Opendoor.com launched in Phoenix in 2015. Since its arrival there have been many questions and misconceptions from potential home sellers. Recently Inman News and Forbes did articles on the company. Forbes quoted fellow HomeSmart Associate Broker, Broker Neil Brooks. Opendoor is part real estate broker and part flipper. I have had interaction with Open Door and have helped sellers who have reached out to them. This is my review of the service they provide. It is a very interesting concept.
In a nutshell, you go to Opendoor.com, tell them about your house and they give you a price quote. If you like the price quote they have you sign a contract with a closing date you pick contingent on the inspection. Opendoor sends an inspector out to your home. The inspector reduces your sales price by the cost of repairs. If you agree to the reduction you move forward with closing and sell your home. Simple.
To fully understand Opendoor there needs to be a mind set change. Opendoor provides a service. A service that will make the selling of a home easy and secure as possible. They make money from that service not in the "flipping" of homes.
This fee in my experience is 10-12% of the sale price of the house. Forbes mentions 8% but I have not seen them quote this personally. Inman states 14%-20% which seems excessive. This fee covers their costs in buying your home, the carry/opportunity costs and the cost of reselling the home. This is 4-6% higher than a sale with a traditional Realtor experience.
I researched over 50 homes that Opendoor bought and sold in the past year. The pricing they offer sellers seems fair. They do not seem to low ball and don't pay top doll either. If you sold your house to a friend or cousin this would be the price you would get. Nobody did great, both parties are Ok with the outcome. Opendoor only buys homes $500,000 or less.
The inspection process is quite simple in my experience. They have flexible times and people I know say the inspectors are professional. Just know going in that anything the inspector finds will be calculated and adjusted off the price. They will want every little thing no matter how small corrected. May be why some seller pre-inspect their homes before marketing. In a small home a colleague was involved with the inspector's total repair bill was over $5400. From looking at the quote it appears that Opendoor estimates repairs using very high end labor.
In defense of Opendoor, I get it. With the service they provide they cannot afford to incur these costs when they resell the home. They also need to make the work is at a minimum contractor grade work. In their business they can't risk a buyer coming back to them for shoddy workmanship.
To summarize Opendoor I will use a saying from a good friend of mine.
"You can pick two of the three. Fast, Cheap and Perfect. If it is cheap and fast it won't be perfect and if it is fast and perfect it won't be cheap."
If a seller is must sell as soon as possible and the added costs of $10,000-$20,000 is worth it, then it could be a good fit. If you found a perfect new home and need to sell the old one fast, it could be a good fit as well.
There are several similar startups like Offerpad.com entering the market as well. These new companies are really just wholesalers wrapped in a new skin. We Buy Ugly Houses has been around for years and has a similar model. I have found that smaller, area specific, investors generally give better values to sellers. These smaller investors do not have point and click pricing but are usually easy to work with.
If you are still unsure if OpenDoor.com is right for you call me and we can look at your specific set of circumstances and weigh the pros and cons. I have requested and reviewed many quotes from Opendoor. They are a new company and their policies continually change. I am happy to help you through the process to get the most possible out of your home.
