Theoretically, you're picking off improperly priced homes and quoting a tighter buy/sell spread, so you aren't buying higher than the "market" price. The seller/buyer is the one crossing the spread.

In practice it seems like something isn't properly hedged so Opendoor and a lot of other iBuyers are exposed to the underlying asset rather than just capturing the spread and picking off incorrectly priced homes. That's why you see their margins go up when housing does well and down when housing does poorly. A proper market maker should have no exposure to the underlying (e.g. market makers made record profits in 2020 despite equities tanking). I bet if a Wall Street quant firm came in they'd roll over Opendoor and the like.

=)

I bet the best performing and consistent market makers have a sense of the uncertainty of the direction

Because the market changes.

I bought a house recently and according to Zillow, I'm technically up about 10% of the purchase price just 18 months later.

Well, in Opendoor’s claimed business model, they did that through separately-disclosed fees that they charged, not the purchase price.