There are few markets that are more in need of disruption than the real estate industry. For the most part, homes are still bought and sold through traditional real estate agents. The process is clunky at best, and the average sales commission is about 6% of the sale price, which translates to more than $20,000 on the average home.

Although it's not the only way the home selling process is being disrupted, iBuying, or "instant buying," is a very promising industry that has started to gain serious traction. There are only a few companies that buy homes directly from sellers on a large scale, and after reading through its latest earnings, Offerpad (OPAD -2.75%) looks like an especially promising way to invest in it.

House with a swimming pool.

Image source: Getty Images.

What does Offerpad do?

Offerpad's core business is iBuying -- that is, buying homes directly from sellers, making moderate repairs, and reselling them directly to homebuyers. The idea is that the sellers get the peace of mind that comes with an all-cash offer, can close on a date of their choosing, and don't have to go through the hassle of showings, open houses, staging, etc.

In addition, Offerpad has been building out its adjacent services. For example, the company offers mortgage origination services and also has its Offerpad Flex product, which encourages customers to list their house on the open market with a backup cash offer.

To be perfectly clear, this is not a low-risk stock by any means. iBuying is still a relatively young industry, and while Offerpad has done a good job with efficiency, no iBuyer has achieved consistent profitability just yet. However, if iBuying continues to grow, there's a massive opportunity. About $2 trillion worth of existing homes are sold in Offerpad's addressable markets annually, and many Americans find selling a home to be a highly frustrating process.

Tremendous execution so far

Offerpad has only been buying and selling homes for a few years, but the growth has been impressive. And it hasn't been "growth at all costs" either -- the company has done a great job of balancing expansion and efficiency.

2021 was an incredible year for Offerpad. Not only did the strong real estate market make it easier for Offerpad to sell homes quickly, but the company got a massive cash infusion when it went public by a SPAC backed by former Zillow CEO Spencer Rascoff.

For the full year, Offerpad bought 9,023 homes and sold 6,373, generating $2.07 billion in revenue and about $208 million in gross profit. It achieved a customer satisfaction rating of 93% and was operating in 21 different markets by the end of the year (with eight more planned for 2022). In the fourth quarter alone, Offerpad bought more than 3,000 homes -- nearly triple the same quarter in 2020 -- and generated positive net income.

Looking ahead, Offerpad anticipates selling 3,000 to 3,150 homes in the first quarter of 2022, which would be 27% sequential growth at the midpoint. From these sales, it anticipates at least $1.1 billion in revenue and positive adjusted EBITDA.

Lots of room to grow

While Offerpad's growth has been impressive, it could be just the beginning. Offerpad has a market share of just 0.9% in its 21 operational markets and could easily multiply this several times over as its brand awareness and reputation grows.

With a market cap of just over $900 million, Offerpad could be a home run for patient and risk-tolerant investors who get in during the industry's early stages. If Offerpad can continue to scale its business, and can do so with consistent profitability, it could rise to 10 times its current value, or potentially much more.