Constantly keeping your home show-ready, sometimes for months. Worrying about getting an offer. And then negotiating price when you finally do.
Whether this is your first time selling a home or your 10th, you know that the process can be stressful. But Opendoor can help “take the uncertainty out of buying and selling” by making you a quick—and competitive—cash offer. How?
Overall, Opendoor’s process works over three steps:
- Tell Opendoor about your home by filling out an online request.
- Receive an offer backed by market data.
- Sign the contract, pick your ideal move date, and receive your funds.
But just because Opendoor is “on a mission to simplify real estate,” does this mean that they’re ideal for your situation? And even if they are, how much money will you get? We’ll cover all of this and more here.
So to start, let’s take a high-level look at how the Opendoor process works.
The Opendoor Process
Requesting An Offer
To request an offer on your home, you’ll start by entering your address on Opendoor’s home page, and you should be able to complete the entire form in about three minutes. Then, Opendoor will use their “proprietary model” (basically, what comparable homes in your area have sold for) to provide you with an offer.
An example of what you might see if Opendoor decides to make an offer on your home.
Accepting Your Offer
If you decide to accept their offer, Opendoor will then schedule a free home inspection to confirm the condition of its structural, exterior, roofing, plumbing, electrical, insulation and ventilation, and HVAC systems.
If repairs are needed (most customers pay less than $1,500 for repairs, and 25% don’t need them at all), you’ll either need to complete them or provide any credits the company asks for. Even up to this point, if you don’t want to make any repairs, you’re free to walk away from the contract without cost or obligation.
Moving On With Your Life
After everything’s been finalized with the inspection, you’ll be able to choose your move-out date (no more than 60 days) and Opendoor will handle the rest. You’ll need to have one final walkthrough the day before closing in order to verify everything’s in the same condition and all your belongings have been moved out.
In the mean time, Opendoor will open an escrow account with a national title company and you’ll need to sign your closing documents (if necessary, a mobile notary can meet you where it’s most convenient). Then, on the day of closing, an escrow agent will distribute the funds to you. And you’re done!
Will Opendoor take just any home, though?
Opendoor’s Property Requirements
Opendoor isn’t a house flipping company, who might take just about any type of property imaginable, so long as they can make a 25% profit. Instead, they’re looking for homes that meet very specific criteria. According to their website, this includes:
- Single family residential real estate (including condos and town-homes that can receive traditional financing)
- Homes that are site-built (not pre-fabricated or mobile)
- Homes located in Phoenix, AZ or Dallas, TX
- When the seller has clear ownership of the property (no double escrow)
- Homes built after 1960
- Homes that are not in age-restricted communities
- Homes where our valuation is between $125K and $500K
- Homes that sit on at maximum of half an acre of land
- Homes that are owner-occupied or vacant, not leased, at the time of closing
- Homes that are non-distressed or Real Estate Owned
- Homes that don't have any un-permitted additions or significant foundation issues
- Homes that don't have a solar lease
- Homes that do not have polybutylene plumbing
- Homes that do not have aluminum electrical wiring
- Homes that do not have masonite woodruff roofs
Alright, now that we’ve covered the basics, it seems like Opendoor might offer a more streamlined approach to selling your home. But will you pay for this convenience?
How Much Will Opendoor Charge To Buy Your Home?
Requesting an offer from Opendoor is completely free. And until your home is inspected and both you and the company have decided to move forward, you can walk away at any point without charge.
Once you’ve entered into a contract, it doesn’t seem like Opendoor provides much (if any) of a cost savings. For example, if you take a look at Opendoor’s pricing comparison page, you’ll notice that you’ll pay 2-6% less since there won’t be any agent commissions or seller concessions.
However, Opendoor makes up for a good portion of this since they charge a “market risk” fee of about 2%—and it’s unclear how competitive their offer will be (more about this next). But at least from a fees perspective, you might end up paying about 1% more than selling your home the traditional way.
According to Opendoor’s price comparison, you’ll pay about the same (or more) in fees compared to selling your home on the open market.
For a more well rounded overview of Opendoor’s fees, be sure to read through How Much Does Opendoor Charge in their FAQ.
Now, here’s the big question: How much money can you expect from Opendoor? Will their offer be about what you could expect selling through a traditional broker?
How Much Will Opendoor Pay You For Your Home?
Because Opendoor’s valuation model is proprietary, we’re not told about any of the specifics, other than that it “was built by our in-house team of expert statisticians and real estate professionals,” and that it uses comps in your area. Outside of this, according to their website, their offers are transparent, “consistent with the market,” and “based on location, characteristics and unique features.”
In real world terms, what’s this mean for you? We’ll wrap everything up in a second, but let’s first take a look at what everyone else is saying about Opendoor.
Does Opendoor Have a Good Online Reputation?
Opendoor has been featured in several popular publications like Fortune, Wall Street Journal, and Re/code, although most of these were high-level overviews. One thing that most of them shared, though, is that you should expect to sell at a discount if you choose to work with Opendoor.
In fact, the only customer reviews available at the time of our research were found on Yelp, where 12 Opendoor customers left feedback. Here, the company had an average rating of 3 stars. Why? Although some reviewers claimed the process was simple and straightforward, the most common complaints referenced lowball offers and very high fees.
From a company perspective, Opendoor is based out of San Francisco, CA and has been in business since 2014. They had an A rating with the Better Business Bureau with no closed complaints (as of 1/26/15).
Is Opendoor Your Best Option For Selling a Home?
“Best” is a very subjective term, and the factors that might make Opendoor an ideal solution for one person could mean that they’re a terrible option for you. So, here are a couple things to think about:
Opendoor: Convenient But Expensive
There’s no question that Opendoor can simplify the home selling process. But for this convenience, you’ll potentially lose money. How much, exactly?
This depends on a ton of different variables, but this article noted their fees are about 2-4.5% more expensive than a traditional Realtor. While this might not seem like much, on a $250K home this amounts to anywhere between $5,000 and $11,250 that you won’t be putting in your pocket after closing.
And based on many of the Yelp reviews referenced above, Opendoor might submit an offer that’s tens of thousands of dollars lower than market value, on top of their higher fees.
Opendoor’s Limited Market
At the time of our research, Opendoor only operated in the Phoenix, AZ and Dallas, TX markets. So, if you’re outside these areas, you’re out of luck.
Given everything we’ve talked about here, Opendoor might be ideal for two completely different clients. Either 1) those who have a lot of equity in their home and can afford to trade money in their pocket for a quick sell, or 2) those who might be in deep financial stress and need to sell their home quickly and deal with the loss down the road.
But if you’re in between either of these buyers (e.g. someone who might have a little equity, but not enough to take the hit, or those who aren’t in a hurry to sell), then a traditional selling experience might be more to your liking.
11 out 13 people found this review helpful
Watch out for the opportunistic algorithm.
Part of their proprietary algorithm seems to be a penalty for not accepting their offer.
The initial offer I requested out of curiosity, and the number price was actually fair, but I disagreed with their market risk percentage (4.5%).
So I talked to the agent, forwarded a dozen pictures to show the house was ready (actually planning to list in the next few days) to see if the offer would increase, or the market risk would go down. The second offer came back, $6k less on the offer and market risk raised to 5% (this was inside of 2 days).
Fast forward, my house has been on the market a few weeks, and I noticed that my estimated value on Zillow had gone up by about $20k from when we had listed based on comps. Since Opendoor's offer was pretty close to what Zillow had estimated initially, I figured if their offer scaled with Zillow, then even with their 'market risk' percentage, it was actually within the range of what I'd consider an acceptable offer. So I submitted for an offer again. (This was a Saturday). I waited and hadn't heard anything by Monday morning, so I submitted again.
Finally, today, I received two offers, 6 hours apart. Each was about $6k less than the one before, and each had about .5% increase in market risk, so despite the market value improving, their offer decreased by about $18k, and market risk went from a high 4.5% to 6%. Dropping $6k in value and 0.5% increase in Market Risk within 6 hours.
So if you get an offer, and are on the fence at first, just know that if you come back later, they're going to take advantage of your desperation.
Bottom Line: No, I would not recommend this to a friend