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 Some homeowners even rely on outdated autovaluations like Zillow's Zestimates for home values.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
- Las Vegas, NV · Member since 2018 · 405 posts · 474 votes7y
Originally posted by @Chris Martin:
Originally posted by @Casey Powers:
@Jay Hinrichs Except pretending to offer market price then cutting the price once in contract is NOT what every wholesaler does. Wholesalers typically offer the price they want to pay and then record the actual price paid, do they not? Instead of offering one price and then reducing it by a huge amount once the seller signs a contract, AND recording the much higher "offer price" and not the actual sold price.
@Dustin P. Yes, you can offer market price to an MLS seller then ask for a $30k repair credit - you're just not likely to get that because the MLS seller typically has an agent who will advise them not to take such a ****** deal and help them negotiate something more fair. Compare that to ibuyers who **require** the unrepresented seller accept the huge repair credit or walk away and start over trying to sell their house elsewhere. The ibuyer method isn't exactly a level negotiation, is it?
Sure this is not technically illegal. That doesn't make it right or fair. Kinda like all those ****** loans that were being sold to a largely confused public weren't illegal, but most folks would argue it wasn't exactly right or fair either. Slavery wasn't illegal for a long time - that didn't make it right or fair. Legality isn't the determinant of fairness. The general public isn't nearly as educated as we all like to think. There is so much data going around, and most people simply don't understand it all, and data is often manipulated to paint a certain picture or to create confusion.t.
According to you, Casey, closing attorneys and brokers conspire in violation of Nevada Revised Statutes (NRS) by (your words) "recording the much higher "offer price" and not the actual sold price." These acts violate NRS 375.020 by adjusting "amount of tax must be computed on the basis of the value of the transferred real property..." And NRS 375.110 says "Any person who willfully falsely declares the value of transferred real property or land sale installment contract pursuant to NRS 375.060 is guilty of a misdemeanor and shall pay the amount of any additional tax required on account of the falsification." You claim the OD brokers are involved in a criminal activity.
These are serious allegations you state.
Here is the form for you to fill out to report the misconduct.Opendoor is a brokerage and there are mostly brokers posting about alleged OD misconduct on this topic. I am not licensed, not a broker, but am an investor and financial interest holder. But, yes, I have seen this type activity before through court actions brought against closing attorneys I have used but not in cases where I was involved. Casey you state OD is "recording the much higher "offer price" and not the actual sold price." Why this is important is, as an industry, we've seen this in cases like NCBAR 10 DHC 17.
I'm not suggesting there is similar activity, but Casey posted attorneys are "recording the much higher "offer price" and not the actual sold price." Red flags are flying.
Once again, I am not saying they’re doing something illegal. I even specifically said IMO it’s not technically illegal. And obviously this is my non-attorney opinion. As far as I know, there is nothing technically illegal about offering a price, then taking a large repair credit, and then recording the (much higher) offer price on the transaction.
Normal buyers and sellers include credits to the buyer in a transaction ALL THE TIME. It’s perfectly legal. The difference with the ibuyers is they are apparently taking very large credits, according to one of their very own agents and according to reports from people who have dealt with them.
To me, this looks like a legal loophole to manipulate the market in their target neighborhoods. Not illegal. Again, legality is not the same as right or fair. Please read what I am saying instead of putting words in my mouth. I AM NOT ACCUSING THEM OF DOING ANYTHING ILLEGAL.
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes7y
@Casey Powers I quoted your words in my post. I also looked up NV rules/laws and posted them.
I am not an attorney and don't invest (and probably never will at my age) in NV. However, OD is active where I live and invest. So I am very interested if they are cheating as your post suggests and if their attorneys are "fixing" recorded documents as your post states. I've seen no evidence where I am to suggest any irregularities, but I'm not licensed and can't see documents other than what's recorded in county records. I don't know if people are make false or misleading statements about other real estate professionals, specifically Opendoor brokers and their business practices. Hopefully regulators and your NV NAR group will figure it out. Per posts on this topic, the public is "being ripped off" by OD brokers and OD closing attorneys are performing market manipulation through recorded documents not reflecting sales. The NV regulators can get to the bottom of it.
- Real Estate Consultant · Texas Hill Country · Member since 2017 · 56 posts · 58 votes6y
Originally posted by @Erez Jonathan:
"There is a room for everybody and every business model in real estate."
This is one of the best comments in this thread. But the sentence needs to be continued with "...for those willing to work harder than most others, and who think creatively".
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