James Grout: Sure. Ryan, So I guess just to kind of walk through each of them really quickly one by one. On the renovate side, like you mentioned, we are seeing some really good progress there and good momentum kind of across the board and in various markets. The way the renovation revenue model works is effectively think about an average renovation cost right now were in the $15,000 range from an average reno cost to these customers. And then we’re capturing a service fee on top of that. It can be anywhere from 20% to 30% or so of a service fee. So this comes through at, call it, a 20% gross margin, plus or minus. Overall, from an overhead perspective, that’s a shared resource from — with our EXPRESS business, with folks in the markets and all that.
So it’s a nice kind of value-accretive overall business line to tack on to our existing operations. On the Direct Plus side, like Brian mentioned, from a customer perspective, it’s very similar experience, overall, where the request comes in, we’re underwriting the home, and we’re managing that request all the way up until the time of closing. Effectively, what’s happening at closing is we’re transitioning or we’re assigning over that contract whoever the ultimate buyer of that home is. And so we’re capturing our service fees as the revenue on that, for that project — or for that home. So really, that comes through at a very high gross margin. I think 95%-plus type gross margins there since it’s effectively just a service fee coming through.
And then on the listing side, this is where the kind of interesting thing that Brian just talked through. Again, this is also a service piece. This comes through at a very high overall gross margin there. For leads that we’re referring out, the referral fee that’s coming through — back through is just going to be a percent of the overall sales price that ultimately that agent closed on, so that should come through again at a 90%-plus type gross margin there. And again, the subscription fee is — it’s our mechanism for being able to engage with those types of very highly motivated and engaged agents within a market that are willing to invest capital upfront in order to get access to leads and listings and all the other great products and services that Offerpad can offer them there.
So again, as a subscription-based type fee coming through, that’s another kind of 90% type gross margin ultimately.
Ryan Tomasello: Great. Really appreciate all that color. Very helpful. And just a follow-up here. You mentioned another $30 million, I think, of cost efficiencies you expect to realize in 2024. Is that mainly driven by the annualization of the expense efficiencies you drove last year? Or is any of that incremental? And if so, any color on where those savings are coming from? Thanks.
James Grout: Yes, great question. It is a little bit of both. So we did kind of continue to optimize the cost structure through the end of the year. So part of that is going to be coming through from that standpoint. The other part is going to be a lot of our focus and attention invested in our partnership program. And then, overall, what that means from a CAC perspective and what we need to invest into kind of direct marketing in order to generate the amount of leads necessary for the business. So I view the annualization part really tied to what the kind of expense management we’re doing at the end of the year, but then also we’ll carry forward some more marketing efficiencies throughout the year as well.
Ryan Tomasello: Okay. Thanks for taking the questions.
Operator: Thank you for your question. Next question is from the line of Michael Ng with Goldman Sachs. Your line is now open.
Michael Ng: Hi, good afternoon. Thank you for the question. It was encouraging to hear about the renewal and extension of the three credit facilities. I was just wondering if you could talk a little bit more about some of the changes in the terms of those facilities. I think you said there was an adjustment on target size. Like how should we think about how that translates into your home purchase and selling prices on a go-forward basis. And could you just remind us what the current capacity is today and what percentage of the capacity was renewed? Thank you.
James Grout: Yes. Good question. So right now, where we ended the year from an overall capacity standpoint, and don’t expect imminent changes right now with the new renewals coming up for a bit of time here, is we had about $560 million of committed capacity and another $490-ish millions of uncommitted capacity for a little bit over $1 billion total. Historically, we’ve had the ability to flex in and out of our uncommitted capacity, overall. But right now, with — we ended the year with about $260 million of total outstanding debt. We felt that the changes that we made in overall committed capacity were pretty prudent, just given our expectations and what we’re seeing from a volume perspective of the — kind of the balance sheet side of the business there.
So again, we feel very good about those renewals that we put in place. Importantly, we maintain those key terms around advance rates and funding mechanics that really allow us to be really efficient with our capital and purchase the amount of homes that we do.
