Is Opendoor Competition or Not Quite Ready for Prime Time?

Question

Opendoor is active in Phoenix but it looks like they haven't figured out a formula yet. They bought this property Oct 31 2018 for $245,700 and after228 DOM are asking $249,000 - who knows how much they put into the rehab and what their carrying costs are but seems to me that putting the money into hotdogs and selling them at the beach would have a better return.

https://www.redfin.com/AZ/Glendale/5220-W-Port-Au-...

Date

Event & Source

Price

Appreciation

Jun 13, 2019

Price Changed   ARMLS #5846121

$249,000

—

May 31, 2019

Relisted (Active)   ARMLS #5846121

—

May 6, 2019

Pending   ARMLS #5846121

—

Apr 23, 2019

Relisted (Active)   ARMLS #5846121

—

Apr 11, 2019

Pending   ARMLS #5846121

—

Apr 4, 2019

Price Changed   ARMLS #5846121

$250,000

—

Mar 14, 2019

Price Changed   ARMLS #5846121

$252,000

—

Feb 21, 2019

Price Changed   ARMLS #5846121

$254,000

—

Jan 31, 2019

Price Changed   ARMLS #5846121

$255,000

—

Jan 17, 2019

Price Changed   ARMLS #5846121

$258,000

—

Dec 27, 2018

Price Changed   ARMLS #5846121

$260,000

—

Dec 13, 2018

Price Changed   ARMLS #5846121

$261,000

—

Nov 29, 2018

Price Changed   ARMLS #5846121

$262,000

—

Nov 12, 2018

Listed (Active)   ARMLS #5846121

$263,000

—

Jay Hinrichs · Answer

Also when you compare to the average wholesaler who's bag of tricks consist of

1. 100 dollar EM if that

2. subject to my partners approval   IE his cat

3. cant close unless they move the contract

4. number one goal is to get the deal as low as possible even if its unconscionable

5. semi clueless how real estate works.

you get the point at least this is a company that is properly financed properly licensed and is closing not skirting the laws .. which we all know the way wholesaling is taught is illegal in all states.

Jay Hinrichs · Answer

Mike send one of your properties to them to quote on its mainly over the internet and just takes a few minutes.

there you will see the recipe they use and charges etc.

Bevla Reeves · Answer

Account Closed  They make their money on the buy by charging sellers enormous fees upfront!

It's bait & switch.

And, they barely rehab the homes, mostly paint if even that.

Charlie Shew · Answer

Here is a snapshot for Opendoor in the Nashville Metropolitan area (This includes the 14 surrounding counties). It is based on the last 6 months, they have closed 289 homes. One interesting figure, the median days on market for an Opendoor home were 65 days. For the rest of the market at similarly priced homes the days on market was 12.

Frank Wong · Answer

There is only so much money in a real estate deal.  Not sure how their business model will work out long term. To me, it doesn't make any sense to scale this in the long run.  Lots of moving parts and people to pay.

Joe Cassandra · Answer

@Charlie Shew

Like Charlie said, (and I have friends who have used them), they "get you" by offering a fair price for your home...then they start dinging you for everything.

I believe my friend ended up paying 10% in fees. Offer on their house wasn't terrible, but not great either.

They felt they got a good deal. For a family buying a new home and cant afford juggling two mortgages and keeping the house in top shape, it probably is.

Another friend just got a quote. Was 80k less than they thought their house was worth.

Charlie Shew · Answer

They are here in Nashville and I have viewed a lot of the homes. I wrote a little blog post about them on my website if anyone is interested:

Opendoor

A quick summary, if the market value of your home is $220,000 they are going to offer you $200,000. However, their fees on average at the time were approximately 13% so you would walk away with $174,000 from opendoor. If you had sold with a realtor for $220,000 at 6% commission you would receive $207,000.

Bottom line, the homeowner would lose a total of $33,000.

Charlie

Jay Hinrichs · Answer

I did with my house in Summerlin..  they offered what I paid for it 3 years ago and I put 100k into remodel so while not wolf ranges and top of the line its nice..  and then there are all their fee's   that's why I say its a way of buying listings.

I then got cold called by one of these here in Oregon its not an open pad  but something similar.

this one I think is more for realtor lead gen.

the auto mated all cash offer close when I want   was 665k..  OR you could list it and we feel the market value is 1.2 million .. then the next thing you know I get calls from 3 brokers..  wanting to list.. so to me I guess if they could low ball like crazy fine.. if not sell the leads to realtors ala Zillow

Jay Hinrichs · Answer

I believe they charge the seller a fee that's how they make the money.. send a property thorugh their system its semi auto mated and you can see all the non public charges..

Jay Hinrichs · Answer

from what I have seen they make a profit even if they don't sell for much more than they paid or anymore..

its a way of simply buying listings.. and then of course they get their homerun as well..

if they can keep at it. they are going to get their share.

Date	Event & Source	Price	Appreciation
Jun 13, 2019	Price Changed ARMLS #5846121	$249,000	—
May 31, 2019	Relisted (Active) ARMLS #5846121	—	—
May 6, 2019	Pending ARMLS #5846121	—	—
Apr 23, 2019	Relisted (Active) ARMLS #5846121	—	—
Apr 11, 2019	Pending ARMLS #5846121	—	—
Apr 4, 2019	Price Changed ARMLS #5846121	$250,000	—
Mar 14, 2019	Price Changed ARMLS #5846121	$252,000	—
Feb 21, 2019	Price Changed ARMLS #5846121	$254,000	—
Jan 31, 2019	Price Changed ARMLS #5846121	$255,000	—
Jan 17, 2019	Price Changed ARMLS #5846121	$258,000	—
Dec 27, 2018	Price Changed ARMLS #5846121	$260,000	—
Dec 13, 2018	Price Changed ARMLS #5846121	$261,000	—
Nov 29, 2018	Price Changed ARMLS #5846121	$262,000	—
Nov 12, 2018	Listed (Active) ARMLS #5846121	$263,000	—

Is Opendoor Competition or Not Quite Ready for Prime Time?

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