.
As of December 31, 2023, our registered IP portfolio includes: nine registered U.S. trademarks, three foreign registered trademarks, four pending U.S. trademark applications and two U.S. copyright registrations. Our trademarks registrations include “Offerpad” and the Offerpad logo, and our pending applications include taglines and trademarks for services in development by Offerpad.
As of December 31, 2024, our registered IP portfolio includes: nine registered U.S. trademarks, three foreign registered trademarks, three pending U.S. trademark applications and two U.S. copyright registrations. Our trademarks registrations include “Offerpad” and the Offerpad logo, and our pending applications include taglines and trademarks for services in development by Offerpad.
We combine an innovative end-to-end technology platform with the expertise of local market teams to efficiently scale our operations while maintaining a physical presence in our markets that enables us to establish and maintain better relationships with our customers. This allows us to provide a fast and simple real estate experience that our customers value.
In order to establish and maintain better relationships with our customers, we combine an innovative end-to-end technology platform with the expertise of local market teams to efficiently scale our operations while maintaining a physical presence in certain of our key markets. This allows us to provide a fast and simple real estate experience that our customers value.
Through our various subsidiaries, we buy and sell homes, provide real estate brokerage 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, such as the California Consumer Privacy Act.
Through our various subsidiaries, we buy and sell homes, provide real estate brokerage services, and provide other product offerings, which results in us receiving or facilitating transmission of personal information. This information is increasingly subject to legislation and regulation in the United States, such as the California Consumer Privacy Act (“CCPA”).
For a more detailed discussion of the risks we face in connection with privacy regulations, see “ Risk Factors—Risks Related to Our Intellectual Property and Technology—We collect, process, store and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, and any actual or perceived violation of these privacy obligations could result in a claim for damages, regulatory action, loss of business, or unfavorable publicity. ” In order to provide the broad range of products and services that we offer customers, certain of our subsidiaries maintain real estate brokerage licenses, and we may in the future apply for additional licenses as our business grows and develops.
For a more detailed discussion of the risks we face in connection with privacy regulations, see “ Risk Factors—Risks Related to Our Intellectual Property and Technology—We collect, process, store and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, and any actual or perceived violation of these privacy obligations could result in a claim for damages, regulatory action, loss of business, or unfavorable publicity. ” Offerpad Solutions Inc. | 2024 Form 10-K | 12 In order to provide the broad range of products and services that we offer customers, certain of our subsidiaries maintain real estate brokerage licenses, and we may in the future apply for additional licenses as our business grows and develops.
We are the registered holder of a variety of domain name registrations, including “offerpad.com”. In addition to the protection provided by our intellectual property rights, we enter into confidentiality and proprietary rights agreements with certain of our employees, consultants, contractors and business partners.
We are the registered holder of a variety of domain name registrations, including “offerpad.com”. In addition to the protection provided by our intellectual property rights, we enter into confidentiality and proprietary rights agreements with certain of our employees, consultants, contractors and business partners. Certain of our employees and contractors are also subject to invention assignment agreements.
As of 2023, there were approximately 1.6 million licensed real estate agents and more than 100,000 U.S. real estate brokerages, with a single brokerage rarely holding more than 10% in a given market. Today, we typically purchase homes with a price of up to $750,000, which represented a potential addressable market opportunity of approximately $1.0 trillion during 2023.
As of 2024, there were approximately 1.5 million licensed real estate agents and more than 100,000 U.S. real estate brokerages, with a single brokerage rarely holding more than 10% in a given market. Today, we typically purchase homes with a price of up to $750,000, which represented a potential addressable market opportunity of approximately $1.1 trillion during 2024.
Offerpad Solutions Inc. | 2023 Form 10-K | 9 Increase advertising and drive brand awareness Even though historically our ability to invest in advertising has been limited due to our focus on capital efficiency we have a proven history of effective local advertising to drive inbound seller inquiries as well as local and national distribution of our active listings for resale.
Increase advertising and drive brand awareness Even though historically our ability to invest in advertising has been limited due to our focus on capital efficiency we have a proven history of effective local advertising to drive inbound seller inquiries as well as local and national distribution of our active listings for resale.
Additionally, state and local laws may restrict the amount and nature of interest and fees that may be charged by a lender or Offerpad Solutions Inc. | 2023 Form 10-K | 12 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.
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.
Offerpad Solutions Inc. | 2023 Form 10-K | 8 Maximizing real estate inventory turnover and increasing returns on invested capital In order to effectively mitigate risk and maximize efficiency of the business, we aim to turn inventory quickly while maintaining our underwritten to actual sales price accuracy.
Maximizing real estate inventory turnover and increasing returns on invested capital In order to effectively mitigate risk and maximize efficiency of the business, we aim to turn real estate inventory quickly while maintaining our underwritten to actual sales price accuracy.
We understand the people in those homes at a “living room” level and use that experience and expertise to provide the best way to buy and sell a home.
Real estate is in our DNA. We know homes. We understand the people in those homes at a “living room” level and use that experience and expertise to provide the best way to buy and sell a home.
Workplace Practices and Policies We are committed to providing a workplace free of harassment or discrimination based on race, color, religion, sex, sexual orientation, gender identity, national origin, disability, veteran status, caste or other legally protected characteristic. We are an equal opportunity employer committed to inclusion and diversity.
Offerpad Solutions Inc. | 2024 Form 10-K | 11 Workplace Practices and Policies We are committed to providing a workplace free of harassment or discrimination based on race, color, religion, sex, sexual orientation, gender identity, national origin, disability, veteran status, caste or other legally protected characteristic. We are an equal opportunity employer.
In 2023 and 2022, the median prices of the homes we sold were approximately $340,000 and $350,000, respectively. We intend to further increase our market penetration in these markets through additional brand marketing, strengthening local partnerships and improving customer awareness of our offerings, which we anticipate will increase our market share.
In 2024 and 2023, the median prices of the homes we sold were approximately $325,000 and $340,000, Offerpad Solutions Inc. | 2024 Form 10-K | 9 respectively. We intend to further increase our market penetration in these markets through additional brand marketing, strengthening local partnerships and improving customer awareness of our offerings, which we anticipate will increase our market share.
We plan to continue providing mortgage services in the future, either through our in-house mortgage solution, or through a third-party lender. Mortgage products are regulated at the state level by licensing authorities and administrative agencies, with additional oversight from the CFPB and other federal agencies.
We have historically provided access to mortgage services through either our in-house mortgage solution or a third-party lending partner. Mortgage products are regulated at the state level by licensing authorities and administrative agencies, with additional oversight from the CFPB and other federal agencies.
Separately, through a variety of ancillary product and service opportunities, we believe we will be able to further expand our total addressable market. Vertical integration and product innovation will provide future potential opportunities including expansion of our mortgage and title solutions, as well as entry into other transaction services such as home warranty, homeowners insurance, or remodeling services.
Separately, through our B2B Renovate business and industry partnership programs, we believe we will be able to further expand our total addressable market. Vertical integration and product innovation will provide future potential opportunities including expansion of our title solution, as well as entry into other transaction services such as home warranty, homeowners insurance, or consumer remodeling services.
Our platform provides home buyers the opportunity to browse and tour homes online and submit purchase offers online in a simple process on their own time, with or without an agent.
Our platform provides home buyers the opportunity to browse and tour homes online and submit purchase offers online in a simple process on their own time, with or without an agent. We also offer seamless, integrated access to partner agents to advise on the purchase of a home.
Generally, the revenue and margin profiles of our ancillary products and services are different from our cash offer service that accounts for the vast majority of our revenues, with most Offerpad Solutions Inc. | 2023 Form 10-K | 7 ancillary products and services having a smaller average revenue per transaction than our cash offer service, but a higher margin.
Generally, the revenue and margin profiles of our ancillary products and services are different from our Cash Offer service that accounts for the substantial majority of our revenue, with most ancillary products and services having a smaller average revenue per transaction than our cash offering service, but a higher margin.
The information found on our website is not part of this or any other report we file with, or furnish to, the SEC.
The information found on our website is not part of this or any other report we file with, or furnish to, the SEC. Offerpad Solutions Inc. | 2024 Form 10-K | 13
Looking forward, we intend to apply rigorous criteria to identify which additional MSAs we plan to expand into in the future. As part of our planned expansion, we have given strategic consideration to which markets we would plan to open first and what the resource requirements for establishing a presence in those markets would be.
As part of our planned expansion, we have given strategic consideration to which markets we would plan to open first and what the resource requirements for establishing a presence in those markets would be.
As of December 31, 2023, we offer our services in 25 markets in the United States, which tend to share median price points of less than $550,000 and are among the top 100 metropolitan statistical areas (MSAs) in terms of annual residential real estate transactions.
Our Growth Strategies We believe we have significant untapped growth potential and intend to achieve our goals through the following strategies: Grow share in existing markets As of December 31, 2024, we offer our services in 26 markets in the United States, which tend to share median price points of less than $550,000 and are among the top 100 metropolitan statistical areas (MSAs) in terms of annual residential real estate transactions.
Our platform provides a unique dual approach to helping home sellers. In our cash offer service, sellers can access our website or mobile application to receive a competitive cash offer for their home within 24 hours and quickly close without the major inconveniences associated with traditional real estate selling.
Our agile and adaptable product suite provides a unique approach to meet both our retail and business customers’ needs. In our Cash Offer service, sellers can access our website or mobile application to receive a competitive cash offer range for their home within minutes and quickly close without the major inconveniences associated with traditional real estate selling.
Interactions in industries such as commerce, restaurants, healthcare, automotive, and insurance have been drastically altered by digital experiences that offer new levels of convenience, efficiency, and reliability.
As digital transactions are transforming every industry, consumers turn to technology for new and improved experiences in their daily lives. Interactions in industries such as commerce, restaurants, healthcare, automotive, and insurance have been drastically altered by digital experiences that offer new levels of convenience, efficiency, and reliability.
A foundation of our strategic approach to growth has been to prove out our business model first, control costs and refine our valuation automation and logistical operations before we scale into additional markets.
Since inception, we have focused on improving the unit economics of our model across our markets, with the added benefit of maximizing operational leverage as we scale. A foundation of our strategic approach to growth has been to prove out our business model first, control costs and refine our valuation automation and logistical operations before we scale into additional markets.
Proven management team with extensive digital, real-estate and finance experience Our founder and management team have decades of experience in transactional real estate operations and property valuation, digital marketplaces, business intelligence and analytics and finance.
The flexibility of our offerings has enabled us to build a strong, well-respected brand in the eyes of our customers. Proven management team with extensive digital, real-estate and finance experience Our founder and management team have decades of experience in transactional real estate operations and property valuation, digital marketplaces, business intelligence and analytics and finance.
For example, during the year ended December 31, 2023, we achieved a 91% Customer Satisfaction Rating and a net promoter score of 64% based on a survey of approximately 900 customers who sold their home to Offerpad during 2023. As of December 31, 2023, Offerpad operated in over 1,700 cities and towns in 25 metropolitan markets across 15 states.
For example, during the year ended December 31, 2024, we achieved a 91% Customer Satisfaction Rating and a net promoter score of 67% based on a survey of over 650 customers who sold their home to Offerpad during 2024.
Renovation services We have extended our renovation services to other businesses allowing other companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell.
Through this offering, we are able to leverage our existing logistics, operations, technology and skill-sets to provide renovation services to other businesses, allowing other companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell.
A house is property, but a home is uniquely personal – a place full of emotion and memories. We help people move freely so they can live their best lives, wherever “home” happens to be. • Freedom first . Providing home buyers and sellers freedom is our passion. No one should ever feel stuck.
Our culture and passion for what we are building is reflected in the following core values: • Homes not houses . A house is property, but a home is uniquely personal – a place full of emotion and memories. We help people move freely so they can live their best lives, wherever “home” happens to be. • Freedom first .
Buyers also experience significant friction for one of the most important purchase decisions in their lives – they often cannot access and tour homes on their own schedule, are dependent on intermediaries and have to endure lengthy offer submission and closing processes.
Buyers also experience significant friction for one of the most important purchase decisions in their lives – they often are dependent on intermediaries and have to endure lengthy offer submission and closing processes. We are continuously focused on providing a differentiated approach to our customers through various selling, buying and ancillary products and services in our Solutions Center.
We believe we have strong and positive relations with our employees. We also engage numerous consultants and contractors to supplement our permanent workforce, primarily to assist with renovating our homes, and real estate agent partners as part of our listing service offering.
We believe we have strong and positive relations with our employees. We also engage numerous consultants and contractors to supplement our permanent workforce, primarily to assist with renovating our homes, and real estate agent partners. Our Culture and Core Values Maintaining a strong company culture is critical to our team and is supported through various employee engagement activities.
Prior to the launch of Offerpad, our team had collectively spent many years buying, selling, renting, and renovating tens of thousands of homes. We created the Solutions Center because we learned through experience all the challenges people face when selling and buying a home the traditional way.
We created the Solutions Center because we learned through experience all the challenges people face when selling and buying a home the traditional way.
As part of our benefits package, we offer many physical, emotional, and financial wellness programs, mental well-being support, disability accommodations, and savings and investment tools. We also offer an optional hybrid work schedule program to better support leaders, managers, and employees in hybrid work scenarios.
Well-being We are committed to supporting our employees’ well-being and safety while they are at work and in their personal lives. As part of our benefits package, we offer many physical, emotional, and financial wellness programs, mental well-being support, disability accommodations, and savings and investment tools.
We pair our local expertise in residential real estate with proprietary technology to put customers in control of the process and help find the right solution that fits their needs. Our digital Solutions Center platform gives users a holistic, customer-centric experience, enabling them to efficiently sell and buy their homes online with streamlined access to ancillary products and services.
In providing streamlined, data driven real estate solutions for the on-demand customer, we pair our local expertise in residential real estate with proprietary technology to put customers in control of the process and help find the right solution that fits their needs.
Available Information We file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and other information electronically with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public on the SEC’s website at www.sec.gov.
(“Supernova”). In connection with the closing of the Business Combination, Supernova changed its name to Offerpad Solutions Inc. Available Information We file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and other information electronically with the Securities and Exchange Commission (“SEC”).
Our customers benefit from a home buying process designed around them, enjoying exclusive buyer benefits including early access to Offerpad homes, savings when bundling multiple Offerpad services, local experts to guide the purchasing process, a dedicated solutions coordinator, and flexibility around their move-in date.
Our customers benefit from a home buying process designed around them, enjoying exclusive buyer benefits including early access to Offerpad homes and local experts to guide the purchasing process. B2B Renovate business services Our B2B Renovate business services represent an important component of our asset-light platform offerings.
We provide simplicity, peace of mind and freedom in everything we do. • Every day matters . We work with a sense of urgency to deliver the best customer experience in the industry. There’s no room for hesitation. We count the days with the goal to use less, so customers can spend less time ‘real estat-ing’. • Results rule .
Providing home buyers and sellers freedom is our passion. No one should ever feel stuck. We provide simplicity, peace of mind and freedom in everything we do. • Every day matters . We work with a sense of urgency to deliver the best customer experience in the industry. There’s no room for hesitation.
Additionally, we may leverage broad reach channels that allow us to responsibly scale brand awareness. Our Competition The U.S. residential real estate market is highly fragmented and non-integrated. As of 2023, there were over 100,000 U.S. real estate brokerages in the United States, with a single brokerage rarely holding more than 10% share in any market.
As of 2024, there were over 100,000 U.S. real estate brokerages in the United States, with a single brokerage rarely holding more than 10% share in any market.
Government Regulation We operate in highly regulated businesses through a number of different channels across the United States.
We further restrict the use of our proprietary technology and intellectual property through provisions in both our general and product-specific terms of use on our website. Government Regulation We operate in highly regulated businesses through a number of different channels across the United States.
Increase renovation services We have extended our renovation services to other businesses allowing other companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell. We believe renovation services could be a more significant component of our business over time and plan to increase focus on such services in the future.
Increase B2B Renovate business services We have expanded our B2B Renovate services in recent years, allowing a greater number of companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell.
We get things done. We celebrate doers. We don’t talk about what we’re going to do, we just do it. When we see a problem, we solve it. • Embrace our roots . Real estate is in our DNA. We know homes.
We count the days with the goal to use less, so customers can spend less time ‘real estat-ing’. • Results rule . We get things done. We celebrate doers. We don’t talk about what we’re going to do, we just do it. When we see a problem, we solve it. • Embrace our roots .
Our employees are eligible for medical, dental and vision insurance, a savings/retirement plan, life and disability insurance, various wellness programs and tuition reimbursement, along with other optional benefits designed to meet individual employee needs. Well-being and Hybrid Work We are committed to supporting our employees’ well-being and safety while they are at work and in their personal lives.
Compensation and Employee Benefits To attract and retain top talent, we offer our employees a broad range of company-paid benefits and highly competitive compensation packages. Our employees are eligible for medical, dental and vision insurance, a savings/retirement plan, life and disability insurance, and various wellness programs, along with other optional benefits designed to meet individual employee needs.
We collect hundreds of data points per home from an array of sources including public records, real estate brokerage transaction histories, private third-party data, and internally developed proprietary data sources. Our proprietary automated valuation and renovation-modeling engine “Offercomp” uses this information to automatically value more than 100,000 properties each year and generate our cash offers based on these data points.
Our proprietary automated valuation and renovation-modeling engine “Offercomp” uses this information to automatically value more than 100,000 properties each year and generate our cash offers based on these data points. Our real estate experts work in tandem with and enhance our technology by providing a final review of the offer.
Through our Offerpad cash offer service, customers complete a few simple steps and receive a competitive cash offer on their home within 24 hours.
Cash Offer Through our Cash Offer service, customers complete a few simple steps and receive a competitive cash offer range on their home within minutes, allowing them to schedule their home inspection on their timeline, in some cases as soon as the next day.
Customers choosing an Offerpad cash offer avoid the disruption of showing their homes, select their own closing date with the benefit of extended stay in case their new home is not ready, and enjoy complimentary free local moving.
Customers choosing an Offerpad cash offer avoid the disruption of showing their homes, select their own closing date, ensuring confidence and control throughout the process, and enjoy complimentary free local moving, streamlining the transition to a new home. If the customer is represented by a third-party agent, we work directly with such agent in addition to paying the agent’s fee.
Our ancillary products and services represented less than 1% of our total revenue in both 2023 and 2022. Our Market Opportunity In 2023, roughly $1.9 trillion in value of homes were sold in the U.S. with approximately 4.7 million homes sold for an average home value of approximately $400,000.
Our Market Opportunity In 2024, roughly $1.9 trillion in value of homes were sold in the U.S., with approximately 4.8 million homes sold for an average home value of approximately $410,000. Despite the large market size, the vast majority of U.S. residential real estate transactions are conducted offline.
Since our founding in 2015, we have transacted on homes representing approximately $10.7 billion of aggregate revenue through December 31, 2023. We believe that this revenue generation is a testament to how the simplicity and ease of iBuying and digital home sales resonates with our customers.
We believe that this market expansion and cumulative revenue generation since 2015 is a testament to how the simplicity and ease of our Cash Offer solution resonates with our customers.
In addition to the renovation project fee, we are also typically compensated for these renovation services with a service fee that is based on a percentage of the overall renovation project fee. Our renovation services represented less than 1% of our total revenue in both 2023 and 2022.
When providing renovation services, we receive a renovation project fee, and are also typically compensated with a service fee that is based on a percentage of the overall renovation project fee. Although our B2B Renovate business services offering is in the early stages, we believe these services could be a more significant component of our business over time.
We maintain market-by-market standards to ensure quality, cost, and time efficiency, deploying our own field automation software to enable accurate progress reporting as well as labor and material tracking. Scalable platform, with proven economics and capital efficiency We have a leading, scalable and low-cost transaction platform. We have created a pioneering iBuying company and leading on-demand real estate marketplace.
We optimize our workforce through a mix of internal employees and external contractors and have local project managers that manage the renovation in its entirety. We maintain market-by-market standards to ensure quality, cost, and time efficiency, deploying our own field automation software to enable accurate progress reporting as well as labor and material tracking.
Further, given the uncertainty regarding the near-term macroeconomic conditions, including the path of ongoing inflation in the broader economy, the impact of geopolitical conflicts and the direction of mortgage interest rates, we currently do not anticipate expanding into any new markets in the first half of 2024 and expect to re-evaluate expansion plans in the second half of the year.
Although we recently expanded into two new markets, we have decelerated our market expansion plans in recent years given the uncertain economic outlook and uneven residential real estate market conditions, which has included uncertainty regarding the near-term macroeconomic conditions, including the path of inflation in the broader economy, the direction of mortgage interest rates and the impact of geopolitical conflicts.
Expand relationships with home buyers We continue to pursue opportunities that enable us to grow our service offerings, and offer a program that allows investors and single-family rental companies an opportunity to purchase homes from homeowners, matching investors with sellers.
We believe these services could be a more significant component of our business over time and plan to continue increasing our focus on such services in the future. Expand Direct+ institutional buyer program We offer a program that allows investors and single-family rental companies an opportunity to purchase homes from homeowners, matching investors with sellers.
Buyers are able to visit homes on their own time and utilize digital tools to complete the inspection and closing process.
We are also committed to removing the stress and inconvenience associated with purchasing a home. Prospective buyers have access to our partner agents who can advise on the purchase of their home. Buyers are able to tour homes online on their own time and utilize digital tools to complete the inspection and closing process.
Our real estate experts work in tandem with and enhance our technology by providing a final review of the offer. Our proprietary and purpose-built “Helix Go” technology streamlines the renovation process for a purchased home by automating logistics and workflows.
Our proprietary and purpose-built “Helix Go” technology streamlines the renovation process for a purchased home by automating logistics and Offerpad Solutions Inc. | 2024 Form 10-K | 8 workflows. This combination of technology, automation, and machine learning, paired with real estate expertise enhances the accuracy in our underwriting to actual sales prices and improves our unit-level economic performance.
We have historically focused on geographic diversification across high population growth cities with affordable median sales prices and increasing employment characteristics. However, given the dislocated residential real estate market conditions during the second half of 2022 and the first quarter of 2023, we did not expand into any new markets during 2023.
We have historically focused on geographic diversification across high population growth cities with affordable median sales prices and increasing employment characteristics. Given this current coverage, we believe there is significant opportunity to both increase market penetration in our existing markets and to grow our business through new market expansion over the long-term.
Since our inception to December 31, 2023, we have executed in aggregate over 77,000 buy and sale transactions and have completed nearly 34,000 home renovations. We optimize our workforce through a mix of internal employees and external contractors and have local project managers that manage the renovation in its entirety.
Operational expertise We know how to efficiently manage the logistical challenge of buying, renovating and selling thousands of homes across 26 differentiated markets. Since our inception to December 31, 2024, we have executed in aggregate over 83,000 buy and sale transactions and have completed nearly 37,000 home renovations.
Who We Are Offerpad was founded to create a better residential real estate experience by combining advanced technology solutions with fundamental industry expertise. From cash offers and flexible listing options to mortgages and buyer services, we have been helping homeowners since 2015. We provide streamlined, data driven iBuying and real estate solutions for the on-demand customer.
Item 1. Business. Our Mission Offerpad, dedicated to simplifying the process of buying and selling homes, is committed to providing comprehensive solutions that remove the friction from real estate. Who We Are Offerpad was founded to create a better residential real estate experience by combining advanced technology solutions with fundamental industry expertise.
Our significant growth relative to our limited capital invested is testament to our efficiency and results driven culture. Since inception, we have focused on improving the unit economics of our model across our markets, with the added benefit of maximizing operational leverage as we scale.
Scalable platform, with proven economics and capital efficiency We have a leading, scalable and low-cost transaction platform. We have created a pioneering real estate solution company and leading on-demand real estate marketplace. Our significant growth relative to our limited capital invested is testament to our efficiency and results driven culture.
Expand relationships with home buyers We continue to pursue opportunities that enable us to grow our service offerings, and offer a program that allows investors and single-family rental companies an opportunity to purchase homes from homeowners, matching investors with sellers.
Direct+ institutional buyer program Another component of our asset-light platform offerings includes our program that allows investors and single-family rental companies an opportunity to purchase homes from homeowners, matching investors with sellers. These transactions occur in several forms, including assigning the original purchase contract to the end buyer and collecting a fee at closing.
Customer satisfaction Our Solutions Center was designed with the commitment to providing the best possible real estate experience. The flexibility of our offerings has enabled us to build a strong, well-respected brand in the eyes of our customers.
As a result of this shift, combined with the impact of the normal seasonal increase that occurs in the fall and winter months, we anticipate our average real estate inventory holding period will continue to increase in early 2025. Customer satisfaction Our Solutions Center was designed with the commitment to providing the best possible real estate experience.
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Item 1. Business. Our Mission Offerpad’s mission is to deliver the best home buying and selling experience. By using technology-enabled solutions across our digital platform, we strive to be the leading on-demand real estate solutions provider that offers customers the simplicity, peace of mind and freedom to solve their housing needs.
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Our advanced real estate platform offers a range of services, from consumer cash offers to business-to-business (“B2B”) renovation solutions and industry partnership programs, all tailored to meet the unique needs of our clients. Since 2015, we have leveraged local expertise in residential real estate alongside proprietary technology to guide homeowners at every step.
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In our listing service offering, we leverage our technology, scale and logistical expertise to renovate and list a seller’s home for sale while also sometimes providing a backup cash offer to the seller, thereby providing optionality of process and certainty of outcome.
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We provide our real estate services through the following solutions: • Cash Offer , in which customers can access our website or mobile application to receive a competitive cash offer range for their home within minutes and quickly close without the major inconveniences associated with traditional real estate selling.
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We also offer seamless, integrated access to partner agents to advise on the purchase of a home as well as access to mortgage services through our in-house mortgage solution, Offerpad Home Loans, or through a third-party lending partner.
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Our Cash Offer business is the core foundation upon which Offerpad was founded and continues to be a key, central component of our business. • Other , which includes: o B2B Renovate business, in which we leverage our existing logistics, operations, technology and skill-sets to provide renovation services to other businesses, allowing other companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell; o Direct+ institutional buyer program, in which investors and single-family rental companies have an opportunity to purchase homes from homeowners, matching investors with sellers; and o Agent Partnership Program, in which our partner agents can request a cash offer on behalf of their clients, have the ability to list an acquired home prepared for resale, and for partner agents in the top tier of the program, have access to sellers in defined zones, along with having the potential to list other Offerpad-owned homes in their zone.
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We believe by offering both cash offer and listing services to sellers, and a guided yet flexible and customizable experience to buyers, we have reinvented the home selling and buying experience to meet the digital and on-demand needs of modern consumers.
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Our Cash Offer solution represents the substantial majority of our business, generating over 97% of our consolidated revenue during each of the years ended December 31, 2024, 2023, and 2022.
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As we expand further into our existing markets, launch new markets, and develop a wide range of new ancillary products and services, we look forward to bringing our mission of delivering the best home buying and selling experience to even more homeowners and prospective home purchasers across the country.
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Our asset-light platform offerings included in Other generally earn a smaller average revenue per transaction than our Cash Offer service, but typically generate higher margins, and represented 11%, 16%, and 5% of our consolidated gross profit during the years ended December 31, 2024, 2023, and 2022, respectively.
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We are continuously focused on providing a differentiated approach to our customers through various selling, buying and ancillary products and services in our Solutions Center. Offerpad selling services We offer two distinct selling services to our customers.
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As of December 31, 2024, Offerpad operated in over 1,800 cities and towns in 26 metropolitan markets across 17 states. Further, we have transacted on homes representing approximately $11.6 billion of aggregate revenue since our founding in 2015 through December 31, 2024.
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If the customer is represented by a third-party agent, we work Offerpad Solutions Inc. | 2023 Form 10-K | 6 directly with such agent in addition to paying the agent’s fee. Through our Offerpad listing service offering, our customers essentially dual track a sale by utilizing both our personalized listing services while also sometimes having a backup cash offer.
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As we expand further in our existing markets, launch into new markets, increase our asset-light platform service offerings and deliver other additional ancillary products and services tied to the core real estate transaction, we remain focused on our mission to simplify the process of buying and selling homes by providing comprehensive solutions that remove the friction from real estate.
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Customers opting to list with us typically enjoy the benefits of complimentary list-ready home services to prepare their home for market, such as carpet cleaning, landscape and pool maintenance, along with home improvement advances, customized marketing, and dedicated support from our Offerpad Solutions Experts or partner agents, while listing with confidence knowing they can pivot to our competitive cash offer.
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Our Business Model Our Cash Offer solution generates the substantial majority of our consolidated revenue and gross profit. We also offer a range of other services that are designed to meet the unique needs of our clients, including B2B renovation solutions and industry partnership programs.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOfferpad Solutions Inc. | 2023 Form 10-K | 27 We rely on licenses to use the intellectual property rights of third parties which are incorporated into our products and services. Failure to renew or expand existing licenses may require us to modify, limit or discontinue certain offerings, which could materially affect our business, financial condition and results of operations.
Biggest changeFailure to renew or expand existing licenses may require us to modify, limit or discontinue certain offerings, which could materially affect our business, financial condition and results of operations. We rely on products, technologies and intellectual property that we license from third parties for use in our services.
We use internal employees and use third parties to renovate and repair homes before we resell them. We or these third-party providers may not be able to complete the required renovations or repairs within the expected timeline or proposed budget.
We use internal employees and third parties to renovate and repair homes before we resell them. We or these third-party providers may not be able to complete the required renovations or repairs within the expected timeline or proposed budget.
Our services utilize third-party open source software components, which may pose particular risks to our proprietary software, technologies, products and services in a manner that could negatively affect our business. We use open source software in our services and will continue to use open source software in the future.
Our services utilize third-party open source software components, which may pose particular risks to our proprietary software, technologies, products and services in a manner that could negatively affect our business. We use open source software in our proprietary software and our services and will continue to use open source software in the future.
Closures of local recording offices or other governmental offices in charge of real property records, including tax or lien-related records, would adversely affect our ability to conduct operations in the affected geographies. Any of these delays will likely result in extended hold times, increased costs and inventory valuation adjustments.
Closures of local recording offices or other governmental offices in charge of real property records, including tax or lien-related records, would adversely affect our ability to conduct operations in the affected geographies. Any of these delays will likely result in extended hold times, increased costs and real estate inventory valuation adjustments.
While these agreements will give us contractual remedies upon any unauthorized use or disclosure of our proprietary information, we cannot guarantee that we will be able to detect such unauthorized activity, or if detected, that our rights under these agreements will be effective in controlling access to, or use and distribution of, our proprietary information, intellectual property or technology.
While these agreements will give us contractual remedies upon any unauthorized use or disclosure of our proprietary information, we cannot guarantee that we will be able to detect such unauthorized activity, or if detected, that our rights under these agreements will be effective in controlling access to, or use, reproduction and distribution of, our proprietary information, intellectual property or technology.
We collect, process, store and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, and any actual or perceived violation of these privacy obligations could result in a claim for damages, regulatory action, loss of business, or unfavorable publicity. We collect, store, disclose and process personal information and other data.
We collect, process, store and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, and any actual or perceived violation of these privacy obligations could result in a claim for damages, regulatory action, loss of business, or unfavorable publicity.
Further, if the trend of new data privacy laws and increasing enforcement by regulators continues, this could lead to substantial costs, require significant systems changes, divert the attention of our personnel, increase costs and subject us to additional liabilities. Any of the foregoing could materially adversely affect our brand, reputation, business, results of operations, and financial condition. The U.S.
Further, if the trend of new data privacy laws and increasing enforcement by regulators continues, this could lead to substantial costs, require significant systems changes, divert the attention of our personnel, increase costs and subject us to additional liabilities. Any of the foregoing could materially adversely affect our brand, reputation, business, results of operations, and financial condition.
If we have excess real estate inventory or our average days to sale increases, as occurred during the year ended December 31, 2022, our liquidity and the results of our operations will be adversely affected due to our inability to sell such real estate inventory at prices that allow us to meet margin targets or to recover our costs.
If we have excess real estate inventory or our average days to sale increases, as occurred during the year ended December 31, 2024, our liquidity and the results of our operations will be adversely affected due to our inability to sell such real estate inventory at prices that allow us to meet margin targets or to recover our costs.
If our intellectual property rights are used or misappropriated by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more effectively mimic our products and methods of operations. Any of these events would have a material adverse effect on our business, financial condition and results of operations.
If our intellectual property rights are misused or misappropriated by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more effectively mimic our products and methods of operations. Any of these events would have a material adverse effect on our business, financial condition and results of operations.
If actual sales are materially less than our forecasts, we would experience an over-supply of real estate inventory. An over-supply of real estate inventory will generally cause downward pressure on our liquidity, sales prices and margins and increase our average days to sale. Our inventory of homes purchased has typically represented a significant portion of total assets.
If actual sales are materially less than our forecasts, we would experience an over-supply of real estate inventory. An over-supply of real estate inventory will generally cause downward pressure on our liquidity, sales prices and margins and increase our average days to sale. Our real estate inventory has typically represented a significant portion of total assets.
Additionally, we may incur significant losses in the future for a number of reasons, including: • our inability to grow market share in our existing markets or any new markets we may enter; • our expansion into new markets; • declines in U.S. residential real estate transaction volumes; • increased competition in the U.S. residential real estate industry; • changes in our fee structure or rates; Offerpad Solutions Inc. | 2023 Form 10-K | 15 • our failure to accurately price homes we acquire or changes to resale prices during the time homes are in real estate inventory; • our failure to realize anticipated efficiencies through our technology and business model; • costs associated with enhancements, or new offerings of our products and services; • failure to execute our growth strategies; • increased marketing costs; • lack of access to housing market data that is used in our pricing models at reasonable cost; • hiring additional personnel to support our overall growth; • loss in value of real estate or potential impairments in the value of our assets due to changes in market conditions in the area in which real estate or assets are located; • increases in costs associated with holding our real estate inventories, including financing costs; • the availability of debt financing and securitization funding to finance our real estate inventories; and • unforeseen expenses, difficulties, complications and delays, and other unknown factors.
Additionally, we may incur significant losses in the future for a number of reasons, including: • our inability to grow market share in our existing markets or any new markets we may enter; • our expansion into new markets or deceleration of market expansion in response to market conditions; • declines in U.S. residential real estate transaction volumes; • increased competition in the U.S. residential real estate industry; • changes in our fee structure or rates; • our failure to accurately price homes we acquire or changes to resale prices during the time homes are in real estate inventory; • our failure to realize anticipated efficiencies through our technology and business model; • costs associated with enhancements, or new offerings of our products and services; • failure to execute our growth strategies; Offerpad Solutions Inc. | 2024 Form 10-K | 16 • increased marketing costs; • lack of access to housing market data that is used in our pricing models at reasonable cost; • hiring additional personnel to support our overall growth; • loss in value of real estate or potential impairments in the value of our assets due to changes in market conditions in the area in which real estate or assets are located; • increases in costs associated with holding our real estate inventories, including financing costs; • the availability of debt financing and securitization funding to finance our real estate inventories; and • unforeseen expenses, difficulties, complications and delays, and other unknown factors.
Even if we do not determine that it is necessary or appropriate to record an inventory valuation adjustment, a reduction in the estimated net realizable value of a property could manifest over time and would therefore affect our earnings and financial condition at that time.
Even if we do not determine that it is necessary or appropriate to record an real estate inventory valuation adjustment, a reduction in the estimated net realizable value of a property could manifest over time and would therefore affect our earnings and financial condition at that time.
Among other things, our certificate of incorporation and bylaws include provisions that: • provide for a classified board of directors with staggered, three-year terms; • permit our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • following the Sunset Date, require that any action of our stockholders be effected only at a meeting of stockholders and not by written consent; • following the Sunset Date, provide that a director may be removed from office only for cause; • following the Sunset Date, provide that vacancies on our board of directors can be filled only by the vote of directors then in office; • prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • limit the liability of, and provide for the indemnification of, our directors and officers; Offerpad Solutions Inc. | 2023 Form 10-K | 32 • permit our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; • require a supermajority vote of stockholders to amend certain provisions of our certificate of incorporation and, following the Sunset Date, a supermajority vote of stockholders in order to amend the bylaws; • limit our ability to engage in business combinations with certain interested stockholders without certain approvals; and • mandate advance notice procedures with which stockholders must comply in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
Among other things, our certificate of incorporation and bylaws include provisions that: • provide for a classified board of directors with staggered, three-year terms; • permit our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • following the Sunset Date, require that any action of our stockholders be effected only at a meeting of stockholders and not by written consent; • following the Sunset Date, provide that a director may be removed from office only for cause; • following the Sunset Date, provide that vacancies on our board of directors can be filled only by the vote of directors then in office; • prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • limit the liability of, and provide for the indemnification of, our directors and officers; • permit our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; • require a supermajority vote of stockholders to amend certain provisions of our certificate of incorporation and, following the Sunset Date, a supermajority vote of stockholders in order to amend the bylaws; • limit our ability to engage in business combinations with certain interested stockholders without certain approvals; and • mandate advance notice procedures with which stockholders must comply in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
A number of factors have in the past, and could in the future adversely affect our business, including the following: • downturns in the U.S. residential real estate market — both seasonal and cyclical — in particular with respect to the single-family home resale market and the markets in which we operate; • changes in national, regional, or local economic, demographic or real estate market conditions; • slow economic growth or recessionary or inflationary conditions; • increased levels of unemployment or declining wages; • declines in the value of residential real estate or the pace of home appreciation, or the lack thereof; • illiquidity in residential real estate; • overall conditions in the housing market, including macroeconomic shifts in demand, and increases in costs for homeowners such as property taxes, homeowners’ association fees and insurance costs; • low levels of consumer confidence in the economy in general or the U.S. residential real estate industry in particular; • low home inventory levels or lack of affordably priced homes; • increased mortgage interest rates or down payment requirements or restrictions on mortgage financing availability; Offerpad Solutions Inc. | 2023 Form 10-K | 13 • increases in household debt levels; • volatility and general declines in the stock market; • federal, state, or local legislative or regulatory changes that would negatively impact owners or potential purchasers of single-family homes or the residential real estate industry in general, such as the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which limited deductions of certain mortgage interest expenses and property taxes; or • natural disasters, such as hurricanes, windstorms, tornadoes, earthquakes, wildfires, floods, hailstorms, pandemics and other events that disrupt local, regional, or national real estate markets.
A number of factors have in the past, and could in the future adversely affect our business, including the following: • downturns in the U.S. residential real estate market — both seasonal and cyclical — in particular with respect to the single-family home resale market and the markets in which we operate; • changes in national, regional, or local economic, demographic or real estate market conditions; • slow economic growth or recessionary or inflationary conditions; • increased levels of unemployment or declining wages; • declines in the value of residential real estate or the pace of home appreciation, or the lack thereof; • illiquidity in residential real estate; • overall conditions in the housing market, including macroeconomic shifts in demand, and increases in costs for homeowners such as property taxes, homeowners’ association fees and insurance costs; • low levels of consumer confidence in the economy in general or the U.S. residential real estate industry in particular; • low home inventory levels or lack of affordably priced homes; • increased mortgage interest rates or down payment requirements or restrictions on mortgage financing availability; • increases in household debt levels; • volatility and general declines in the stock market; • federal, state, or local legislative or regulatory changes that would negatively impact owners or potential purchasers of single-family homes or the residential real estate industry in general, such as the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which limited deductions of certain mortgage interest expenses and property taxes; or • natural disasters, such as hurricanes, windstorms, tornadoes, earthquakes, wildfires, floods, hailstorms, pandemics and other events that disrupt local, regional, or national real estate markets.
Further, if the macroeconomic and residential real estate market conditions continue to be challenging in the future, we may need to further stall or moderate our expansion activities, which may include pausing real estate inventory acquisitions in certain existing markets.
Further, if the macroeconomic and residential real estate market conditions continue to be challenging in the future, we may need to further stall, moderate or decelerate our expansion activities, which may include pausing or reducing real estate inventory acquisitions in certain existing markets.
Any expansion or new offering requires significant expenses and the time of our key personnel, particularly at the outset of the process, and our new service offerings, and expansion of our listing service platform may not result in the customer conversion or profitability that we expect.
Any expansion or new offering requires significant expenses and the time of our key personnel, particularly at the outset of the process, and our new service offerings may not result in the customer conversion or profitability that we expect.
We believe that our ability to compete depends upon many factors both within and beyond our control, including the following: • the financial competitiveness of our products for customers; • the volume of our customers; • the timing and market acceptance of our products, including iBuying, and new products offered by us or our competitors; • our selling and marketing efforts; • our customer service and support efforts; • our continued ability to develop and improve our technology to support our business model; • customer adoption of our platform as an alternative to traditional methods of buying and selling residential real estate; and • our brand strength relative to our competitors.
We believe that our ability to compete depends upon many factors both within and beyond our control, including the following: • the financial competitiveness of our products for customers; • the volume of our customers; • the timing and market acceptance of our products, including our cash offer solution, and new products offered by us or our competitors; • our selling and marketing efforts; • our customer service and support efforts; • our continued ability to develop and improve our technology to support our business model; • customer adoption of our platform as an alternative to traditional methods of buying and selling residential real estate; and • our brand strength relative to our competitors.
These laws generally regulate the manner in which lending and lending-related activities 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 Real Estate Settlement Procedures Act, 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 Telephone Consumer Protection Act, the Mortgage Acts and Practices Advertising Rule (Regulation N), the Coronavirus Aid, Relief, and Economic Security Act, all implementing regulations, and various other federal laws.
These laws generally regulate the manner in which lending and lending-related activities 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 Real Estate Settlement Procedures Act, 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 Telephone Consumer Protection Act, the Mortgage Acts and Offerpad Solutions Inc. | 2024 Form 10-K | 23 Practices Advertising Rule (Regulation N), the Coronavirus Aid, Relief, and Economic Security Act, all implementing regulations, and various other federal laws.
If we fail to comply with new laws, regulations or reporting requirements, our reputation and business could be adversely impacted. Item 1B. Unresolved Staff Comments. None.
If we fail or are perceived to fail to comply with new laws, regulations or reporting requirements, our reputation and business could be adversely impacted. Item 1B. Unresolved Staff Comments. None.
Buying and selling homes, providing real estate brokerage services, and providing other product offerings, such as mortgage brokerage services, results in us receiving or facilitating transmission of personally identifiable information. Further, in the future we may offer additional products and services, which could increase the amount of personally identifiable information we receive and transmit.
Buying and selling homes, providing real estate brokerage services, and providing other product offerings, such as mortgage brokerage services, results in us receiving or facilitating transmission of personal information. Further, in the future we may offer additional products and services, which could increase the amount of personal information we receive and transmit.
If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster, and successfully execute on those plans in the event of a disaster or emergency, our business and reputation would be harmed. Offerpad Solutions Inc. | 2023 Form 10-K | 23 Environmentally hazardous conditions may adversely affect us.
If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster, and successfully execute on those plans in the event of a disaster or emergency, our business and reputation would be harmed. Offerpad Solutions Inc. | 2024 Form 10-K | 24 Environmentally hazardous conditions may adversely affect us.
Certain services we use, subscriptions and fees have fixed costs and are necessary for operation of the business. The other portion of fixed costs are necessary in order to invest in future growth. Given the early stage of our business, we cannot assure you that we will be able to rationalize our fixed costs.
Certain services we use, subscriptions and fees have fixed costs and are necessary for operation of the business. The other portion of fixed costs are necessary in order to invest in future growth. We cannot assure you that we will be able to rationalize our fixed costs.
We will require additional capital and debt financing to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, including to increase our marketing expenditures to improve our brand awareness, build and maintain our inventory of homes, develop new products or services or further improve existing products and services (including mortgage lending), enhance our operating infrastructure and acquire complementary businesses and technologies.
We will require additional capital and debt financing to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, including to increase our marketing expenditures to improve our brand awareness, build and maintain our real estate inventory, develop new products or services or further improve existing products and services (including mortgage lending), enhance our operating infrastructure and acquire complementary businesses and technologies.
Offerpad Solutions Inc. | 2023 Form 10-K | 16 Declining real estate valuations have resulted in, and could continue to result in, real estate inventory valuation adjustments, and property values may decline between our offer to purchase a home and the closing of such home, which could adversely affect our financial condition and operating results.
Offerpad Solutions Inc. | 2024 Form 10-K | 17 Declining real estate valuations have resulted in, and could continue to result in, real estate inventory valuation adjustments, and property values may decline between our offer to purchase a home and the closing of such home, which could adversely affect our financial condition and operating results.
Offerpad Solutions Inc. | 2023 Form 10-K | 19 If the methodologies we use to assess the value and condition of homes are inaccurate, including because of the information supplied to us by prospective sellers or due to the physical inspections being ineffective, it could result in unforeseen costs and risks.
Offerpad Solutions Inc. | 2024 Form 10-K | 20 If the methodologies we use to assess the value and condition of homes are inaccurate, including because of the information supplied to us by prospective sellers or due to the physical inspections being ineffective, it could result in unforeseen costs and risks.
As a result of this concentration, local and regional conditions in these markets may differ significantly from prevailing conditions in the United States or other parts of the country. Any unforeseen events or circumstances that negatively affect these areas could materially adversely affect our revenues and profitability.
As a result of this concentration, local and regional conditions in these markets may differ significantly from prevailing conditions in the United States or other parts of the country. Any unforeseen events or circumstances that negatively affect these areas have historically affected and could in the future materially adversely affect our revenues and profitability.
To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire, if at all. As of December 31, 2023, the Company had federal and state net operating loss (“NOL”) carryforwards of $735.0 million.
To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire, if at all. As of December 31, 2024, the Company had federal and state net operating loss (“NOL”) carryforwards of $806.0 million.
In the event of a breach we could face government actions resulting in penalties or Offerpad Solutions Inc. | 2023 Form 10-K | 24 consumer class actions alleging statutory damages amounting to hundreds of millions, and possibly billions of dollars, as well as reputational and other harms.
In the event of a breach we could face government actions resulting in penalties or Offerpad Solutions Inc. | 2024 Form 10-K | 25 consumer class actions alleging statutory damages amounting to hundreds of millions, and possibly billions of dollars, as well as reputational and other harms.
Additionally, laws, regulations, guidelines 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 (the “ TCPA ”) (as implemented by the Telemarketing Sales Rule), the CAN-SPAM Act, and similar state consumer protection laws.
Additionally, laws, regulations, guidelines and standards covering marketing and advertising activities conducted by telephone, email, mobile devices, and the internet, are applicable to our business, such as the TCPA (as implemented by the Telemarketing Sales Rule), the CAN-SPAM Act, and similar state consumer protection laws.
If we combine our proprietary software with such open source software in a certain manner, we could, under certain open source licenses, be required to release or license the source code of our proprietary software to the public.
If we combine and distribute our proprietary software with such open source software in a certain manner, we could, under certain open source licenses, be required to release or license the source code of our combined proprietary software to the public.
Offerpad Solutions Inc. | 2023 Form 10-K | 17 We may be unsuccessful in launching new product and service offerings or pursuing expansion of existing product and service offerings into new markets, which could result in significant expense and may not achieve the desired results.
Offerpad Solutions Inc. | 2024 Form 10-K | 18 We may be unsuccessful in launching new product and service offerings or pursuing expansion of existing product and service offerings into new markets, which could result in significant expense and may not achieve the desired results.
Moreover, as we expand into higher cost markets or target higher-priced homes, home buyers, and accordingly demand for our homes and services, may be more Offerpad Solutions Inc. | 2023 Form 10-K | 18 acutely affected by these factors.
Moreover, as we expand into higher cost markets or target higher-priced homes, home buyers, and accordingly demand for our homes and services, may be more Offerpad Solutions Inc. | 2024 Form 10-K | 19 acutely affected by these factors.
It is possible we may not be in full compliance with certain laws, regulations, policies, legal obligations, industry guidelines and standards, and any failure or perceived failure by us to comply with these requirements may result in governmental investigations or enforcement actions, litigation, loss of business and unfavorable publicity.
It is possible we may not be in full compliance with certain laws, regulations, policies, legal obligations, industry guidelines and standards, and any failure or perceived failure by us to comply with these requirements may result and has at times resulted in litigation, and may also result in governmental investigations or enforcement actions, loss of business and unfavorable publicity.
Compliance with new or more stringent environmental laws or regulations or stricter interpretation of existing laws may require material expenditures by us. We may be subject to environmental laws or regulations relating to our properties, such as those concerning lead-based paint, mold, asbestos, radon, pesticides, proximity to power lines or other issues.
Compliance with new or more stringent environmental laws or regulations or varying interpretations of existing laws or conflicting laws or regulations may require material expenditures by us. We may be subject to environmental laws or regulations relating to our properties, such as those concerning lead-based paint, mold, asbestos, radon, pesticides, proximity to power lines or other issues.
This existing and future legislation may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to compliance programs, could impact strategies and availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies, all of which we may not be able to expend resources toward.
This existing and future legislation on both the state and federal level may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to compliance programs, could impact strategies and availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies, all of which we may not be able to expend resources toward.
We are from time to time involved in, or may in the future be subject to, claims, suits, government investigations, and proceedings arising from our business, including actions with respect to intellectual property, privacy, consumer protection, Offerpad Solutions Inc. | 2023 Form 10-K | 21 information security, mortgage lending, real estate, environmental, data protection or law enforcement matters, tax matters, labor and employment, and commercial claims, as well as actions involving content generated by our customers, shareholder derivative actions, purported class action lawsuits, and other matters.
We are from time to time involved in, or may in the future be subject to, claims, suits, government investigations, and proceedings arising from our business, including actions with respect to intellectual property, privacy, consumer protection, information security, mortgage lending, real estate, environmental, data protection or law enforcement matters, tax matters, labor and employment, and commercial claims, as well as actions involving content generated by our customers, shareholder derivative actions, purported class action lawsuits, and other matters.
We had an accumulated deficit of $397.9 million and $280.7 million as of December 31, 2023 and 2022, respectively. We expect to continue to make future investments in developing and expanding our business, including technology, recruitment and training, marketing, and pursuing strategic opportunities. These investments may not result in increased revenue or growth in our business.
We had an accumulated deficit of $460.0 million and $397.9 million as of December 31, 2024 and 2023, respectively. We expect to continue to make future investments in developing and expanding our business, including technology, recruitment and training, marketing, and pursuing strategic opportunities. These investments may not result in increased revenue or growth in our business.
If we identify any material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is ineffective, or if our auditor is unable to express an opinion as to the effectiveness of our internal control over financial reporting, we could fail to meet our reporting obligations or be required to restate our financial statements for prior periods.
If we identify any material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is ineffective, we could fail to meet our reporting obligations or be required to restate our financial statements for prior periods.
Although we monitor our use of open-source software to avoid subjecting our platform to conditions we do not intend, we cannot assure that our processes for controlling our use of open-source software in our platform will be effective.
Although we monitor our use of open-source software to avoid subjecting our platform to such requirements or to other conditions we do not intend, we cannot assure that our processes for controlling our use of open-source software in our platform will be effective.
As a result of such reviews, we recorded $8.9 million and $93.8 million of real estate inventory valuation adjustments during the years ended December 31, 2023 and 2022, respectively. These adjustments caused an immediate reduction of net income and a corresponding decrease in real estate inventory our balance sheet in the respective periods.
As a result of such reviews, we recorded $4.5 million and $8.9 million of real estate inventory valuation adjustments during the years ended December 31, 2024 and 2023, respectively. These adjustments caused an immediate reduction of net income and a corresponding decrease in real estate inventory on our balance sheet in the respective periods.
Assuming no change in the outstanding borrowings on our senior and mezzanine secured credit facilities, we estimate that a one percentage point increase in the Secured Overnight Financing Rate would have increased our annual interest expense by $2.6 million during the year ended December 31, 2023.
Assuming no change in the outstanding borrowings on our senior and mezzanine secured credit facilities, and other senior secured debt, we estimate that a one percentage point increase in the Secured Overnight Financing Rate would have increased our annual interest expense by $2.4 million during the year ended December 31, 2024.
While we experienced rapid growth and demand for our products and service offerings from inception through the first half of 2022, our business has more recently been negatively impacted by the dislocated residential real estate market conditions.
While we experienced rapid growth and demand for our products and service offerings from inception through the first half of 2022, our business has more recently been negatively impacted by the uncertain economic outlook and uneven residential real estate market conditions.
Offerpad Solutions Inc. | 2023 Form 10-K | 25 Any significant change to applicable laws, regulations or industry guidelines and standards regarding the collection, use processing or disclosure of personal information, could require us to modify our products and features, possibly in a material manner and subject to increased compliance costs, which may limit our ability to develop new products and features that make use of the personal information that we collect, use, process, and disclose.
Any significant change to applicable laws, regulations or industry guidelines and standards regarding the collection, use processing or disclosure of personal information, could require us to modify our products and features, possibly in a material manner and subject to increased compliance costs, which may limit our ability to develop new products and features that make use of the personal information that we collect, use, process, and disclose.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act These provisions may have the effect of discouraging lawsuits against our directors and officers.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
While our business is spread across 25 metropolitan markets in the United States as of December 31, 2023, a substantial amount of our revenue is generated in certain geographic markets.
While our business is spread across 26 metropolitan markets in the United States as of December 31, 2024, a substantial amount of our revenue is generated in certain geographic markets.
Risks Related to Our Business and Industry Our business and operating results may be significantly impacted by general economic conditions, the health of the U.S. residential real estate industry and risks associated with our real estate inventory.
Risks Related to Our Business and Industry Our business and operating results have in the past been impacted and may in the future be significantly impacted by general economic conditions, the health of the U.S. residential real estate industry and risks associated with our real estate inventory.
Specifically, we need to maintain a certain tangible net worth and liquidity minimums, and leverage maximums under certain of these facilities. These covenants may limit our operational flexibility or Offerpad Solutions Inc. | 2023 Form 10-K | 29 restrict our ability to engage in transactions that we believe would otherwise be in the best interests of our shareholders.
Specifically, we need to maintain a certain tangible net worth and liquidity minimums, and leverage maximums under certain of these facilities. These covenants may limit our operational flexibility or restrict our ability to engage in transactions that we believe would otherwise be in the best interests of our shareholders.
We may be subject to additional local, state and federal laws and regulations governing residential Offerpad Solutions Inc. | 2023 Form 10-K | 22 real estate transactions, including those administered by the U.S. Department of Housing and Urban Development, and the states and municipalities in which we transact.
We may be subject to additional local, state and federal laws and regulations governing residential real estate transactions, including those administered by the U.S. Department of Housing and Urban Development, and the states and municipalities in which we transact.
If new financing sources are required, but are insufficient or unavailable, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, operating results, financial condition and prospects could be adversely affected.
Offerpad Solutions Inc. | 2024 Form 10-K | 32 If new financing sources are required, but are insufficient or unavailable, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, operating results, financial condition and prospects could be adversely affected.
A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change. Our management is required to evaluate the effectiveness of our internal control over financial reporting.
A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change. Offerpad Solutions Inc. | 2024 Form 10-K | 35 Our management is required to evaluate the effectiveness of our internal control over financial reporting.
If any analyst who may cover us were Offerpad Solutions Inc. | 2023 Form 10-K | 36 to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.
If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.
When Offerpad Solutions Inc. | 2023 Form 10-K | 14 interest rates increase, the cost of owning a home increases, which in turn reduces the number of potential home buyers who can obtain mortgage financing and affects the prices home buyers may be willing to pay for homes.
When interest rates increase, the cost of owning a home increases, which in turn reduces the number of potential home buyers who can obtain mortgage financing and affects the prices home buyers may be willing to pay for homes.
Offerpad Solutions Inc. | 2023 Form 10-K | 20 There are risks related to our ownership of vacant homes and the listing of those homes for resale that are not possible to fully eliminate. The homes in our real estate inventory generally are not occupied during the time we own them prior to resale.
There are risks related to our ownership of vacant homes and the listing of those homes for resale that are not possible to fully eliminate. The homes in our real estate inventory generally are not occupied during the time we own them prior to resale.
We also are subject to various laws, regulations and rules that are not industry specific, including employment laws related to employee hiring and termination practices, health and safety laws, environmental laws and other federal, state and local laws, regulations and rules in the jurisdictions in which we operate.
We also are subject to various laws, regulations and rules that are not industry specific, including employment laws related to employee hiring and termination practices, health and safety laws, environmental laws and other federal, state and local laws, regulations and rules in the Offerpad Solutions Inc. | 2024 Form 10-K | 22 jurisdictions in which we operate.
Offerpad Solutions Inc. | 2023 Form 10-K | 30 In addition, our net operating loss carryforwards are subject to review and possible adjustment by the IRS, and state tax authorities, and may be limited as a result of previous or future changes in our ownership.
In addition, our net operating loss carryforwards are subject to review and possible adjustment by the IRS, and state tax authorities, and may be limited as a result of previous or future changes in our ownership.
It may be difficult for you to evaluate our potential future performance without the benefit of established long-term track records from companies implementing a similar business model.
Our operating results are not predictable and our historical results may not be indicative of our future results. It may be difficult for you to evaluate our potential future performance without the benefit of established long-term track records from companies implementing a similar business model.
For the years ended December 31, 2023 and 2022, approximately 51% and 49% of our revenue, respectively, was generated from our top five markets by revenue during 2023, which consisted of Phoenix, Tampa, Atlanta, Orlando, and Houston.
For the years ended December 31, 2024 and 2023, approximately 55% and 51% of our revenue, respectively, was generated from our top five markets which consisted of Atlanta, Phoenix, Tampa, Orlando, and Charlotte for the year ended December 31, 2024, and Phoenix, Tampa, Atlanta, Orlando, and Houston for the year ended December 31, 2023.
Pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to evaluate and determine the effectiveness of our internal control over financial reporting, and our auditor is required to deliver an attestation report on the effectiveness of our internal control over financial reporting.
Pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to evaluate and determine the effectiveness of our internal control over financial reporting.
We rely on products, technologies and intellectual property that we license from third parties for use in our services. We cannot assure that these third-party licenses, or support for such licensed products and technologies, will continue to be available to us on commercially reasonable terms, if at all.
We cannot assure that these third-party licenses, or support for such licensed products and technologies, will continue to be available to us on commercially reasonable terms, if at all.
There is no assurance that we will be able to obtain any such interest rate hedging arrangements on attractive terms or at all.
Offerpad Solutions Inc. | 2024 Form 10-K | 31 There is no assurance that we will be able to obtain any such interest rate hedging arrangements on attractive terms or at all.
In addition, we could become subject to investigations by the applicable stock exchange, the SEC or other regulatory authorities, which could require additional management attention and which could adversely affect our business.
In addition, we could become subject to investigations by the applicable stock exchange, the SEC or other regulatory authorities, which could require additional management attention and which could adversely affect our business. We may acquire other businesses which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our operating results.
These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the Offerpad Solutions Inc. | 2023 Form 10-K | 31 market price of our securities.
These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our securities.
Violators may be subject to injunctions and civil penalties of up to $5,000 per violation. Numerous other states have already enacted, and are actively considering enacting privacy laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation, carry significant potential liability for our business, and could result in reputational harm.
Numerous other states have already enacted, and are actively considering enacting privacy laws similar to the CCPA, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation, carry significant potential liability for our business, and could result in reputational harm. The U.S.
We face numerous evolving cybersecurity risks that threaten the confidentiality, integrity, and availability of our IT Systems and Confidential Information. The evolution of technology systems introduces ever more complex security risks that are difficult to predict and defend against.
We face numerous evolving cybersecurity risks that threaten the confidentiality, integrity, and availability of our IT Systems and Confidential Information, including from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists. The evolution of technology systems introduces ever more complex security risks that are difficult to predict and defend against.
We intend to rely on proceeds from the sale of financed homes to repay amounts owed under our property financing facilities, but such proceeds may not be available or may be insufficient to repay the amounts when they become due.
If realized, any of these financing risks could negatively impact our results of operations and financial condition. We intend to rely on proceeds from the sale of financed homes to repay amounts owed under our property financing facilities, but such proceeds may not be available or may be insufficient to repay the amounts when they become due.
We maintain insurance to cover costs and losses from certain risk exposures in the ordinary course of our operations, but our insurance may not cover all of the costs and losses from all events.
Some of our potential losses may not be covered by insurance. We may not be able to obtain or maintain adequate insurance coverage. We maintain insurance to cover costs and losses from certain risk exposures in the ordinary course of our operations, but our insurance may not cover all of the costs and losses from all events.
Any of these events could cause us to incur significant costs in investigating and defending such claims and, if found liable, pay significant damages. Further, these proceedings and any subsequent adverse outcomes may cause significant reputational harm to our brand and our customers to lose trust in us, which could have an adverse effect on our reputation and business.
Further, these proceedings and any subsequent adverse outcomes may cause significant reputational harm to our brand and our customers to lose trust in us, which could have an adverse effect on our reputation and business.
Offerpad Solutions Inc. | 2023 Form 10-K | 26 Failure to protect our trade secrets, know-how, proprietary applications, business processes and other proprietary information, could adversely affect the value of our technology and products. Our success and ability to compete depends in part on our intellectual property and our other proprietary business information.
Offerpad Solutions Inc. | 2024 Form 10-K | 27 Failure to protect our trade secrets, know-how, proprietary applications, business processes and other proprietary information, could adversely affect the value of our technology and products.
Further, the Reverse Stock Split could be viewed negatively by the market and other factors may adversely affect the market price of the shares of our Class A common stock.
The market price of our Class A common stock will also be based on our performance and other factors, some of which are unrelated to the number of shares outstanding. Further, the Reverse Stock Split could be viewed negatively by the market and other factors may adversely affect the market price of the shares of our Class A common stock.
As of December 31, 2023, we had $259.5 million aggregate principal amount of indebtedness outstanding, all of which is outstanding under asset-backed senior and mezzanine secured credit facilities.
As of December 31, 2024, we had $237.9 million aggregate principal amount of indebtedness outstanding, under asset-backed senior and mezzanine secured credit facilities and other senior secured debt.
We may not realize benefits from any acquisition that we may make in the future. If we fail to integrate successfully such acquisitions, or the businesses and technologies associated with such acquisitions, into our company, the revenue and operating results of the combined company could be adversely affected.
If we fail to integrate successfully such acquisitions, or the businesses and technologies associated with such acquisitions, into our company, the revenue and operating results of the combined company could be adversely affected. Any integration process will require significant time and resources, and we may not be able to manage the process successfully.
Moreover, these risks may be heightened when we expand into new markets where we may not have similar levels of knowledge and experience as we do in the markets where we currently operate.
Moreover, these risks may be heightened when we expand into new markets where we may not have similar levels of knowledge and experience as we do in the markets where we currently operate or if the valuation technologies that we currently use are not as effective at accurately valuing homes in markets with different housing conditions.
In addition, in the past, following periods of volatility in the overall market and the market prices of particular companies’ securities, securities class action litigations have often been instituted against these companies. Litigation of this type, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
In addition, in the past, following periods of volatility in the overall market and the market prices of particular companies’ securities, securities class action litigations have often been instituted against these companies.
In addition, each of our secured credit facilities are not fully committed, meaning the applicable lender may not be obligated to advance new loan funds if they choose not to do so. Obtaining new or replacement funding arrangements may not be possible or may be at higher interest rates or other less favorable terms.
In addition, some of our secured credit facilities are entirely uncommitted and other of our secured credit facilities are not fully committed, meaning the applicable lender may not be obligated to advance new loan funds if they choose not to do so.
Although the residential real estate market conditions started showing signs of stabilization and some improvement beginning in the second quarter of 2023, persistent challenges in mortgage financing—stemming from sustained high interest rates, potential further rate hikes, or a tightening of credit conditions—could lead to a continued decrease in demand for our homes and the services our platform provides.
Persistent challenges in mortgage financing—stemming from sustained high interest rates, potential further rate hikes, or a tightening of credit conditions—could lead to a continued decrease in demand for our homes and the services our platform provides. Such conditions could, in turn, negatively impact our business and financial performance.
If we are unable to renew or extend the terms of our existing senior and mezzanine secured credit facilities, we may not be able to terminate or prepay the secured credit facilities without incurring significant financial costs. If realized, any of these financing risks could negatively impact our results of operations and financial condition.
If we are unable to renew or extend the terms of our existing senior and mezzanine Offerpad Solutions Inc. | 2024 Form 10-K | 30 secured credit facilities, we may not be able to terminate or prepay the secured credit facilities without incurring significant financial costs.
Offerpad Solutions Inc. | 2023 Form 10-K | 28 Risks Related to Our Liquidity and Capital Resources We utilize a significant amount of indebtedness in the operation of our business, and so our cash flows and operating results could be adversely affected by required payments of debt or related interest and other risks of our debt financing.
Failure to comply with these laws, rules and regulations or to obtain and maintain required licenses, could adversely affect our business, financial condition and results of operations.” Risks Related to Our Liquidity and Capital Resources We utilize a significant amount of indebtedness in the operation of our business, and so our cash flows and operating results could be adversely affected by required payments of debt or related interest and other risks of our debt financing.
The trading price of our Class A common stock will depend on many factors, including those described in this “ Risk Factors ” section, many of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment.
This is especially true for companies like ours with a small public float. The trading price of our Class A common stock will depend on many factors, including those described in this “ Risk Factors ” section, many of which are beyond our control and may not be related to our operating performance.
We have filed trademark and copyright applications to protect certain aspects of our intellectual property. However, we cannot guarantee that we will be successful in registering our trademarks or copyrights. We may be unable to secure intellectual property protection for all of our technology and methodologies, or the steps we take to enforce our intellectual property rights may be inadequate.
We have filed trademark and copyright applications to protect certain aspects of our intellectual property. However, we cannot guarantee that we will be successful in registering our trademarks or copyrights, or maintaining any existing registrations.
The increasing focus on environmental sustainability and social initiatives could increase our costs, harm our reputation and adversely impact our financial results. There has been increasing public focus by investors, customers environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability matters.
There has been increasing focus by investors, customers, activists, the media, governmental and nongovernmental organizations, and other stakeholders on a variety of environmental, social and other sustainability matters, including diversity and inclusion matters.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor additional information about our cybersecurity related risks, see Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K.
Biggest changeFor additional information about our cybersecurity related risks, see Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K. Cybersecurity Governance Our board of directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks.
Our cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology environment; • a security team composed primarily of members of management, including our Director of IT Operations, that is principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to maintain, assess, test or otherwise assist with aspects of our security controls; • cybersecurity awareness training — including phishing and malware simulations — of all of our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes relevant procedures for evaluating the materiality of identified cybersecurity incidents, and reporting and responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors.
Offerpad Solutions Inc. | 2024 Form 10-K | 38 Our cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology environment; • a security team composed primarily of members of management, including our Director of IT Operations, that is principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to maintain, assess, test or otherwise assist with aspects of our security controls; • cybersecurity awareness training — including phishing and malware simulations — of all of our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes relevant procedures for evaluating the materiality of identified cybersecurity incidents, and reporting and responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors.
The Audit Committee receives quarterly reports from our management-led Enterprise Risk Management Committee on our cybersecurity risks and mitigation initiatives. In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential.
The Audit Committee oversees management’s implementation of our cybersecurity risk management program. The Audit Committee receives quarterly reports from our management-led Enterprise Risk Management Committee on our cybersecurity risks and mitigation initiatives. In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential.
We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”). This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
We design and assess our program based on established frameworks, such as the CIS Critical Security Controls (“CIS Controls”). This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the CIS Controls as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Removed
Offerpad Solutions Inc. | 2023 Form 10-K | 37 Cybersecurity Governance Our board of directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks. The Audit Committee oversees management’s implementation of our cybersecurity risk management program.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIf one or more legal matters were resolved against us in a reporting period for amounts above management’s expectations, our financial condition, results of operations or cash flows for that reporting period could be adversely impacted, perhaps materially. Item 4. Mine Safety Disclosures. Not applicable. Offerpad Solutions Inc. | 2023 Form 10-K | 38 PART II
Biggest changeOfferpad Solutions Inc. | 2024 Form 10-K | 39 The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against us in a reporting period for amounts above management’s expectations, our financial condition, results of operations or cash flows for that reporting period could be adversely impacted, perhaps materially. Refer to Note 16.
Item 3. Legal Proceedings. From time to time, we may become involved in actions, claims, suits and other legal proceedings arising in the ordinary course of our business, including assertions by third parties relating to intellectual property infringement, breaches of contract or warranties or employment-related matters.
Item 3. Legal Proceedings. From time to time, we may become involved in actions, claims, suits and other legal proceedings arising in the ordinary course of our business, including, without limitation, assertions by third parties relating to intellectual property infringement, breaches of contract or warranties or employment-related matters.
We are not currently a party to any actions, claims, suits or other legal proceedings, the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition, results of operations and cash flows. The outcome of litigation is inherently uncertain.
We are not currently a party to any actions, claims, suits or other legal proceedings arising in the ordinary course of our business, the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition, results of operations and cash flows.
Added
Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part II, Item 8, of this Annual Report on Form 10-K for information regarding pending litigation that falls outside the scope of ordinary and routine litigation incidental to our business. Item 4. Mine Safety Disclosures. Not applicable. Offerpad Solutions Inc. | 2024 Form 10-K | 40 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe public warrants were later delisted from the NYSE and have subsequently been trading on the OTC Markets Group Pink Market under the symbol “OPADW.” Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
Biggest changeMarket Information for Common Stock Our Class A common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “OPAD.” Our public warrants are traded on the OTC Markets Group Pink Market under the symbol “OPADW.” Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
Any future determination to pay dividends will be made at the discretion of our board of directors and will depend on, among other things, our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as our board of directors may deem relevant.
Any future determination to pay dividends will be made at the discretion of our Board and will depend on, among other things, our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as our Board may deem relevant.
Dividends Our Class A common stock is entitled to dividends if and when any dividend is declared by our board of directors, subject to the rights of all classes of stock outstanding having priority rights to dividends. We have not paid any cash dividends on common stock to date.
Dividends Our Class A common stock is entitled to dividends if and when any dividend is declared by our Board, subject to the rights of all classes of stock outstanding having priority rights to dividends. We have not paid any cash dividends on common stock to date.
Offerpad Solutions Inc. | 2023 Form 10-K | 39 Stock Performance Graph The following graph illustrates the total return from September 1, 2021 through December 31, 2023, for (i) our Class A common stock, (ii) the Russell 2000 Index, and (iii) the NASDAQ Real Estate and Other Financial Services Index.
Offerpad Solutions Inc. | 2024 Form 10-K | 41 Stock Performance Graph The following graph illustrates the total return from September 1, 2021 through December 31, 2024, for (i) our Class A common stock, (ii) the Russell 2000 Index, and (iii) the NASDAQ Real Estate and Other Financial Services Index.
Purchase of Equity Securities We did not repurchase shares of our Class A common stock during the three months ended December 31, 2023.
Sales of Unregistered Equity Securities No unregistered sales of our equity securities were made during the year ended December 31, 2024. Purchase of Equity Securities We did not repurchase shares of our Class A common stock during the three months ended December 31, 2024.
The comparisons reflected in the graph are not intended to forecast the future performance of our stock and may not be indicative of our future performance.
The comparisons reflected in the graph are not intended to forecast the future performance of our stock and may not be indicative of our future performance. Item 6. [Reserved] Offerpad Solutions Inc. | 2024 Form 10-K | 42
Holders of Record Class A Common Stock As of February 16, 2024, there were 50 registered holders of our Class A common stock, and four registered holders of our warrants that were issued in connection with the Business Combination.
Holders of Record As of February 18, 2025, there were 49 registered holders of our Class A common stock, and four registered holders of our warrants.
Removed
Market Information for Common Stock Class A Common Stock Our Class A common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “OPAD.” Prior to November 15, 2023, our warrants were traded on the NYSE under the symbol “OPAD WS.” On November 15, 2023, we received notice from the NYSE that our public warrants were no longer suitable for listing based on “abnormally low” price levels, pursuant to Section 802.01D of the NYSE Listed Company Manual, and that the NYSE Regulation has determined to commence proceedings to delist the warrants.
Removed
Class B Common Stock Prior to the our 2023 annual meeting of stockholders on June 8, 2023 ( the “Annual Meeting”), there was no established public trading market for our outstanding shares of Class B common stock, all of which were owned by Brian Bair, our Chief Executive Officer and Founder, or entities controlled by Mr. Bair.
Removed
Following the conclusion of the Annual Meeting, Mr. Bair effected a voluntary conversion of all shares of Class B common stock beneficially owned by him to an equivalent number of shares of Class A common stock (the “Voluntary Class B Conversion”). Following the Voluntary Class B Conversion, there were no issued and outstanding shares of our Class B common stock.
Removed
Class B Common Stock and Class C Common Stock In connection with the Voluntary Class B Conversion, our board of directors approved amendments to our Certificate of Incorporation to, among other things, eliminate the authorization of and references to Class B common stock and Class C common stock, and make related technical, non-substantive and conforming changes.
Removed
Upon the recommendation of the board of directors, our stockholders approved the amendments at the Annual Meeting. As a result of the amendments, we are no longer authorized to issue any shares of Class B Common Stock or Class C Common Stock.
Removed
Sales of Unregistered Equity Securities Except as previously disclosed in our Current Report on Form 8-K filed with the SEC on February 1, 2023, no unregistered sales of our equity securities were made during the year ended December 31, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOfferpad Solutions Inc. | 2023 Form 10-K | 49 Results of Operations The following details our consolidated results of operations and includes a discussion of our operating results and significant items explaining the material changes in our operating results during the periods presented: Year Ended December 31, % of Revenue (in thousands, except percentages) 2023 2022 $ Change % Change 2023 2022 Revenue $ 1,314,412 $ 3,952,314 $ (2,637,902 ) (66.7 )% 100.0 % 100.0 % Cost of revenue 1,244,231 3,769,892 (2,525,661 ) (67.0 )% 94.7 % 95.4 % Gross profit 70,181 182,422 (112,241 ) (61.5 )% 5.3 % 4.6 % Operating expenses: Sales, marketing and operating 116,558 238,931 (122,373 ) (51.2 )% 8.9 % 6.0 % General and administrative 50,091 58,718 (8,627 ) (14.7 )% 3.8 % 1.5 % Technology and development 7,945 12,090 (4,145 ) (34.3 )% 0.6 % 0.3 % Total operating expenses 174,594 309,739 (135,145 ) (43.6 )% 13.3 % 7.8 % Loss from operations (104,413 ) (127,317 ) 22,904 (18.0 )% (8.0 )% (3.2 )% Other income (expense) Change in fair value of warrant liabilities 68 23,522 (23,454 ) (99.7 )% 0.0 % 0.6 % Interest expense (18,859 ) (45,991 ) 27,132 (59.0 )% (1.4 )% (1.2 )% Other income, net 6,149 1,532 4,617 301.4 % 0.5 % 0.0 % Total other expense (12,642 ) (20,937 ) 8,295 (39.6 )% (0.9 )% (0.6 )% Loss before income taxes (117,055 ) (148,254 ) 31,199 (21.0 )% (8.9 )% (3.8 )% Income tax expense (163 ) (359 ) 196 (54.6 )% (0.0 )% (0.0 )% Net loss $ (117,218 ) $ (148,613 ) $ 31,395 (21.1 )% (8.9 )% (3.8 )% Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenue Revenue decreased by $2,637.9 million, or 66.7%, to $1,314.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Biggest changeOfferpad Solutions Inc. | 2024 Form 10-K | 51 Results of Operations The following details our consolidated results of operations and includes a discussion of our operating results and significant items explaining the material changes in our operating results during the periods presented: Year Ended December 31, (in thousands, except percentages) 2024 2023 $ Change % Change Revenue $ 918,819 $ 1,314,412 $ (395,593 ) (30.1 )% Cost of revenue 846,624 1,244,231 (397,607 ) (32.0 )% Gross profit 72,195 70,181 2,014 2.9 % Operating expenses: Sales, marketing and operating 73,091 116,558 (43,467 ) (37.3 )% General and administrative 40,621 50,091 (9,470 ) (18.9 )% Technology and development 4,524 7,945 (3,421 ) (43.1 )% Total operating expenses 118,236 174,594 (56,358 ) (32.3 )% Loss from operations (46,041 ) (104,413 ) 58,372 (55.9 )% Other income (expense) Change in fair value of warrant liabilities 240 68 172 252.9 % Interest expense (18,684 ) (18,859 ) 175 (0.9 )% Other income, net 2,357 6,149 (3,792 ) (61.7 )% Total other expense (16,087 ) (12,642 ) (3,445 ) 27.3 % Loss before income taxes (62,128 ) (117,055 ) 54,927 (46.9 )% Income tax expense (31 ) (163 ) 132 (81.0 )% Net loss $ (62,159 ) $ (117,218 ) $ 55,059 (47.0 )% Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenue Revenue decreased by $395.6 million, or 30.1%, to $918.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Other Income, Net Other income, net during the year ended December 31, 2023 principally represents interest income earned on our cash and cash equivalents, and the gain that was recorded as a result of the fair value adjustment of the derivative financial instruments that were entered into during 2023 to manage risks that are principally associated with interest rate fluctuations.
Other income, net during the year ended December 31, 2023 principally represents interest income earned on our cash and cash equivalents, and the gain that was recorded as a result of the fair value adjustment of the derivative financial instruments that were entered into during 2023 to manage risks that are principally associated with interest rate fluctuations.
Factors Affecting Our Performance We believe that our performance and future success depend on a variety of factors that present significant opportunities for our business but also present risks and challenges that could adversely impact our growth and profitability, including those discussed below and in Part I, Item 1A. “Risk Factors” of this Form 10-K.
Factors Affecting Our Performance We believe that our performance and future success depend on a variety of factors that present significant opportunities for our business but also present risks and challenges that could adversely impact our growth and profitability, including those discussed and in Part I, Item 1A. “Risk Factors” of this Form 10-K.
Historically, we have required access to external financing resources in order to fund growth, penetration in existing markets, expansion into new markets and other strategic initiatives, and we expect this to continue in the future. Our access to capital markets can be impacted by factors outside our control, including economic conditions.
Historically, we have required access to external financing resources in order to fund growth, increase penetration in existing markets, expansion into new markets and other strategic initiatives, and we expect this to continue in the future. Our access to capital markets can be impacted by factors outside our control, including economic conditions.
These types of costs include general and administrative expenses and certain marketing and information technology expenses, which grow at a slower pace than proportional to revenue growth. Real Estate Inventory Financing Our business model requires significant capital to purchase real estate inventory.
These types of costs include general and administrative expenses and certain marketing and information technology expenses, which generally grow at a slower pace than proportional to revenue growth. Real Estate Inventory Financing Our business model requires significant capital to purchase real estate inventory.
Efficiently turning over our inventory is important as we incur holding costs (including property taxes, insurance, utilities, and homeowner association dues) and financing costs while we own the home. However, we routinely make strategic decisions or offer services that are designed to generate improved returns even if resulting in an increase in average inventory holding period.
Efficiently turning over our real estate inventory is important as we incur holding costs (including property taxes, insurance, utilities, and homeowner association dues) and financing costs while we own the home. However, we routinely make strategic decisions or offer services that are designed to generate improved returns even if resulting in an increase in average real estate inventory holding period.
Contribution Profit / Margin After Interest We define Contribution Profit After Interest as Contribution Profit, minus (1) interest expense associated with homes sold in the presented period and recorded in cost of revenue, minus (2) interest expense associated with homes sold in the presented period, recorded in costs of sales, and previously excluded from Adjusted Gross Profit, and minus (3) interest expense under our senior and mezzanine secured credit facilities incurred on homes sold during the period.
Contribution Profit / Margin After Interest We define Contribution Profit After Interest as Contribution Profit, minus (1) interest expense associated with homes sold in the presented period and recorded in cost of revenue, minus (2) interest expense associated with homes sold in the presented period, recorded in costs of sales, and previously excluded from Adjusted Gross Profit, and minus (3) interest expense under our senior and mezzanine secured credit facilities and other senior secured debt incurred on homes sold during the period.
This includes interest expense recorded in prior periods in which the sale occurred. Our senior and mezzanine secured credit facilities are secured by our homes in real estate inventory and drawdowns are made on a per-home basis at the time of purchase and are required to be repaid at the time the homes are sold.
This includes interest expense recorded in prior periods in which the sale occurred. Our senior and mezzanine secured credit facilities and other senior secured debt are secured by our homes in real estate inventory and drawdowns are made on a per-home basis at the time of purchase and are required to be repaid at the time the homes are sold.
We do so by including revenue generated from homes sold (and ancillary services) in the period and only the expenses that are directly attributable to such home sales, even if such expenses were recognized in prior periods, and excluding expenses related to homes that remain in inventory as of the end of the period presented.
We do so by including revenue generated from homes sold (and ancillary services) in the period and only the expenses that are directly attributable to such home sales, even if such expenses were recognized in prior periods, and excluding expenses related to homes that remain in real estate inventory as of the end of the period presented.
Other Income, Net Other income, net consists primarily of interest income earned on our cash and cash equivalents, changes in the fair value of derivative financial instruments that are entered into to manage risks that are principally associated with interest rate fluctuations and gains from the disposal of property and equipment.
Other Income, Net Other income, net consists primarily of interest income earned on our cash and cash equivalents, changes in the fair value of derivative financial instruments that are entered into to manage risks that are principally associated with interest rate fluctuations, and gains or losses from the disposal of property and equipment.
Market Penetration in Existing Markets Residential real estate is one of the largest industries, with roughly $1.9 trillion in value of homes transacted in 2023 in the United States, and is highly fragmented with over 100,000 real estate brokerages, according to the National Association of Realtors (NAR).
Market Penetration in Existing Markets Residential real estate is one of the largest industries, with roughly $1.9 trillion in value of homes transacted in 2024 in the United States, and is highly fragmented with over 100,000 real estate brokerages, according to the National Association of Realtors (NAR).
Our inventory valuation adjustment calculations contain uncertainties because they require management to make assumptions and apply judgment in determining the net realizable value for each home. Key assumptions used in estimating the net realizable value for each home include the projected home sales price and expected selling costs.
Our real estate inventory valuation adjustment calculations contain uncertainties because they require management to make assumptions and apply judgment in determining the net realizable value for each home. Key assumptions used in estimating the net realizable value for each home include the projected home sales price and expected selling costs.
A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2023. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.
A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2024. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.
The Investors included Brian Bair, our founder, chief executive officer and chairman of our Board; Roberto Sella, a member of our Board; First American Financial Corporation (“First American”), a holder of more than 10% of our outstanding Class A Common Stock; and Kenneth DeGiorgio, a member of our Board and chief executive officer of First American.
Participating investors included Brian Bair, our founder, chief executive officer and chairman of our Board; Roberto Sella, a member of our Board; First American Financial Corporation (“First American”), a holder of more than 10% of our outstanding Class A common stock; and Kenneth DeGiorgio, a member of our Board and chief executive officer of First American.
For example, these measures include costs that were recorded in prior periods under GAAP and exclude, in connection with homes held in inventory at the end of the period, costs required to be recorded under GAAP in the same period.
For example, these measures include costs that were recorded in prior periods under GAAP and exclude, in connection with homes held in real estate inventory at the end of the period, costs required to be recorded under GAAP in the same period.
Our effective tax rate for each of the years ended December 31, 2023 and December 31, 2022 differed from the federal statutory rate of 21% primarily due to the valuation allowance recorded on our deferred tax assets and state taxes.
Our effective tax rate for each of the years ended December 31, 2024 and December 31, 2023 differed from the federal statutory rate of 21% primarily due to the valuation allowance recorded on our deferred tax assets and state taxes.
A discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021 has been reported previously in the 2022 Annual Report on Form 10-K, which was filed with the SEC on February 28, 2023, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties.
A discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022 has been reported previously in the 2023 Annual Report on Form 10-K, which was filed with the SEC on February 27, 2024, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties.
This section of this Form 10-K generally discusses 2023 items and the results of our operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This section of this Form 10-K generally discusses 2024 items and the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Generally, the revenue and margin profiles of our ancillary products and services are different from our cash offering service that accounts for the vast majority of our revenue, with most ancillary products and services having a smaller average revenue per transaction than our cash offering service, but a higher margin.
Generally, the revenue and margin profiles of our ancillary products and services are different from our Cash Offer service that accounts for the substantial majority of our revenue, with most ancillary products and services having a smaller average revenue per transaction than our cash offering service, but a higher margin.
We expect this program will allow us to help more homeowners sell their home and expand our ability to reach more Offerpad Solutions Inc. | 2023 Form 10-K | 43 customers, while also providing customers with the benefit of receiving an optimized offer for their home.
We expect Offerpad Solutions Inc. | 2024 Form 10-K | 45 this program will allow us to help more homeowners sell their home and expand our ability to reach more customers, while also providing customers with the benefit of receiving an optimized offer for their home.
Future financial performance improvements are expected to be driven by expanding unit level margins through initiatives such as: • Continued optimization of acquisition, renovation, and resale processes and strategies, as we increase our market penetration in existing markets; • Effectively increasing and expanding our listing service business alongside the cash offer business, optimizing customer and agent community engagement and increasing conversion of requests for home purchases; and • Introducing and scaling additional ancillary products and services to complement our core cash offer and listing service products.
Future financial performance improvements are expected to be driven by expanding unit level margins through initiatives such as: • Continued optimization of acquisition, renovation, and resale processes and strategies, as we increase our market penetration in existing markets; • Effectively increasing and expanding our Cash Offer solution, optimizing customer and agent community engagement and increasing conversion of requests for home purchases; and • Introducing and scaling additional ancillary products and services to complement our core Cash Offer solution.
Offerpad Solutions Inc. | 2023 Form 10-K | 48 Technology and Development Technology and development expenses consist of headcount expenses, including salaries, benefits and stock-based compensation expense for employees and contractors engaged in the design, development, and testing of website applications, mobile applications, and software development. Technology and development expenses are charged to operations as incurred.
Offerpad Solutions Inc. | 2024 Form 10-K | 50 Technology and Development Technology and development expenses consist of headcount expenses, including salaries, benefits and stock-based compensation expense for employees and contractors engaged in the design, development, and testing of website applications, mobile applications, and software development. Technology and development expenses are charged to operations as incurred.
On the basis of this evaluation, we recorded a full valuation allowance against the net deferred tax assets as of December 31, 2023, 2022, and 2021.
On the basis of this evaluation, we recorded a full valuation allowance against the net deferred tax assets as of December 31, 2024 and 2023.
Offerpad Solutions Inc. | 2023 Form 10-K | 47 We calculate Adjusted Net Income (Loss) as GAAP Net Income (Loss) adjusted for the change in fair value of warrant liabilities. We define Adjusted Net Income (Loss) Margin as Adjusted Net Income (Loss) as a percentage of revenue.
Offerpad Solutions Inc. | 2024 Form 10-K | 49 We calculate Adjusted Net Income (Loss) as GAAP Net Income (Loss) adjusted for the change in fair value of warrant liabilities. We define Adjusted Net Income (Loss) Margin as Adjusted Net Income (Loss) as a percentage of revenue.
Depending on these and other market conditions, we may seek additional financing. Volatility in the credit markets, rising interest rates and softening consumer demand for residential real estate may have an adverse effect on our ability to obtain debt financing on favorable terms or at all.
Based on these and other current market conditions, we plan to seek additional financing. Volatility in the credit markets, rising interest rates and softened consumer demand for residential real estate may have an adverse effect on our ability to obtain debt financing on favorable terms or at all.
For all other homes, if the carrying value exceeds the expected sale price less expected selling costs, the carrying value of these homes are adjusted to the expected sale price less expected selling costs. We recorded real estate inventory valuation adjustments of $8.9 million, $93.8 million, and $2.8 million during the years ended December 31, 2023, 2022, and 2021, respectively.
For all other homes, if the carrying value exceeds the expected sale price less expected selling costs, the carrying value of these homes are adjusted to the expected sale price less expected selling costs. We recorded real estate inventory valuation adjustments of $4.5 million and $8.9 million during the years ended December 31, 2024 and 2023, respectively.
In order to minimize the sales period, we market our homes across a wide variety of websites and platforms to generate buyer demand. This includes the Offerpad website and mobile app, local MLS, and syndication across online real estate portals.
In order to minimize the sales period, we market our Offerpad Solutions Inc. | 2024 Form 10-K | 44 homes across a wide variety of websites and platforms to generate buyer demand. This includes the Offerpad website and mobile app, local MLS, and syndication across online real estate portals.
Home Purchase Commitments As of December 31, 2023, we were under contract to purchase 500 homes for an aggregate purchase price of $135.1 million, all of which are expected to close within 12 months. Other Purchase Obligations We have other purchase obligations which principally include commitments relating to insurance, information technology, administration services, and marketing.
Home Purchase Commitments As of December 31, 2024, we were under contract to purchase 163 homes for an aggregate purchase price of $43.4 million, all of which are expected to close within 12 months. Other Purchase Obligations We have other purchase obligations which principally include commitments relating to insurance, information technology, administration services, and marketing.
Income Tax Expense We recorded income tax expense of $0.2 million and $0.4 million during the years ended December 31, 2023 and 2022, respectively, and our effective tax rate was an expense of (0.1)% and (0.2)% for the respective periods.
Income Tax Expense We recorded income tax expense of less than $0.1 million and $0.2 million during the years ended December 31, 2024 and 2023, respectively, and our effective tax rate was an expense of (0.1%) for both of the respective periods.
With the exception of the year ended December 31, 2021, during which we generated net income, we have incurred losses each year from inception, and may incur additional losses in the future. We have continued to invest in the development and expansion of our operations.
With the exception of the year ended December 31, 2021, during which we generated net income, we have incurred losses each year from inception, and may incur additional losses in the future. Since our launch in 2015, we have invested in the development and expansion of our operations.
Investing Activities Net cash provided by (used in) investing activities was $2.0 million and $(1.1) million and for the years ended December 31, 2023 and 2022, respectively. Net cash provided by investing activities during 2023 principally represents proceeds from the sale of derivative instruments, which was partially offset by purchases of derivative instruments during the year.
Net cash provided by investing activities during 2023 principally represents proceeds from the sale of derivative instruments, which was partially offset by purchases of derivative instruments during the year. Financing Activities Net cash used in financing activities was $21.8 million and $324.0 million for the years ended December 31, 2024 and 2023, respectively.
The terms of these facilities and related financing documents require the Company to comply with a number of customary financial and other covenants, such as maintaining certain levels of liquidity, tangible net worth or leverage (ratio of debt to tangible net worth).
Financed properties are subject to customary eligibility criteria and concentration limits. The terms of these facilities and related financing documents require the Company to comply with a number of customary financial and other covenants, such as maintaining certain levels of liquidity, tangible net worth or leverage (ratio of debt to tangible net worth).
Contribution Profit provides investors a measure to assess Offerpad’s ability to generate returns on homes sold during a reporting period after considering home acquisition costs, renovation and repair costs, and adjusting for holding costs and selling costs.
Contribution Profit provides investors a measure to assess Offerpad Solutions Inc. | 2024 Form 10-K | 47 Offerpad’s ability to generate returns on homes sold during a reporting period after considering home acquisition costs, renovation and repair costs, and adjusting for holding costs and selling costs.
For individual homes or portfolios of homes under contract to sell as of the real estate inventory valuation assessment date, if the carrying value exceeds the contract price less expected selling costs, the carrying value of these homes are adjusted to the Offerpad Solutions Inc. | 2023 Form 10-K | 55 contract price less expected selling costs.
For individual homes or portfolios of homes under contract to sell as of the real estate inventory valuation assessment date, if the carrying value exceeds the contract price less expected selling costs, the carrying value of these homes are adjusted to the contract price less expected selling costs.
Further, there continues to be uncertainty regarding the near-term macroeconomic conditions, including the path of ongoing inflation in the broader economy, the impact of geopolitical conflicts and the direction of mortgage interest rates, which have continued to fluctuate during the first quarter of 2024.
Further, there continues to be uncertainty regarding the near-term macroeconomic conditions, including the path of inflation in the broader economy, the direction of mortgage interest rates, which have continued to stay around 7% during the early stages of the first quarter of 2025, and the impact of geopolitical conflicts.
Expansion into New Markets Since our launch in 2015, we have expanded into 25 markets as of December 31, 2023, which covered roughly 22% of the 4.7 million homes sold in the United States in 2023.
Expansion into New Markets Since our launch in 2015, we have expanded into 26 markets as of December 31, 2024, which covered roughly 23% of the 4.8 million homes sold in the United States in 2024.
Our principal sources of liquidity have historically consisted of cash generated from our operations and financing activities. As of December 31, 2023, we had cash and cash equivalents of $76.0 million and had a total undrawn borrowing capacity under our senior and mezzanine secured credit facilities of $792.5 million, $302.7 million of which is committed and $489.8 million uncommitted.
Our principal sources of liquidity have historically consisted of cash generated from our operations and financing activities. As of December 31, 2024, we had cash and cash equivalents of $43.0 million and had a total undrawn borrowing capacity under our senior and mezzanine secured credit facilities of $790.5 million, $169.0 million of which is committed and $621.5 million uncommitted.
The following table presents a reconciliation of our Adjusted Net Income (Loss) and Adjusted EBITDA to our GAAP Net Income (Loss), which is the most directly comparable GAAP measure, for the periods indicated: Year Ended December 31, (in thousands, except percentages, unaudited) 2023 2022 Net loss (GAAP) $ (117,218 ) $ (148,613 ) Change in fair value of warrant liabilities (68 ) (23,522 ) Adjusted net loss $ (117,286 ) $ (172,135 ) Adjusted net loss margin (8.9 )% (4.4 )% Adjustments: Interest expense 18,859 45,991 Amortization of capitalized interest (1) 7,234 12,660 Income tax expense 163 359 Depreciation and amortization 728 1,022 Amortization of stock-based compensation 7,915 8,307 Adjusted EBITDA $ (82,387 ) $ (103,796 ) Adjusted EBITDA margin (6.3 )% (2.6 )% (1) Amortization of capitalized interest represents all interest related costs, including senior and mezzanine interest related costs, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.
The following table presents a reconciliation of our Adjusted Net Income (Loss) and Adjusted EBITDA to our GAAP Net Income (Loss), which is the most directly comparable GAAP measure, for the periods indicated: Year Ended December 31, (in thousands, except percentages, unaudited) 2024 2023 Net loss (GAAP) $ (62,159 ) $ (117,218 ) Change in fair value of warrant liabilities (240 ) (68 ) Adjusted net loss $ (62,399 ) $ (117,286 ) Adjusted net loss margin (6.8 )% (8.9 )% Adjustments: Interest expense 18,684 18,859 Amortization of capitalized interest (1) 5,771 7,234 Income tax expense 31 163 Depreciation and amortization 611 728 Amortization of stock-based compensation 8,080 7,915 Adjusted EBITDA $ (29,222 ) $ (82,387 ) Adjusted EBITDA margin (3.2 )% (6.3 )% (1) Amortization of capitalized interest represents all interest related costs, including senior and mezzanine interest related costs, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.
The buyer then conducts a customary inspection of the home and takes possession of the home upon funding and closing. We pay agent commissions for home buyers out of funds received at closing.
If the buyer is represented by an agent, we work directly with the agent. The buyer then conducts a customary inspection of the home and takes possession of the home upon funding and closing. We pay agent commissions for home buyers out of funds received at closing.
Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, refer to Note 1. Nature of Operations and Significant Accounting Policies in Item 8, Financial Statements and Supplementary Data .
Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, refer to Note 1. Nature of Operations and Significant Accounting Policies in Item 8, Financial Statements and Supplementary Data . Offerpad Solutions Inc. | 2024 Form 10-K | 58
In 2023, we estimate that we captured roughly 0.5% market share across our then active 25 markets. Given this high degree of fragmentation, we believe that bringing a solutions-oriented approach to the market with multiple buying and selling services to meet the unique needs of customers could lead to continued market share growth and accelerated adoption of the digital model.
Given this high degree of fragmentation, we believe that bringing a solutions-oriented approach to the market with multiple buying and selling services to meet the unique needs of customers could lead to continued market share growth and accelerated adoption of the digital model.
The following summarizes certain details related to our mezzanine secured credit facilities (in thousands, except interest rates): Borrowing Capacity Outstanding Weighted- Average Interest End of Revolving / Withdrawal Final Maturity As of December 31, 2023 Committed Uncommitted Total Amount Rate Period Date Related party facility 1 $ 45,000 $ 25,000 $ 70,000 $ 22,250 11.56 % June 2025 December 2025 Mezzanine financial institution 1 22,500 22,500 45,000 11,198 12.79 % January 2025 July 2025 Mezzanine financial institution 2 26,667 13,333 40,000 1,506 9.55 % January 2025 April 2025 Related party facility 2 8,000 14,000 22,000 1,553 13.05 % March 2025 September 2025 Mezzanine secured credit facilities $ 102,167 $ 74,833 $ 177,000 $ 36,507 As of December 31, 2023, we had four mezzanine secured credit facilities, two with separate financial institutions and two with a related party, which holds more than 5% of our Class A common stock.
The following summarizes certain details related to our mezzanine secured credit facilities (in thousands, except interest rates): Borrowing Capacity Outstanding Weighted- Average Interest End of Revolving / Withdrawal Final Maturity As of December 31, 2024 Committed Uncommitted Total Amount Rate Period Date Related party facility 1 $ 45,000 $ 25,000 $ 70,000 $ 18,372 13.67 % June 2025 December 2025 Mezzanine financial institution 1 — 45,000 45,000 — 13.86 % January 2026 July 2026 Mezzanine financial institution 2 26,667 13,333 40,000 7,707 12.39 % January 2025 April 2025 Related party facility 2 8,000 14,000 22,000 5,160 13.59 % March 2025 September 2025 Mezzanine secured credit facilities $ 79,667 $ 97,333 $ 177,000 $ 31,239 As of December 31, 2024, we had four mezzanine secured credit facilities, two with separate financial institutions and two with a related party, which holds more than 5% of our Class A common stock.
Interest Expense Interest expense decreased by $27.1 million, or 59.0%, to $18.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Interest Expense Interest expense decreased by $0.2 million, or 0.9%, to $18.7 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Offerpad Solutions Inc. | 2023 Form 10-K | 46 The following table presents a reconciliation of our Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest to our gross profit, which is the most directly comparable GAAP measure, for the periods indicated: Year Ended December 31, (in thousands, except percentages and homes sold, unaudited) 2023 2022 Gross profit (GAAP) $ 70,181 $ 182,422 Gross margin 5.3 % 4.6 % Homes sold 3,674 10,635 Gross profit per home sold $ 19.1 $ 17.2 Adjustments: Real estate inventory valuation adjustment - current period (1) 837 58,413 Real estate inventory valuation adjustment - prior period (2) (58,125 ) (1,205 ) Interest expense capitalized (3) 7,234 12,660 Adjusted gross profit $ 20,127 $ 252,290 Adjusted gross margin 1.5 % 6.4 % Adjustments: Direct selling costs (4) (35,225 ) (97,381 ) Holding costs on sales - current period (5)(6) (3,357 ) (8,342 ) Holding costs on sales - prior period (5)(7) (2,166 ) (918 ) Other income, net (8) 6,149 1,532 Contribution (loss) profit $ (14,472 ) $ 147,181 Contribution margin (1.1 )% 3.7 % Homes sold 3,674 10,635 Contribution (loss) profit per home sold $ (3.9 ) $ 13.8 Adjustments: Interest expense capitalized (3) (7,234 ) (12,660 ) Interest expense on homes sold - current period (9) (15,289 ) (32,022 ) Interest expense on homes sold - prior period (10) (13,924 ) (3,737 ) Contribution (loss) profit after interest $ (50,919 ) $ 98,762 Contribution margin after interest (3.9 )% 2.5 % Homes sold 3,674 10,635 Contribution (loss) profit after interest per home sold $ (13.9 ) $ 9.3 (1) Real estate inventory valuation adjustment – current period is the real estate inventory valuation adjustments recorded during the period presented associated with homes that remain in real estate inventory at period end.
Offerpad Solutions Inc. | 2024 Form 10-K | 48 The following table presents a reconciliation of our Adjusted Gross Profit, Contribution Profit (Loss) and Contribution Profit (Loss) After Interest to our Gross Profit, which is the most directly comparable GAAP measure, for the periods indicated: Year Ended December 31, (in thousands, except percentages and homes sold, unaudited) 2024 2023 Gross profit (GAAP) $ 72,195 $ 70,181 Gross margin 7.9 % 5.3 % Homes sold 2,707 3,674 Gross profit per home sold $ 26.7 $ 19.1 Adjustments: Real estate inventory valuation adjustment - current period (1) 2,953 837 Real estate inventory valuation adjustment - prior period (2) (793 ) (58,125 ) Interest expense capitalized (3) 5,771 7,234 Adjusted gross profit $ 80,126 $ 20,127 Adjusted gross margin 8.7 % 1.5 % Adjustments: Direct selling costs (4) (24,208 ) (35,225 ) Holding costs on sales - current period (5)(6) (3,955 ) (3,357 ) Holding costs on sales - prior period (5)(7) (581 ) (2,166 ) Other income, net (8) 2,357 6,149 Contribution profit (loss) $ 53,739 $ (14,472 ) Contribution margin 5.8 % (1.1 )% Homes sold 2,707 3,674 Contribution profit (loss) per home sold $ 19.9 $ (3.9 ) Adjustments: Interest expense capitalized (3) (5,771 ) (7,234 ) Interest expense on homes sold - current period (9) (13,869 ) (15,289 ) Interest expense on homes sold - prior period (10) (2,976 ) (13,924 ) Contribution profit (loss) after interest $ 31,123 $ (50,919 ) Contribution margin after interest 3.4 % (3.9 )% Homes sold 2,707 3,674 Contribution profit (loss) after interest per home sold $ 11.5 $ (13.9 ) (1) Real estate inventory valuation adjustment – current period is the real estate inventory valuation adjustments recorded during the period presented associated with homes that remain in real estate inventory at period end.
The decrease was primarily attributable to lower sales volumes and a lower average sales price. We sold 3,674 homes during the year ended December 31, 2023 compared to 10,635 homes during the year ended December 31, 2022, representing a decrease of 65.5%.
The decrease was primarily attributable to lower sales volumes and a lower average sales price per home. We sold 2,707 homes during the year ended December 31, 2024 compared to 3,674 homes during the year ended December 31, 2023, representing a decrease of 26.3%.
The Pre-funded Warrants became exercisable during March 2023. All of the Pre-funded Warrants were subsequently exercised, upon which, 10.7 million shares of our Class A common stock were issued. As of December 31, 2023, there were no remaining Pre-funded Warrants outstanding.
All of the pre-funded warrants were subsequently exercised during 2023, upon which, 10.7 million shares of our Class A common stock were issued.
Net cash used in investing activities during 2022 represents purchases of property and equipment. Financing Activities Net cash used in financing activities was $324.0 million and $358.5 million for the years ended December 31, 2023 and 2022, respectively.
Investing Activities Net cash (used in) provided by investing activities was $(5.3) million and $2.0 million and for the years ended December 31, 2024 and 2023, respectively. Net cash used in investing activities during the year ended December 31, 2024 principally represents purchases of property and equipment.
Additionally, the average resale home price decreased by 4.3% from $371,000 in the year ended December 31, 2022 to $355,000 in the year ended December 31, 2023.
Additionally, the average resale home price decreased by 5.6% from $355,000 in the year ended December 31, 2023 to $335,000 in the year ended December 31, 2024.
Offerpad Solutions Inc. | 2023 Form 10-K | 53 Cash Flows The following summarizes our cash flows for the years ended December 31, 2023 and 2022: Year Ended December 31, ($ in thousands) 2023 2022 Net cash provided by operating activities $ 261,632 $ 305,402 Net cash provided by (used in) investing activities 1,985 (1,070 ) Net cash used in financing activities (323,982 ) (358,466 ) Net change in cash, cash equivalents and restricted cash $ (60,365 ) $ (54,134 ) Operating Activities Net cash provided by operating activities was $261.6 million and $305.4 million for the years ended December 31, 2023 and 2022, respectively.
Cash Flows The following summarizes our cash flows for the years ended December 31, 2024 and 2023: Year Ended December 31, ($ in thousands) 2024 2023 Net cash provided by operating activities $ 20,833 $ 261,632 Net cash (used in) provided by investing activities (5,326 ) 1,985 Net cash used in financing activities (21,815 ) (323,982 ) Net change in cash, cash equivalents and restricted cash $ (6,308 ) $ (60,365 ) Offerpad Solutions Inc. | 2024 Form 10-K | 56 Operating Activities Net cash provided by operating activities was $20.8 million and $261.6 million for the years ended December 31, 2024 and 2023, respectively.
Our ancillary products and services represented less than 1% of our total revenue in both 2023 and 2022. Unit Economics We view Contribution Margin and Contribution Margin after Interest (see “—Non-GAAP Financial Measures”) as key performance indicators for unit economic performance, which are currently primarily driven by our cash offer transactions.
Unit Economics We view Contribution Margin and Contribution Margin after Interest (see “—Non-GAAP Financial Measures”) as key performance indicators for unit economic performance, which are currently primarily driven by our cash offer transactions.
Credit Facilities and Other Debt As of December 31, 2023, we had aggregate outstanding principal amounts on our senior and mezzanine secured credit facilities of $222.9 million and $36.5 million, respectively.
Credit Facilities and Other Debt As of December 31, 2024, we had aggregate outstanding principal amounts on our senior and mezzanine secured credit facilities of $185.2 million and $31.2 million, respectively, and $21.4 million on our other senior secured debt.
Interest Expense Interest expense consists primarily of interest on borrowings, including amortization of debt issuance costs related to our senior secured credit facilities, mezzanine secured credit facilities and other debt. Borrowings under the senior secured credit facilities and mezzanine secured credit facilities accrue interest at a rate based on a Secured Overnight Financing Rate (“SOFR”) reference rate plus a margin.
Borrowings under the senior secured credit facilities and mezzanine secured credit facilities, and other debt accrue interest at a rate based on a Secured Overnight Financing Rate (“SOFR”) reference rate plus a margin.
This transaction volume affects substantially all of the ways that we generate revenue, including our ability to acquire new homes and generate associated fees, and our ability to sell homes that we own. The residential real estate market conditions were mixed over the course of 2023.
This transaction volume affects substantially all of the ways that we generate revenue, including our ability to acquire new homes and generate associated fees, and our ability to sell homes that we own. The uncertain economic outlook and uneven residential real estate market conditions challenged our operating results during 2024.
Borrowings under the senior and mezzanine secured credit facilities are required to be repaid as the related real estate inventory is sold, which is expected to be within 12 months from December 31, 2023.
Borrowings under these debt arrangements are required to be repaid as the related real estate inventory is sold, which is expected to be within 12 months from December 31, 2024.
We believe that Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest are useful financial measures for investors as they are used by management in evaluating unit level economics and operating performance across our markets.
We believe that Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest are useful financial measures for investors as they are used by management in evaluating unit level economics and operating performance across our markets. Each of these measures is intended to present the economics related to homes sold during a given period.
Senior Secured Credit Facilities The following summarizes certain details related to our senior secured credit facilities (in thousands, except interest rates): Borrowing Capacity Outstanding Weighted- Average Interest End of Revolving / Withdrawal Final Maturity As of December 31, 2023 Committed Uncommitted Total Amount Rate Period Date Senior financial institution 1 $ 200,000 $ 200,000 $ 400,000 $ 135,676 7.91 % June 2025 June 2025 Senior financial institution 2 100,000 100,000 200,000 55,541 7.61 % January 2025 July 2025 Senior financial institution 3 100,000 50,000 150,000 6,453 7.11 % January 2025 April 2025 Related party 30,000 20,000 50,000 6,289 10.05 % March 2025 September 2025 Senior financial institution 4 30,000 45,000 75,000 18,984 8.42 % August 2024 February 2025 Senior secured credit facilities $ 460,000 $ 415,000 $ 875,000 $ 222,943 Offerpad Solutions Inc. | 2023 Form 10-K | 52 As of December 31, 2023, we had five senior secured credit facilities that we use to fund the purchase of homes and build our real estate inventory, four with separate financial institutions and one with a related party, which holds more than 5% of our Class A common stock.
Senior Secured Credit Facilities The following summarizes certain details related to our senior secured credit facilities (in thousands, except interest rates): Borrowing Capacity Outstanding Weighted- Average Interest End of Revolving / Withdrawal Final Maturity As of December 31, 2024 Committed Uncommitted Total Amount Rate Period Date Senior financial institution 1 $ 150,000 $ 250,000 $ 400,000 $ 110,109 7.93 % December 2025 June 2026 Senior financial institution 2 — 200,000 200,000 — 8.01 % January 2026 July 2026 Senior financial institution 3 100,000 50,000 150,000 30,941 8.38 % January 2025 April 2025 Related party 30,000 20,000 50,000 18,329 10.09 % March 2025 September 2025 Senior financial institution 4 — 30,000 30,000 25,864 9.76 % August 2025 February 2026 Senior secured credit facilities $ 280,000 $ 550,000 $ 830,000 $ 185,243 As of December 31, 2024, we had five senior secured credit facilities that we use to fund the purchase of homes and build our real estate inventory, four with separate financial institutions and one with a related party, which holds more than 5% of our Class A common stock.
Change in Fair Value of Warrant Liabilities Change in fair value of warrant liabilities for the years ended December 31, 2023 and 2022 represents gains of $0.1 million and $23.5 million, respectively, as a result of the fair value adjustment of the warrant liabilities that were assumed in connection with the Business Combination.
Change in Fair Value of Warrant Liabilities Change in fair value of warrant liabilities for the years ended December 31, 2024 and 2023 represents gains of $0.2 million and $0.1 million, respectively, as a result of the fair value adjustment of our warrant liabilities.
Inventory financing is a key enabler to our growth and we rely on our non-recourse asset-backed financing facilities, which primarily consist of senior and mezzanine secured credit facilities to finance our home purchases. The loss of adequate access to these types of facilities, or the inability to maintain these types of facilities on favorable terms, would impair our performance.
Real estate inventory financing is a key enabler to our growth and we rely on our non-recourse asset-backed financing facilities, which primarily consist of senior and mezzanine secured credit facilities to finance our home purchases.
The decrease in average sales price per home was primarily due to our increased focus on geographic markets that tend to share relatively lower median price points as elevated mortgage interest rates and inflation in the broader economy have continued to negatively impact the residential real estate market conditions, as well as refining our target home purchase price range to focus on acquiring homes with the greatest price stability within each market.
The decrease in average sales price per home during the year ended December 31, 2024 was primarily due to our increased focus on geographic markets that tend to share relatively lower median price points, as well as homes closer to or below the median price in a given market as higher mortgage interest rates and somewhat elevated levels of inflation in the broader economy have continued to negatively impact the residential real estate market conditions.
The decrease in expense was primarily attributable to a $370.2 million decrease in the average outstanding balance of our senior and mezzanine secured credit facilities, from $790.7 million during the year ended December 31, 2022 to $420.5 million during the year ended December 31, 2023.
The decrease in expense was primarily attributable to a $172.0 million decrease in the average outstanding balance of our secured credit facilities and other debt, from $420.6 million during the year ended December 31, 2023 to $248.6 million during the year ended December 31, 2024.
As of December 31, 2023, we were in compliance with all covenants and no event of default had occurred. Senior Secured Debt - Other We have a borrowing arrangement with a financial institution to support purchases of real estate inventory. Borrowings under this arrangement accrue interest at a rate based on a SOFR reference rate, plus a margin.
Senior Secured Debt - Other We have a borrowing arrangement with a financial institution to support purchases of real estate inventory. Borrowings under this arrangement accrue interest at a rate based on a SOFR reference rate, plus a margin. The weighted-average interest rate under our other senior secured debt was 9.24% as of December 31, 2024.
Estimated interest payments, which have been calculated using the Offerpad Solutions Inc. | 2023 Form 10-K | 54 applicable variable interest rate in existence at December 31, 2023 over an assumed holding period of 97 days, total $5.0 million and $1.4 million under the respective facilities.
Estimated interest payments, which have been calculated using the applicable variable interest rate in existence at December 31, 2024 over an assumed holding period of 142 days, total $5.9 million, $1.6 million, and $0.8 million under the respective facilities and other senior secured debt.
Prior to listing the home for sale, an Offerpad Asset Manager will reevaluate the current market and comparable properties using the same underwriting technology as is used in the buying process to price the home accordingly.
Prior to listing the home for sale, an Offerpad employee will reevaluate the current market and comparable properties using the same underwriting technology as is used in the buying process to price the home accordingly. Our acquisition and resale teams work closely to ensure market level trends are captured and anticipated in pricing decisions.
The increase in gross profit margin was partially offset by a decrease in the difference between the average home resale price and the average home acquisition price during the year ended December 31, 2023 compared to the year ended December 31, 2022.
The increase in gross profit margin was primarily due to an increase in the difference between the average home resale price and the average home acquisition price during the year ended December 31, 2024 compared to the year ended December 31, 2023, and a $4.5 million decrease in the real estate inventory valuation adjustment during the year ended December 31, 2024 compared to the year ended December 31, 2023.
Renovation Services We have extended our renovation services to other businesses allowing other companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell.
Through this offering, we are able to leverage our existing logistics, operations, technology and skill-sets to provide renovation services to other businesses, allowing other companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell.
Offers We generate demand for our services through traditional media, digital media, organic referral, and partnership channels. Partnership channels include relationships with homebuilders, brokerages, and complementary industry partners. Interested home sellers visit our desktop or mobile website or application and fill out a short questionnaire about their home.
Offers We generate demand for our services through traditional media, digital media, organic referral, and partnership channels. Partnership channels include relationships with homebuilders, brokerages, and complementary industry partners.
This resulted in a decrease in the average real estate inventory holding period to 97 days during the fourth quarter of 2023, which is consistent with our expected average real estate inventory holding period and our historical norm.
As we increased our scale and improved our workflow optimization in prior years, our average real estate inventory holding period of homes sold decreased from 138 days in 2016 to 97 days during the fourth quarter of 2023, which is consistent with our expected average real estate inventory holding period and our historical norm.
Cost of Revenue and Gross Profit Cost of revenue decreased by $2,525.7 million, or 67.0%, to $1,244.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was primarily attributable to lower sales volumes and a decrease in the real estate inventory valuation adjustment.
This decrease was primarily attributable to lower sales volumes, a lower average home acquisition price, and a decrease in the real estate inventory valuation adjustment. Cash Offer gross profit margin was 7.2% for the year ended December 31, 2024 compared to 4.6% for the year ended December 31, 2023.
As of December 31, 2023, we had $3.8 million of total future lease payments, including imputed interest, associated with our operating lease arrangements, of which, $2.4 million is short-term.
As of December 31, 2024, we had $22.6 million of total future lease payments, including imputed interest and tenant incentive receivables, associated with our operating lease arrangements, of which, $2.8 million is short-term. Critical Accounting Estimates We prepare our consolidated financial statements in accordance with GAAP.
When we resell a home, the proceeds are used to reduce the corresponding outstanding balance under the related senior and mezzanine secured revolving credit facilities. Mezzanine Secured Credit Facilities In addition to the senior secured credit facilities, we use mezzanine secured credit facilities which are structurally and contractually subordinated to the related senior secured credit facilities.
Each senior secured credit facility contains eligibility requirements that govern whether a property can be financed. When we resell a home, the proceeds are used to reduce the corresponding outstanding balance under the related senior and mezzanine secured revolving credit facilities.
This was partially offset by $90.0 million of proceeds from the issuance of pre-funded warrants, net of issuance costs of $0.8 million. Net cash used in financing activities during 2022 primarily consisted of $3,540.5 million of repayments of credit facilities and other debt, which was partially offset by $3,178.0 million of borrowings from credit facilities and other debt.
Net cash used in financing activities during the year ended December 31, 2024 primarily consisted of $829.5 million of repayments of credit facilities and other debt, which was partially offset by $807.9 million of borrowings from credit facilities and other debt.
We are currently headquartered in Chandler, Arizona and operated in over 1,700 cities and towns in 25 metropolitan markets across 15 states as of December 31, 2023.
We are currently headquartered in Tempe, Arizona and operated in over 1,800 cities and towns in 26 metropolitan markets across 17 states as of December 31, 2024. Current Economic Conditions and Health of the U.S.
Traditionally, resale housing pricing moves gradually through cycles; therefore, shorter real estate inventory holding periods limit pricing exposure.
Historically, we have been able to manage our portfolio risk in part by our ability to manage holding periods for our real estate inventory. Traditionally, resale housing pricing moves gradually through cycles; therefore, shorter real estate inventory holding periods limit pricing exposure.
Once a purchase offer is received on a home, we enter into negotiations with the buyer and upon agreement of price, terms and conditions, we enter into a purchase contract. If the buyer is represented by an agent, we work directly with the agent.
The ultimate goal during the resale process is to maximize return on investment when considering pricing and holding periods. Once a purchase offer is received on a home, we enter into negotiations with the buyer and upon agreement of price, terms and conditions, we enter into a purchase contract.
This net decrease in credit facility funding of $362.5 million was directly related to the decrease in financed inventory during 2022. Material Cash Requirements and Other Obligations Our material cash requirements include the following contractual obligations and other commitments.
This net decrease in credit facility and other debt funding of $21.6 million was directly related to the decrease in financed real estate inventory during the period.
Given this current coverage, we believe there is significant opportunity to both increase market penetration in our existing markets and to grow our business through new market expansion over the long-term, although new market expansion typically generates lower initial margins as we begin operations that increase as we scale volumes.
Given this current coverage, we believe there is significant opportunity to both increase market penetration in our existing markets and to grow our business through new market expansion over the long-term. Also, because of our strategic approach to our asset-light platform offerings, we believe a significant portion of the total addressable market is serviceable with our business model.
We aim to deliver our offerings to customers in a smooth, efficient, digital driven platform, focused on transparency and ease of use. The primary goal is to be able to offer multiple services tied to the core real estate transaction, allowing customers to bundle and save.
We anticipate this integration will further expand our reach and diversify our lead sources. Ancillary products and services We aim to deliver other additional products and services tied to the core real estate transaction in a smooth, efficient, digital driven platform, focused on transparency and ease of use.
Our underwriting tools are constantly updated with inputs from third-party data sources, proprietary data sources as well as internal data to adjust to the latest market conditions. This allows us to assess and adjust to changes in the local housing market conditions based on our technology, analysis and local real estate experience, in order to mitigate our risk exposure.
Our underwriting tools are constantly updated to adjust to the latest market conditions, leveraging inputs from our internal data systems, as well as third-party and other proprietary data sources.
The lenders have legal recourse only to the assets securing the debt and do not have general recourse against us with limited exceptions.
The lenders have legal recourse only to the assets securing the debt and do not have general recourse against us with limited exceptions. We have, however, provided limited non-recourse carve-out guarantees under our senior and mezzanine secured credit facilities for certain of the SPEs’ obligations.
There were no amounts outstanding under this borrowing arrangement as of December 31, 2023. The weighted-average interest rate under our other senior secured debt was 7.23% as of December 31, 2022.
There were no amounts outstanding under this borrowing arrangement as of December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2022, our exposure to changes in interest rates within our variable rate senior secured credit facilities and other senior secured debt was principally associated with SOFR.
Biggest changeAs of December 31, 2024, our exposure to changes in interest rates for these debt arrangements is principally associated with the Secured Overnight Financing Rate (“SOFR”). We had outstanding borrowings on our senior and mezzanine secured credit facilities of $185.2 million and $31.2 million, respectively, and $21.4 million on our other senior secured debt as of December 31, 2024.
Assuming no change in the outstanding borrowings on our senior and mezzanine secured credit facilities, we estimate that a one percentage point increase in SOFR would have increased our annual interest expense by $2.6 million during the year ended December 31, 2023.
Assuming no change in the outstanding borrowings on our senior and mezzanine secured credit facilities and other senior secured debt, we estimate that a one percentage point increase in SOFR would have increased our annual interest expense by $2.4 million during the year ended December 31, 2024.
Assuming no change in the outstanding borrowings on our senior secured credit facilities as of December 31, 2022, we estimate that a one percentage point increase in SOFR would have increased our annual interest expense by $4.9 million during the year ended December 31, 2022. Offerpad Solutions Inc. | 2023 Form 10-K | 56
Assuming no change in the outstanding borrowings on our senior and mezzanine secured credit facilities as of December 31, 2023, we estimate that a one percentage point increase in SOFR would have increased our annual interest expense by $2.6 million during the year ended December 31, 2023. Offerpad Solutions Inc. | 2024 Form 10-K | 59
As of December 31, 2023, our exposure to changes in interest rates for these debt arrangements is principally associated with the Secured Overnight Financing Rate (“SOFR”).
As of December 31, 2023, our exposure to changes in interest rates for these debt arrangements was principally associated with SOFR.
We had outstanding borrowings on our senior and mezzanine secured credit facilities of $222.9 million and $36.5 million, respectively, as of December 31, 2023, and there were no amounts outstanding under our other senior secured debt arrangement. Borrowings under these debt arrangements accrue interest at a floating rate based on a SOFR reference rate plus a margin.
Borrowings under these debt arrangements accrue interest at a floating rate based on a SOFR reference rate plus a margin.

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