Real Estate
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Opendoor

7,295 Views | 31 Replies | Last: 4 yr ago by mazag08
CypressAg09
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AG
Does anyone have any experience with this company? Wanted to put in an offer on a house they own, but they said they won't consider any contingency offers. We would either have to sell our current house first or sell our house to them.
aggie appraiser
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I've seen quite a few of their houses. You'd probably be better off finding a good price on a home and putting in new carpet and fresh paint.
Diggity
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AG
They're in the business of getting those homes off the books ASAP, so I I'm not suprised they wouldn't take a contingency.
plowboy1065
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S
We have a copy of their purchase contract and the fine print details is where they really get you on purchasing your home. Much better off listing with a realtor
CypressAg09
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AG
plowboy1065 said:

We have a copy of their purchase contract and the fine print details is where they really get you on purchasing your home. Much better off listing with a realtor
I saw some reviews where they nickel and dime you with repair costs when they purchase your home, what kind of issues are there when buying a home from them if you dont mind me asking?
HomeFinderCody
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AG
I've seen them buy homes where the deal was okay for the Seller.....once or twice.

I've seen offers they've made that were crazy low even before the fine print....dozens of times.

The fine print is basically a huge credit Seller will need to give them at closing.

As for homes they have for sale --- most that I have seen don't show very well and I've never had a buyer that wanted to make an offer on one.
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Diggity
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AG
I'm amazed at how much capital is flying towards these guys.

The idea that they're going to disrupt real estate and the "6% commission model" by charging 7-12% to the seller and low balling them is crazy to me.

I feel like their whole business plan is to exploit ignorant/desperate sellers.
Know1
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AG
Diggity said:

I'm amazed at how much capital is flying towards these guys.

The idea that they're going to disrupt real estate and the "6% commission model" by charging 7-12% to the seller and low balling them is crazy to me.

I feel like their whole business plan is to exploit ignorant/desperate sellers.
Yep...that's their bread and butter right there. It looks to me like they are going to end up with a huge amount of junk inventory. As an outsider (of their company model) looking in I'm not sure how it's sustainable.
p_bubel
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Quote:

I feel like their whole business plan is to exploit ignorant/desperate sellers.
It seems like they go after properties that need paint and a light touch up and then do the cheapest, ****tiest, job possible.

I did a purchase last week where there was two different colors of carpet upstairs. One color for the hall and 1 bedroom and 1 color for the adjoining 2 bedrooms. (It wasn't a large house) Just real low level junk in a somewhat decent newer neighborhood. Zero effort, zero ****s given.
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Diggity
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AG
I saw an investment offering for the Houston office so I don't think it's a franchise model.
plowboy1065
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S
CypressAg09 said:

plowboy1065 said:

We have a copy of their purchase contract and the fine print details is where they really get you on purchasing your home. Much better off listing with a realtor
I saw some reviews where they nickel and dime you with repair costs when they purchase your home, what kind of issues are there when buying a home from them if you dont mind me asking?

You and diggity hit the nail on the head. As far as purchasing a home from them I haven't seen or heard of anyone dealing with them on the buy side yet
Absolute
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AG
I have inspected a couple and they were really bad and they would not negotiate ate all with the buyer on repairs.

Interesting to me that they make a big deal about inspecting them pre-purchase and charging the seller for repairs, but apparently don't do the repairs and don't disclose anything.

Law of averages says some of them have to be decent, but in my sampling I have not seen it. Agree they are taking advantage of desperate or ignorant sellers.
evestor1
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Only one in my area right now. It sat empty for 6 months w a inflated list price. On 6 months and 5 days it had an opendoor sign on it.

Since then, lights are on 24/7 and I haven't seen anyone inside of it yet. We've been watching pretty closely.
one MEEN Ag
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AG
All the homes I've seen that had an opendoor style listing were absolute junk. Usually they were homes with good curb appeal, in relatively nice neighborhoods, with the absolutely crappiest interiors/updates. I think the average person who is selling to those services can't stomach the cost of updating the home to sell and weren't willing to drop the price of the home either. House sits, and they finally sell to this middle man who flashes a good sticker price and nails them in the fine print with the updates.

I don't know how this company makes money long term. Their inventory will continue to grow with junk assets. Saw a house that had an interior paint color that could only be described as 'insane asylum peach/pink.' Whole house. The middle men had updated the stove and put granite on only the island, not the rest of the kitchen.

I believe its still for sale.
valtosca
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AG
"As for homes they have for sale --- most that I have seen don't show very well and I've never had a buyer that wanted to make an offer on one." - Home Finder Cody

This describes exactly how it's gone for me in San Antonio. I have been unimpressed and so have all my clients.
TresPuertas
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AG
I run across a lot as an appraiser and can echo what a lot of people here are saying.

Their repairs and updates they do post purchasing always appears to be done with the cheapest materials possible and with whatever they have lying around in their warehouse.

They don't seem to be a very good deal on each side of the transaction.
Jay@AgsReward.com
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AG
The value proposition for the seller is convenience, not having to make a contingent offer on next house, guarantee the their buyers financing goes through etc. So, all attractive from a sellers point of view. But, wow, the cost! A bridge loan is MUCH cheaper and provides all the same upside as Opendoor from a seller point of view.
evestor1
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Just got my first open door offer through mail.

110,000 116,000

The property is 1.5 acres of waterfront valued in the 400s. I am fine with real estate weasels...but I hate these mailers that use improvement value from an appraisal district rather than an actual low ball estimate from a real person.
Diggity
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AG
I feel like most of these aren't "misconceptions"


Quote:

Unlike a buy-low, sell-high investment strategy that relies on price appreciation, our business model is fee-based. We charge a service fee similar to the realtor commissions in a traditional sale. The service we provide is the certainty of a competitive offer and the ability to move on your own timeline; we're also dramatically simplifying the process for a better customer experience overall.
so they don't plan on selling the property for more than they paid? Otherwise, it's definitely "buy-low, sell-high"

Quote:

Misconception 5: Opendoor charges hidden fees and is more expensive than a traditional sale.

When you sell your home to Opendoor, you pay a service charge. When comparing our service charge to the costs you'd pay in a traditional sale, it's natural to anchor on the 5 to 6% people typically pay in realtor commissions.
The truth is that selling your home on the market actually costs more than thisit can add up to about 10% of the sale price. There are additional costs that come into play later like seller concessions, staging costs, closing costs, and housing overlap costs. It's also important to keep in mind that 37% of homes listed on the market for 3-4 weeks drop their asking price.
so let's clear up this misconception about our service by offering a misconception about the traditional sales process. Seller concessions are market driven and I promise OpenDoor keeps them in mind when calculating their offers (as do appraisers). You will still have nearly the same closing costs with OpenDoor as you would with traditional real estate. They just call their 7% charge a "fee" rather than a "commission".

The stat about % of homes dropping their asking price in the first month is also market driven and fairly meaningless. If a home is listed too high, then the owner have to drop the price. If the market softens, they'll have to drop the price. OpenDoor is going to carefully consider all of these local market factors in their offers.

They go on to admit they have substantial carrying risk. For that very reason, they are going to have to offer less than the open market. It's simple economics. They're offering 3% to buyers agents, leaving around 4% to cover all their overhead. In Houston, their listing are averaging listing has been sitting for two months so they aren't pricing the properties aggressively.

Most common misconceptions about Opendoor
Absolute
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AG
If you want a good laugh get a quote from them on your house.
AggieFrog
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AG
Absolute said:

If you want a good laugh get a quote from them on your house.

Just did with my house (about to put it on the market as we're having a new house built). The offer wasn't bad and we could have up to 9 months to close to match our new build but the 7.5% fee is excessive. If it were about 4-5% I'd definitely take them up (a few thousand less in sales price to avoid having to show the house (we have 3 kids and a dog) is worth it IMO.

I'm not sure OpenDoor makes it long term (we have several houses being sold by them in our neighborhood which is still being built out) but I have to think services like this will squeeze real estate agents eventually just as they've done in the mortgage business.
clw04
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Jay@AgsReward.com said:

The value proposition for the seller is convenience, not having to make a contingent offer on next house, guarantee the their buyers financing goes through etc. So, all attractive from a sellers point of view. But, wow, the cost! A bridge loan is MUCH cheaper and provides all the same upside as Opendoor from a seller point of view.
I can Echo this. I actually sold to Opendoor in the Phoenix metro area December of 2017. We approached Opendoor Dec 3 and closed on Dec 26th. This allowed us to move to Houston and get a house there in one month due to having a guaranteed sale of the house and the money available for purchase the first of the year.

We sold for 272100. They sold it 2 months later for 288000. We gave them 16k and 1k for repairs and had a guaranteed close date.

I could have made more money on the sell, but would have had risk.

AggieFrog
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AG
Was 272 their offer before fees? Just curious because we were offered $263k minus almost 19K in fees. Were you able to negotiate with them, because I'd do it for those terms and give up the extra $5k or so I might get by showing.
clw04
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AG
It was 272 before fees. Fees were 16K and they dinged us for 1K in stupid repairs.

I had 1 dog, 2 cats, a 6 year old autistic son, and a 6 month old baby. There was a significant cost assessment for showing the house much less uncertainty on potential sale date.
Absolute
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AG
On the house I sold last fall they were 50k below what we sold it for in a month on their offer. Their fees and such were higher. Never got to the Inspection point. I have heard they ask for money for old things (BUT can pretty certainly say from the ones of theirs I have inspected,} that they don't actually replace older things.

I understand the convenience factor. Listing was a major pia. But when I looked it still did joy make sense. If it does for you, by all means go for it.
AggieFrog
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AG
Update - went with an agent, which turned out to be a mistake. House has had no offers after 6+ weeks including a price reduction below what OpenDoor offered. Will likely have to just give up on the new build and stay in our current home at this point.

As with anything I suppose every situation is different but OpenDoor's offer was better than the market is bearing.
mazag08
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AG
AggieFrog said:

Update - went with an agent, which turned out to be a mistake. House has had no offers after 6+ weeks including a price reduction below what OpenDoor offered. Will likely have to just give up on the new build and stay in our current home at this point.

As with anything I suppose every situation is different but OpenDoor's offer was better than the market is bearing.


Without knowing details, you left off the 3rd option.. you picked a bad agent who promised you too much. A well overpriced house will almost always end up selling at a discount.

Again, I know nothing of the price you were seeking vs the price you listed at vs open doors price.
Diggity
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AG
I have talked to a couple guys that have received offers from OpenDoor that were higher (in some cases significantly) than what they could likely get on the open market. These are lower end homes/investment properties, but that's still very strange to me.

I suppose the algorithm they use isn't always perfect (similar to Zillow) but I don't know how long a company can afford to overpay for homes.

If you get an offer from OpenDoor that appears to be in line with the market (or better) when taking into account the fees, I would take the thing. No reason not to.
Know1
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AG
Diggity said:

I have talked to a couple guys that have received offers from OpenDoor that were higher (in some cases significantly) than what they could likely get on the open market. These are lower end homes/investment properties, but that's still very strange to me.

I suppose the algorithm they use isn't always perfect (similar to Zillow) but I don't know how long a company can afford to overpay for homes.

If you get an offer from OpenDoor that appears to be in line with the market (or better) when taking into account the fees, I would take the thing. No reason not to.
We've seen them overpaying for homes as well. Not sure who is backing them, but they better have deep pockets.
hph6203
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AG
Listened to a Planet Money podcast where the CEO of Redfin discussed their move into this space and he said he wouldn't put money on tech companies figuring out how to do this kind of investing successfully (including his own somewhat). Their business is buying houses in uniform neighborhoods where price comparisons are pretty straight forward. Guessing these offers came in neighborhoods where the houses/lots weren't typical (some nicer, some lesser houses).

In other words Redfin is supposedly being conservative with their purchases, OpenDoor not so much.
rodan85
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AG
mazag08
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AG
About to offer on an opendoor home. I'll provide an update when the process is finished.
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