Opendoor & Offerpad; What's Their Angle?
Rental Property Investor · Chandler, AZ · Member since 2011 · 145 posts · 79 votes
Opendoor & Offerpad; What's Their Angle?
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Robert AdamsBusiness Member
Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votesThey are in Las Vegas and Henderson now as well. My experience with them on the buyer side is over worded contracts but pretty smooth transaction and listed slightly above recent comps which is typical for our market. On the sellers side..............I wouldn't recommend it.
Here is how it works:
Over the past 7 years the Vegas Valley has seen enormous growth in the housing market and home values. Many people have no idea what their home is worth. Some homeowners even rely on outdated autovaluations like Zillow's Zestimates for home values. Then opendoor or similar company gets in touch with a homewoner (because they are spend an insane amount of money on marketing to reach sellers that are not in tune with the market). FOR EXAMPLE: The homeowner maybe bought their home in 2011 for $200k for the sake of round numbers. Now lets fast forward to 2018 and the home is now worth $400k. The seller looks on websites like Zillow and sees there home is worth $380k. This seller is already underselling themselves by $20k, but wait it gets worse. Then opendoor comes along and says we think your home is worth $370k to $380k BUT we will buy it right now from you without you having to market the home or do any showings etc for $375k but we are going to charge you a fee up to 12% (in our example this would equate to $45,000). Then on top of that they charge a 7% Commission (that would equate to additional $26,250). Then opendoor would clean the home, maybe paint it, maybe put new carpet if you are lucky then resell your home for $400k in a week or two. Below I have compared 2 examples of selling traditionally with a Realtor at 6% commisions (which it may be less as it is negotiable) vs selling with opendoor or similar service.
Comparing Opendoor to a Traditional Sale with a Realtor
$400,000 Home via OpendoorHome Value: $400,000Sales Price: $375,000 Charge 12%: $45,000 Commissions 7%: $26,250 Total Costs via Opendoor: $71,250 Net Proceeds to Owner: $303,750 | $400,000 Home via a RealtorHome Value: $400,000Sales Price: $400,000 Traditional Closing Costs 3%: $12,000 Commissions 6%: $24,000 Total Costs via a Realtor: $36,000 Net Proceeds to Owner: $364,000 |
In this Example Selling with a Realtor will save you $60,250!!!
Most homeowners I know could use an extra $60,000+ in their pocket! It is my firm belief that homeowners do not know how drastically their bottomline is affected by selling with these unethical companies.
BEFORE YOU SELL WITH ANY COMPANY ASK THEM "HOW MUCH MONEY WILL I WALK AWAY WITH?"AND THEN COMPARE THAT TO A TRADITIONAL REALTOR SALE.
I confronted them on a public post of Opendoor on Facebook, you can see for yourself how it went below
(after my question about them charging 19% they stopped responding):
HERE IS THE ORIGINAL POST
The Adams Team at Rothwell Gornt Companies4.971 Reviews
154 Replies
https://businessden.com/2019/05/28/opendoors-first...
Here is the article from Denver. Interesting note is that they are moving into the mortgage business too.
- Real Estate Broker · Austin, TX · Member since 2012 · 1k+ posts · 1k+ votes7y
@Lesley Resnick I also think that their model is unsustainable. The moment that the market turns they will run out of gas and the investors in those companies will be holding the bag. That could spell massive opportunity.... In a sellers market those guys can be a player. In any other market I think its unsustainable but then again, I haven't taken the time to examine their SEC 10k reports. I have read that Zillow is losing money though.
- Member since 2019 · 2 posts · 0 votes7y
Here in Las Vegas I have been watching a few properties owned by opendoor. I am very confused about how opendoor is making money and will continue making money. If the properties I see sell at the list price, which they currently aren't, opendoor will be losing money, up to $20k on one deal. These properties have also been sitting empty for a long time, as long as 9 months on one. With assessment payments, taxes, utilities, etc., I imagine the carrying costs are high. One property has an assessment on it that is delinquent and it says that it is scheduled for foreclosure. What is going on here? Seems very unsustainable to me. Are they making enough in fees to be able to sell at a loss after carrying the property for long periods?
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes7y
Originally posted by @Matt M.:
https://businessden.com/2019/05/28/opendoors-first...
Here is the article from Denver. Interesting note is that they are moving into the mortgage business too.
That was a good read. the author was doing his homework. From the article:
"On average, Opendoor sold the homes for $7,844 more than the company paid for them — but, on 17 occasions, Opendoor has sold a home for less than its purchase price, the review found. That doesn’t necessarily mean Opendoor lost money on a particular deal, however, because it doesn’t account for the fee the company charges sellers when it buys their home. Opendoor itself said it isn’t trying to maximize the gain it sees when it sells.
“The goal’s not to make a lot of money in the resale of the home itself,” PJ O’Neil, Opendoor’s Denver general manager, told BusinessDen. “The fee is really where we make our money.”
As a data point, Opendoor Brokerage LLC organized in NC on 6/15/2017. The Principal Office address matches the property card address, so this is indeed part of the Opendoor operation.
- 7yRobert AdamsBusiness MemberReal Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
Originally posted by @Chris Martin:
Originally posted by @Matt M.:
https://businessden.com/2019/05/28/opendoors-first...
Here is the article from Denver. Interesting note is that they are moving into the mortgage business too.
That was a good read. the author was doing his homework. From the article:
"On average, Opendoor sold the homes for $7,844 more than the company paid for them — but, on 17 occasions, Opendoor has sold a home for less than its purchase price, the review found. That doesn’t necessarily mean Opendoor lost money on a particular deal, however, because it doesn’t account for the fee the company charges sellers when it buys their home. Opendoor itself said it isn’t trying to maximize the gain it sees when it sells.
“The goal’s not to make a lot of money in the resale of the home itself,” PJ O’Neil, Opendoor’s Denver general manager, told BusinessDen. “The fee is really where we make our money.”
As a data point, Opendoor Brokerage LLC organized in NC on 6/15/2017. The Principal Office address matches the property card address, so this is indeed part of the Opendoor operation.
Its not just about what they paid for the home and what they sold it for. Most of their profits come from the fee structure (which they purposely structure differently so the consumer is more confused when trying to compare it to a tradtional sale).
They make a margin off each of these steps:
1. Fair market price (is it really fair market if they use old comps or cherry pick low comps?) they supply the seller with a report of value that is biased for them THE BUYER and the seller accepts it as fact when in fact they should have a Realtor give them a second opinion on what the actual value is. (I have read on this thread that some was offered $45k over what a Realtor said the proeprty comped at. I find that VERY hard to believe as I have seen nothing but the opposite here in Vegas.)
2. They offer slightly less than what they claim to be a Fair Market Price (again making a margin here).
3. They make a margin on their fees that are up to 12% per their own website.
4. The renegotiate repair credits once the offer has been accepted. They may or may not make the repairs before reselling.
5. The markets they focus on tend to be highly appreciating markets, so they make a margin on the appreciation while holding the asset.
To take all the variable out of the equation and know the true cost of convenience do the following:
To make this debate as simple as possible compare 2 things:
1. Net proceeds to seller after selling to an ibuyer like open door, offer paid, or a dozen others.
2. Net proceeds to seller after selling traditionally with a knowledgable Realtor.
If you compare these to things you will see the true "cost of convenience" and can make an informed decision. If option ones gives the seller a check for 300k and option 2 gives the seller 340k the "cost of convenience" is 40k. Then the seller can choose if convenience is worth 40k or not.
ibuyers purposely make the process different than traditional selling so sellers think the "cost of convenience" is lower than it actually is. They do this by using a different fee structure, justifying "fair market offers" with low and old comps. Just cut to the chase and compare the 2 items above.
The Adams Team at Rothwell Gornt Companies4.971 Reviews - Member since 2019 · 2 posts · 0 votes7y
So for the one house Im looking at that is supposedly scheduled to foreclose due to an unpaid assessment. Opendoor bought for 404,000, so assuming 12% fee they made $48,400, and it is currently listed at $385,000. If they sell it at list price they could gain up to $29,400 on the deal. That's not factoring in the carrying costs, SID payment, taxes, etc. I'll be watching it to see if it actually goes through foreclosure.
Looking at it this way I can see how they make money, but I agree with the poster above, a slight downturn in the market and they are left holding the bag.
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes7y
@Robert Adams I'm not quite sure I understand your point. But, please, post details of Opendoor's Las Vegas sales.
I'm not a broker. I don't know who is on the list of the top selling brokers in the Raleigh-Cary MSA but my premise is 200-300 houses annually. My observations:
- Opendoor is just starting operations (within the last year) in the Raleigh area
- Opendoor, using my premise, already significantly exceeds on an annualized basis the traditional top selling broker's sales numbers.
- In a free market system, where sellers can choose the broker they want, people (sellers) will employ brokers that best match their needs.
- I don't know if the hundreds of sellers per quarter in the Raleigh area using Opendoor perform an analysis that you call true "cost of convenience"
- Opendoor has been in business over 5 years; not that it matters much but they have no BBB issues.
A conclusion; based on sales numbers, sellers are deciding to use Opendoor.
Disclosure: I have not used the Opendoor service and have no affiliation with the company.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Chris Martin:
@Robert Adams I'm not quite sure I understand your point. But, please, post details of Opendoor's Las Vegas sales.
I'm not a broker. I don't know who is on the list of the top selling brokers in the Raleigh-Cary MSA but my premise is 200-300 houses annually. My observations:
- Opendoor is just starting operations (within the last year) in the Raleigh area
- Opendoor, using my premise, already significantly exceeds on an annualized basis the traditional top selling broker's sales numbers.
- In a free market system, where sellers can choose the broker they want, people (sellers) will employ brokers that best match their needs.
- I don't know if the hundreds of sellers per quarter in the Raleigh area using Opendoor perform an analysis that you call true "cost of convenience"
- Opendoor has been in business over 5 years; not that it matters much but they have no BBB issues.
A conclusion; based on sales numbers, sellers are deciding to use Opendoor.
Disclosure: I have not used the Opendoor service and have no affiliation with the company.
fact is its pretty brilliant model on their part. And lots of competition for wholesalers I am sure along with brokers.
. I have run my Vegas home through the open door.. they offered what I paid for it 3 years ago and before I put 100k into full gut rehab.. if I took their price minus all their fee's I would have left a good 150k or more on the table.
my Lake Oswego home it was substantially more.. not sure what the I company was.. although I think they were really just fishing for listings. but this time the offer was just over 600k which is what I had listed it for when I built it 5 years ago.. and todays value is north of of a million.. so that offer if accepted would have cost me at least 400k LOL.. but really like I said I think it was more of a listing lead generation program.. as I got follow up calls from 3 brokers that wanted to list it.. kind of like where agents advertise on Zillow.
- 7yRobert AdamsBusiness MemberReal Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
In my opinion there is no doubt their model is currently getting them deals. It is hard to compare them to local brokers since they have SO much capital to advertise and gain the interest of uninformed homeowners. Then they buy and sell through their own brokerage, their own title company, and now their own mortgage company (these are also areas they make a margin I should have included in the post above). Most deals there is no agent on the sellers side so they do both sides of the transaction on the acquisition side. This model will continue to be successful as long as homeowners are uniformed on the true cost of convenience and as long as the market is appreciating.
@Chris Martin I have no issue with sellers picking the brokerage that fits their needs even if that is opendoor etc. The problem I have is that these owners think they know what they are leaving on the table but in reality it is MUCH worse than what they think. It is corporate greed and there is NO ONE looking out for the homeowner. They think Opendoor is being fair and upfront with them when in fact they don't have an agent representing their best interest nor do they know the true costs and in most cases they don't even know the actual value of their home, so they lose on both ends. I have talked to several people that thought the cost of convenience was $10k to $15k when in reality its $40k to $60k. I did a press release on this topic over a year ago.There are now classes being held no to teach agents how to inform these sellers on process so the seller can make an informed decision. In my opinion 10 years from now there will be articles written on how many BILLIONS of dollars were transferred from homeowners equity to massive corporations. I have also noticed that when they start out in a new market they have VERY thin margins and in some cases minor loses to get positive word of mouth started. Then as they gain popularity in the market and gain market share they increase their margins. Meanwhile the deals in the beginning continue to run around and tell other sellers how great it was.
In conclusion the ibuyers have not affected my business very much. Once I explain the process to the sellers and the true cost of convenience I still get the listings anyways. The ibuyers are easy to deal with on the sale side once they relist, and I would never sell any of my properties to them so I am not really affected. I am on this and others threads mainly to help educate the uniformed sellers out there that are looking for honest info.
Hope this helps.
The Adams Team at Rothwell Gornt Companies4.971 Reviews - 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Robert Adams:
In my opinion there is no doubt their model is currently getting them deals. It is hard to compare them to local brokers since they have SO much capital to advertise and gain the interest of uninformed homeowners. Then they buy and sell through their own brokerage, their own title company, and now their own mortgage company (these are also areas they make a margin I should have included in the post above). Most deals there is no agent on the sellers side so they do both sides of the transaction on the acquisition side. This model will continue to be successful as long as homeowners are uniformed on the true cost of convenience and as long as the market is appreciating.
@Chris Martin I have no issue with sellers picking the brokerage that fits their needs even if that is opendoor etc. The problem I have is that these owners think they know what they are leaving on the table but in reality it is MUCH worse than what they think. It is corporate greed and there is NO ONE looking out for the homeowner. They think Opendoor is being fair and upfront with them when in fact they don't have an agent representing their best interest nor do they know the true costs and in most cases they don't even know the actual value of their home, so they lose on both ends. I have talked to several people that thought the cost of convenience was $10k to $15k when in reality its $40k to $60k. I did a press release on this topic over a year ago.There are now classes being held no to teach agents how to inform these sellers on process so the seller can make an informed decision. In my opinion 10 years from now there will be articles written on how many BILLIONS of dollars were transferred from homeowners equity to massive corporations. I have also noticed that when they start out in a new market they have VERY thin margins and in some cases minor loses to get positive word of mouth started. Then as they gain popularity in the market and gain market share they increase their margins. Meanwhile the deals in the beginning continue to run around and tell other sellers how great it was.
In conclusion the ibuyers have not affected my business very much. Once I explain the process to the sellers and the true cost of convenience I still get the listings anyways. The ibuyers are easy to deal with on the sale side once they relist, and I would never sell any of my properties to them so I am not really affected. I am on this and others threads mainly to help educate the uniformed sellers out there that are looking for honest info.
Hope this helps.
at least for the public unlike most wholesalers ( not all but most) the seller is not getting lied too blatantly.. and this company can close etc . they are just trying to make the best deal possible.. I think the risk they have though and I know they are licensed I checked.. if they are using old and out dated data to justify their values.. then I think some sellers if they wanted to come back on them could claim some sort of misrepresentation or fraud in the inducement.. along with unconscionable profits claim.. I mean you don't need to be licensed to get sued for those violations.. its such a fine line when your a distressed asset buyer.. but I think we can agree these are not distressed seller deals or a lot of them are not.. just like my townhouse in Summerlin.. I am in the trails you can buy anything there for what they offered .. So there was no way that was a true valuation.. its what they wanted to pay to maximize their profit.. I get it if your doing major rehab.. and taking on that risk. but buying 15 year old fluff an buff Vegas homes and telling the sellers they worth 100k less than true market value I suspect a lawyer may line up to take on a few of those cases.. :)
- 7yRobert AdamsBusiness MemberReal Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
@Jay in order for them to sue...or in order for complaints to be filed w BBB (as someone else mentioned) the sellers would have to at some point become aware of misrepresentation. Most will never become aware and those that do will often not say anything because of the embarrassment they feel for telling their friend how awesome it was only to find out they took a huge loss they were unaware of. Most people will not go back and do that research after the sale is finalized. They have already moved on to the next home etc. I think you are a much more savvy seller than most. I'm glad you get it.
The Adams Team at Rothwell Gornt Companies4.971 Reviews - 7yRobert AdamsBusiness MemberReal Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
I would also add that you will probably see cases like that in the future. If the seller is not represented by an agent and the buyer/Opendoor is the agent for the buyer/Opendoor then they have a fiduciary duty to both sides to treat them fair. I don't think this is currently happening so I could see potential issues for them in the future.
The Adams Team at Rothwell Gornt Companies4.971 Reviews - Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes7y
Interesting. I guess you have all the data to back up the claims, the press releases, all the uninformed and misinformed sellers who have been cheated by the Opendoor brokers? I'm not a broker so I can't see closing statements like HUD-1 statements that would have the information that you are talking about.
I also find it interesting that you think this institutional flip company is making too much money. Most of the people on this thread seem to think opendoor can't make enough to survive.
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes7y
Originally posted by @Dovid Staples:
Originally posted by @Pat Kalamatas:
Offerpad is not in my market (Chicago).
Based on the what I’m seeing in this thread and other research I’ve done on the company, the major benefits are:
-quick and flexible closing
-knowing your bottom line quicker in the process
-less headaches with no showings, long escrow etc
OP is obviously going to buy your home below market value in order to flip it for a profit even if it’s small. You have to know that. You also have their flat fee of 6-12% whatever that number is. They might also drill you on the inspection.
If you want ease, it’ll come at a price, that’s the bottom line. You can’t have it both ways.
This is nothing different than what wholesalers and flippers have been doing for years, it’s just marketing and branding, and they have a ton of money behind them. They’re able to get to sellers early and sell them on the ease of the process. Before a realtor can sit with them and educate them.
In my market, sellers are fighting tooth and nail for equity in their home. OP is a costly program (selling below market + fees)....in my opinion and if you want quick and easy and you’re willing to pay tens of thousands for it, then help yourself.
But if you’re a home seller, you should still talk to a few realtors and get a market analysis, then compare.
In my local market, I know sellers are not willing to give up tens of thousands of dollars in equity just for a quick sale. Especially when we are in a sellers market and they can maximize their value by putting the home on the market. Yes, it'll take some work and money to get it ready but nothing comes easy. A good realtor will help sellers maximize ROI on small projects that get homes ready to sell. That's where the value is in a good realtor.
If you want to maximize your bottom line, hire a traditional agent. If you want quick & easy and you’re willing to give up equity - try out OP.
ANOTHER ONE?!?!
The one post wonders will be back, no doubt.
I don't think most posters of <5 posts have a clue about the company, the real estate industry, or that OD is a licensed brokerage. If using a "traditional broker" is so great, why is OD still in business? Because "traditional brokerage" is BROKEN. Part of convenience for a seller is getting OUT. Factor in the seller's holding costs as @Colleen F. pointed out, and it's clear that OD offers something of value at an acceptable cost. Sellers to OD are not the ignorant, dumb, misinformed, confused nitwits that some brokers on this topic believe.
AH4R had it's startup problems too, but they are still in business and have become the largest landlord in my area. That started 6-7 years ago. I see OD as no different from a market disruptor perspective. The low volume 'wholesalers' and brokers will see and feel the competition and (hopefully) will transition to new careers. Over time, OD (like AH4R was for rentals) will become more efficient and make the selling process more efficient and palatable for sellers.
Brokers adapted when Zillow came along 10+ years ago, and the good brokers will adapt with OD too. Natural progression.
Carry on....
- Contractor · Magnolia, TX · Member since 2016 · 279 posts · 155 votes7y
@Robert Adams There's a lot of fail in your posts on this subject. You and @Casey Powers could start a traveling "Opendoor Misinformation" roadshow.
Again, for the record, I'm an employee of Opendoor and I will happily answer any questions I am able to. Frankly I hope there aren't too many folks on here falling for the FUD being pumped out by real estate "pros" with ulterior motives.
Also for the record, I want to reiterate the process for selling a home to Opendoor: Request initial offer > Accept/deny offer > Home assessment > Revised offer (typically with repair credit ask) > Accept/negotiate/deny revised offer > Closing.
Negative comments typically come from two camps: realtors, and sellers who have had a negative experience. Of the latter, they can be further broken down into two groups: those with an unrealistic idea of their home's value, and those who didn't understand the process (namely that we're coming out to verify the information they provided).
Regarding values: OD goes to a lot of trouble to research and value properties accurately. It's not foolproof; it doesn't work every time with 100% accuracy. But for someone to say, "They offered $295k and I know for a fact my home is worth $325k," is just hogwash. There is no way to know for sure, and realtors know it can't be verified, it can't be proven, and by the time their clients realize it, they're already locked into a six-month listing agreement. At that point, the realtor simply shrugs and says, "Well, the market dipped." (Opendoor, by the way, tracks properties where the seller declined to sell to us after requesting an offer. When that home eventually sells, we compare the sales price to our offer. If the delta is above a certain threshold, we'll go back and adjust the AVM for that area so it doesn't happen again.)
The reality is, Opendoor provides a side-by-side comparison of the numbers involved in selling to us vs. selling traditionally. It's much easier to understand than a HUD statement. There's zero obligation to request an offer and see this comparison. Realtors don't mention this because it shows that even with fees that are "higher than a realtor's 6% commission," the end costs are about the same either way. Don't believe me? Try it and see.
Got questions? Reach out and I'll do my best to answer them (until OD marketing/legal shuts me down, anyway). (On that note, these are my opinions, not those of Opendoor. Any mistakes are mine and mine alone.)
- 7yRobert AdamsBusiness MemberReal Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
@Andrew Taylor the side by side comparison is a joke and just as biased as the comps used for their offers. Huge surprise an opendoor employee would come on here and bash people that aren't raging fans of opendoor.
To be clear I have no problem with sellers selling for a discount to a wholeseller or opendoor or any other ibuyer. I do have problem with them taking advantage of homeowners and not giving an accurate perception of what they are leaving on the table. The comps that I have seen from opendoor do not justify true market value and the service fees exceed traditional commissions. There is no need to go round and round saying the same thing. The bottomline is sellers should get the net proceeds to seller from ibuyers and net proceeds from traditional selling and then make an informed decision. If they are strictly relying on the buyers info they have no idea what they are leaving on the table.
@Chris most people that think they are not making money are looking at the purchase price and the final sale price. Opendoor is making money on all the different factors I mentioned above. To make it simple take all of those factors out of the equation and get the estimated net proceeds (ibuyer vs traditional) and see the difference.
It is not the popluar stance I am taking but no one is trying to inform the public so at least if they google it and read it here maybe they will dig a little deeper and make an informed decision. If they are informed and choose an ibuyer then more power to them.
The Adams Team at Rothwell Gornt Companies4.971 Reviews - 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Robert Adams:
I would also add that you will probably see cases like that in the future. If the seller is not represented by an agent and the buyer/Opendoor is the agent for the buyer/Opendoor then they have a fiduciary duty to both sides to treat them fair. I don't think this is currently happening so I could see potential issues for them in the future.
its called unconscionable profits realtors can get tagged with this ) open door is a licensed broker) I pretty sure all the I buyers are they have to be.. they cant be like the legion of unlicensed wholesalers who's whole business model is illegal to begin with.
be that as it may license or not anyone can get tagged for unconscionable profits.. this is most likely to happen when some one elderly gets duped .. the son or daughter who stood to inherit is an attorney and there ya go.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Andrew Taylor:
@Robert Adams There's a lot of fail in your posts on this subject. You and @Casey Powers could start a traveling "Opendoor Misinformation" roadshow.
Again, for the record, I'm an employee of Opendoor and I will happily answer any questions I am able to. Frankly I hope there aren't too many folks on here falling for the FUD being pumped out by real estate "pros" with ulterior motives.
Also for the record, I want to reiterate the process for selling a home to Opendoor: Request initial offer > Accept/deny offer > Home assessment > Revised offer (typically with repair credit ask) > Accept/negotiate/deny revised offer > Closing.
Negative comments typically come from two camps: realtors, and sellers who have had a negative experience. Of the latter, they can be further broken down into two groups: those with an unrealistic idea of their home's value, and those who didn't understand the process (namely that we're coming out to verify the information they provided).
Regarding values: OD goes to a lot of trouble to research and value properties accurately. It's not foolproof; it doesn't work every time with 100% accuracy. But for someone to say, "They offered $295k and I know for a fact my home is worth $325k," is just hogwash. There is no way to know for sure, and realtors know it can't be verified, it can't be proven, and by the time their clients realize it, they're already locked into a six-month listing agreement. At that point, the realtor simply shrugs and says, "Well, the market dipped." (Opendoor, by the way, tracks properties where the seller declined to sell to us after requesting an offer. When that home eventually sells, we compare the sales price to our offer. If the delta is above a certain threshold, we'll go back and adjust the AVM for that area so it doesn't happen again.)
The reality is, Opendoor provides a side-by-side comparison of the numbers involved in selling to us vs. selling traditionally. It's much easier to understand than a HUD statement. There's zero obligation to request an offer and see this comparison. Realtors don't mention this because it shows that even with fees that are "higher than a realtor's 6% commission," the end costs are about the same either way. Don't believe me? Try it and see.
Got questions? Reach out and I'll do my best to answer them (until OD marketing/legal shuts me down, anyway). (On that note, these are my opinions, not those of Opendoor. Any mistakes are mine and mine alone.)
when I ran my Vegas property through the system it was an automated offer.. and just came in at what I paid for it 3 years earlier exactly what I paid for it.. so I suspect they are getting some killer deals some probably not so great etc etc.. its a brilliant business model frankly that can only be done with monster financial backing.. sure beats the likes of Networth or that other wholesale outfit in Texas
my day job is funding bottom feeders so I get the low ball offer concept.. And having owned 4 brokerages over the years I also get the concept In a very tight listing market of buying your own listings..
keep in mind Many flippers in America make less than the real estate agents commissions on the flips.. they just don't know it until it happens so if Open door or whatever gets some delta plus the fee's it I bet will be pretty successful. I personally would never sell to them at least my personal properties but if they are in a market we are working flips before I do the rehab I might just see what they will pay.
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes7y
@Robert Adams you need to consider time frame in your calculations. People close in a few weeks. That's just not the case with traditional brokers.
I have looked at hundreds of public sales records in Wake county and don't see that OD is ripping people off. Believe me, if they were, I'd be posting it here. I can tell you that we did a sale 8/30/2018 and OD bought in the same development recently. The numbers are below.
What I'd like to see is for you to post an analysis of all sales records of all transactions by OD in Las Vegas. With complete sales numbers, you would have statistical information to go by rather than speculation. You are a broker and can find this information with an MLS search. You are going to have to do this anyway when you take OD to court or file a complaint against OD with your state's real estate commission.
If you are calling me a "raging fan of OD" then you are mistaken. I am not a broker and have never used Opendoor. I do recognize that they have become the largest broker in Raleigh, by far, in very short order. That's the only reason I post. I've said it before, there is something significant going on or they wouldn't be where they are.
Show some proof of agent misrepresentation by OD or that the cost of convenience is what you say. You have access to information, as a broker, that I don't have. Again, the court (or RE commission) is going to ask for it anyway, so do your homework. As a disinterested party, with no dog in the fight, I want to see the facts.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Chris Martin:
@Robert Adams you need to consider time frame in your calculations. People close in a few weeks. That's just not the case with traditional brokers.
I have looked at hundreds of public sales records in Wake county and don't see that OD is ripping people off. Believe me, if they were, I'd be posting it here. I can tell you that we did a sale 8/30/2018 and OD bought in the same development recently. The numbers are below.
What I'd like to see is for you to post an analysis of all sales records of all transactions by OD in Las Vegas. With complete sales numbers, you would have statistical information to go by rather than speculation. You are a broker and can find this information with an MLS search. You are going to have to do this anyway when you take OD to court or file a complaint against OD with your state's real estate commission.
If you are calling me a "raging fan of OD" then you are mistaken. I am not a broker and have never used Opendoor. I do recognize that they have become the largest broker in Raleigh, by far, in very short order. That's the only reason I post. I've said it before, there is something significant going on or they wouldn't be where they are.
Show some proof of agent misrepresentation by OD or that the cost of convenience is what you say. You have access to information, as a broker, that I don't have. Again, the court (or RE commission) is going to ask for it anyway, so do your homework. As a disinterested party, with no dog in the fight, I want to see the facts.
chris when they buy off market I am not sure they take a traditional listing put it on MLS then show it as sold .. some folks do that to create their own comps.. I see this in the turnkey space.. so I suspect you would have to pull it from tax records or assessors office at least on the buy.. if they then list them those would show up in MLS.. also don't know all the entities they may buy in.. you know what I mean fund # 1 fund # 2 or a bunch of different LLC's depending on where capital comes from..
Sounds like in your market their main goal is to buy listings ???
- 7yRobert AdamsBusiness MemberReal Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
@Chris I was not referring to you regarding the "raging fan" comment. I also have no idea what they are doing in your market as I am not involved there. If they are new there then the margins are probably thinner than existing markets as they tend to give better offers when first emerging into a new market. I would like to mention that you are comparing the sales prices like most do. You would need to compare the bottomline numbers to the seller of each after "service fees" and all the other factors already mentioned. I come across sellers with ibuyer offers often so next time I get a current one I will provide a side by side comparison.
Here is some more info from other Vegas brokers (not from me or affiliated with me):
The Adams Team at Rothwell Gornt Companies4.971 Reviews - Contractor · Magnolia, TX · Member since 2016 · 279 posts · 155 votes7y
@Robert Adams You say, "The bottomline is sellers should get the net proceeds to seller from ibuyers and net proceeds from traditional selling and then make an informed decision." As I have said - multiple times now - this information is included in the offer summary sellers receive when they request an offer. You can claim all you want to that it's ginned up, but that sounds suspiciously like a straw man argument from a broker who doesn't like the way the numbers look.
Of course, the flip side of that numbers comparison is that you can't guarantee that you'll sell the same property for what the comparison estimates it'll sell at, can you? You'd like to think you can - and more importantly, you'd like potential clients to think you can - but in reality you may not be able to get that price. What if the market takes a dive shortly after listing? More tariffs are announced? Large local employer shutters its doors? School district suddenly gets downgraded? Starbucks closes? Maybe it's just an uglier house than its neighbors.
Opendoor is making a bonafide offer with that comparison. If the seller's property is as-stated and doesn't require repairs (admittedly, this is rare, but there's already been one poster on this thread who had it happen to them, so it's possible), then that seller can have cash in-hand in two weeks. Period.
People will pay for this convenience. That's the proposition here. It's not for everyone; there are some sellers who, either because of circumstances or personality, must have every last dollar they can get for their property no matter how long it takes. Opendoor is not for them.
Opendoor is for the guy who just got divorced or transferred. It's for the family whose child is getting bullied at school. It's for families with young children and pets who can't reasonably be expected to prepare and maintain a home for showings for months. And, lots and lots of times, it's for people who just don't want to mess with any of it.
- Contractor · Magnolia, TX · Member since 2016 · 279 posts · 155 votes7y
Oh - and I'm sorry you feel bad about being "bashed for not being a raging fan of Opendoor." That's rich, based on your string of posts in this thread. Pot calling the kettle black, as it were.
I have no problem with your not being a fan. What I have a problem with is your making up imaginary information to support your position. Post some facts and we can have an intelligent discussion about it.
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes7y
@Jay Hinrichs Everything I post comes from recorded data, none of it from MLS data because I'm not a broker and not a realtor. I have analyzed all of the OD recorder of deeds transfers and all of the county property cards. Buying listings? Not sure what that means. They (OD) are buying properties, lots of them, and they are selling properties... also lots of them. See my synopsis at BP topic Opendoor (Wake county) facts and figures... sorry, can't help it which is just basic details on OD buying patterns that any broker can find if they try. I've done the same with AH4R in the past. Same source, from public records, not MLS.
@Robert Adams I've said two or three times or more, I don't have access to "service fees" because I don't see other people's HUD-1's like you do. How many of other people's HUD-1s have you analyzed? You make statements as fact, which implies you've seen a lot of HUD-1s. Isn't that confidential to other sellers? How can you get access to other people's confidential data to make your consistent claims? Broker privilege I guess.
I'll wait for you to file your claims against OD with your real estate commission before spending a lot of energy listening to other broker claims. I know the REC will dig for facts rather than perception. I assume what you say is true, although haven't seen BBB claims (0 to date) or REC filings (0 to date) in the past 4 years of OD existence so I see it as up to you to protect people in NV from losing (as you say) Billions from fraud.
It will be a while, but when I read through your state's REC (real estate commission) findings I will be able to tell from their interviews and analysis that they are thorough.
It's been interesting posting on this topic, but at this point I think I know the answer to OP's question. At least in my market. In Las Vegas, I'll wait for the court filings and REC complaints. I get it, that brokers don't like Opendoor and their business practices.
I'm not planning on posting again here.
- Real Estate Agent · Henderson, NV · Member since 2011 · 1k+ posts · 550 votes7y
@Chris Martin A couple months ago I was competing for a listing against one of the big iBuyers. The seller was kind enough to provide the offer that the iBuyer made. It included a mock comparison of what their offer looked like versus what the seller could expect from selling traditionally via an agent on the open market. Besides the deflated price that they said a traditional sale would garner, the iBuyer also told the seller that she would have to pay for the buyer's closing costs ($7k on a sub 300k deal). In that market it is not common for sellers to pay for buyer closing costs. So, Robert's suggestion that sellers get opinions outside of the offer they may receive from an iBuyer is sound advice and not merely hate words.
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