Opendoor is a startup that descended upon Arizona sometime in 2015 where three young men from the San Fran area secured an insane amount money from investors. The Opendoor sales pitch is “Sell your home to Opendoor so you can skip the hassle of listing, showings, and months of uncertainty.” This gives Sellers the option to cut and run if they need to or want to and the purchase prices don’t seem to be the crazy lowball numbers we are used to seeing from investors (20-25% below market value) but they are still 5-10% below market value not including the outrageous fees.
But in most situations, in my opinion, Opendoor does the home seller a disservice, and that seller would put much more in their pocket if he or she took the traditional route. Sellers paid, according to Opendoor, 10 to 12 percent in fees! Also, sellers pay for all repairs that are found during inspections, (repairs, if not warranted, are negotiable in traditional sales; plus sellers must pay whatever Opendoor charges for needed repair). According to Opendoor’s inspection brochure, the company offers two other options: sellers can tackle the fix themselves or “say goodbye.”
In addition to the fees, Sellers split their closing costs with Opendoor (so no savings here); sellers are clearly giving up significant equity in exchange for convenience. On a $300,000 house, giving up 5 percent to 10 percent of market value — plus paying 12 percent commission or fees and making all repairs needed — can add up to a very pretty penny. The market value hit is worth $20,000, and the higher commission or fees is worth at least $18,000 — plus the repairs; that’s $40,000 less in their pocket by going with Opendoor versus hiring a real estate agent and selling the traditional way.
Opendoor also reserves the right to renegotiate after the inspection period if it decides that something they discover will affect the resale value. This might just be a bad color option for the countertops, so that $5,000 hit is added to fees, but the property still shows as selling for 96 percent of market value. (This is how Opendoor makes money but appears to buy close to market value.)
Check Out The Recent Yelp Reviews From Local Sellers Below
“Put our house on the market in Mckinney TX, which is a huge market right now. Decided to check out open door before we signed anything w a realtor. Offer was about 20k below what we could get. Declined the offer. I am sure the company is growing but by the time that they took to reply with an offer and after seeing they take 10% (4% more than your realtor and buyers commission), glad we decided to go with the Realtor!”
“I got an offer on my house in Frisco, TX for 203k. I knew that was too low. Ended up selling my house with a Realtor for 25k more, plus I saved an additional $10,000 on commission!!! They take advantage of the money you make on your investment! Do not fall for this!”
“I asked Opendoor for a more realistic offer since they low balled me on the first one and after leaving a Yelp review they said to let them know if I want another offer. They went up 5k and it was quick, like less than 24 hours as opposed to the first time they gave me an offer. Hmm? Moral of the story, if you don’t care about them taking so much more of a % and don’t want to deal with showing your house, and don’t mind losing money- Opendoor can help you. Otherwise, just use a Realtor.”
“Watch out – it’s a bait and switch. They offered me a price and I accepted – then a few days before closing (almost a month later) they came back and said they made a mistake on my appraisal and had to drop the price almost $40k. Pretty shady stuff. Seller beware.”
“We reached out to Opendoor to sell our home, because it was supposed to be no-hassle for a fair price. That was not our experience. Opendoor never spoke with us prior to making us an offer. The offer was $13,000 less than what our home just appraised for. Worse than that were the $10,000+ in fees plus undetermined repair costs. When we tried to negotiate with them, we were told that maybe they weren’t the right company for us. I guess they were right!”
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