What is Opendoor? Opendoor is an iBuyer company that purchases homes directly from homeowners, saving homeowners the trouble of open houses, cleaning their house for home showings, waiting for offers, and closing complications.
When a homeseller requests an offer for their home, Opendoor compares the property to recently sold homes and uses user-submitted data to make an offer. The homeowner then accepts or rejects the offer. The homes are then re-sold on the open market.
Opendoor also offers traditional listing services, but they are best known for their iBuyer services.
If you decide to sell your home to Opendoor, the process is fairly straightforward.
While there are additional details involved with each step, this is a pretty fair summary of how Opendoor works.
Although Opendoor is transparent about its pricing, some homeowners may find the repair deductions at the end of the offer to be akin to “hidden fees” - especially because Opendoor gets to make the determination as to what repairs will cost.
According to the Opendoor website, you can expect:
So if you have a $500,000 home, Opendoor expects that you'll pay a minimum of $30,000 before repairs.
The Federal Trade Commission has accused Opendoor of deceptive business practices that led homeowners to offer up their homes for less than they would pay on the open market - and in August 2022, Opendoor settled the case for $62 million.
So how does this compare to a traditional brokerage, OfferPad, and Houwzer?
So for a $500,000 home, you’d pay about $50,000
So for a $500,000 home, you'd pay a minimum of $30,000 before repairs
So for a $500,000 home, you’d pay $25,000-$40,000
However, it’s worth noting that both traditional brokerages and Houwzer bring homes to the open market. Since it’s currently a seller’s market, some homes receive multiple offers and sellers are in a position to ask for exactly what they want (whether that’s buyers guaranteeing that they can pay cash even if the appraisal comes in low, or asking for a seller rentback).
In other words, on the open market that $500,000 home might go for $510,000.
When you sell a home to a "we buy your house" website like Opendoor, you get one offer, rather than several, and you lose the leverage you’d have by playing multiple offers against each other. In other words, you are paying for the convenience of having a quicker, more streamlined closing experience.
*Until recently, Opendoor charged up to 14% for the service fee - they updated their policy in 2020 to cap at 5%, but many articles about Opendoor still list the outdated fee structure.
On Yelp, Opendoor Realty (a Nevada Opendoor office) has an overall rating of 2 out of 5 stars based on 25 reviews. Two examples of Opendoor reviews there include:
"It was easy and a better experience than the agent I worked with initially. You make less but it was stress-free. I would definitely recommend them and use them again."
-Mstr Kevin L. D. of Henderson, Nevada (2021)
"This is the most unprofessional company I have ever dealt with as a real estate professional. Here is their scam. They offer you a great asking price for your home then they load up on repair costs and hidden fees. On my deal they added $8,000 dollars one hour before closing."
-Jason Griggs of Henderson, NV (2019)
On Review.io, Opendoor has an overall rating of 4.33 out of 5 stars based on 1,590 reviews. Two examples of Opendoor reviews there include:
"...We had surprises when signing paperwork (for which we were given a deadline to sign and couldn't get legal clarification in time). The offer given was okay given market conditions, but they only use their inspector and then waited until 24 hours before closing (a week and a half after inspection) to present their offer with reduced repair costs, etc after inspection. The home seller is intentionally given no time to react...If I could do it again, I would try a different service or just use a Realtor."
-Anonymous (2021)
“Smooth, easy, hassle-free. Eliminated showings. With 3 dogs and a cat, cleaning out for showings would have been almost impossible.”
-Michael of Denver, CO (2021)
Tampa-based listing agent Windy Back has first-hand experience working with Opendoor.
“I have had sellers go with Opendoor offers only to call me weeks later to come back to the market and cancel the Opendoor offer. Opendoor and similar home buying companies offer market value for properties to entice sellers away from placing their home on the open market. Weeks later they come through, do an inspection, only to offer much much less on the home,” she explains.
“This last one was a 40k difference between what they originally offered at the initial contract and what the company was actually willing to pay. I ended up selling the home for 100k more than what Opendoor offered.
These are common tactics IBuyers use to make sellers believe they have no alternative and/ or are locked in a contract. IBuyers are great for homes that would not sell on the open market, or sellers looking to cash out and be done. But most sellers are looking to get top dollar for their listing with little inconvenience. And in a seller's market that is an easy feat for any agent to accomplish - it makes no sense for your average homeowner to take the Ibuyer route.”
Although online reviewers are sometimes quick to jump to “it’s a rip-off”, it’s important to reiterate that Opendoor does not really sell itself as a cheaper solution than using an agent, which is where many people misunderstand their services. They are a faster and often more convenient service because the buying and closing process is sped up.
Because Opendoor charges a 5% service fee - and also deducts for repairs - people rarely profit more than they would by selling on the open market.
However, Opendoor can be the perfect solution for homeowners who really need to prioritize speed and/or ease of transaction. Opendoor can be worth it when: