opendoor

[Amiee Baker]

does anyone know anything about this Opendoor?  I am seeing their houses everywhere. What percentage of MV are the buying at? Must be pretty high . I've gone into a couple of their houses and they aren't rehabbing just selling as is.

[Robert Adams]

Here is how it works:

Over the past 7 years the Vegas Valley has seen enormous growth in the housing market and home values. Many people have no idea what their home is worth. Some homeowners even rely on outdated autovaluations like Zillow's Zestimates for home values. Then opendoor or similar company gets in touch with a homewoner (because they are spend an insane amount of money on marketing to reach sellers that are not in tune with the market). FOR EXAMPLE: The homeowner maybe bought their home in 2011 for $200k for the sake of round numbers. Now lets fast forward to 2018 and the home is now worth $400k. The seller looks on websites like Zillow and sees there home is worth $380k. This seller is already underselling themselves by $20k, but wait it gets worse. Then opendoor comes along and says we think your home is worth $370k to $380k BUT we will buy it right now from you without you having to market the home or do any showings etc for $375k but we are going to charge you a fee up to 12% (in our example this would equate to $45,000). Then on top of that they charge a 7% Commission (that would equate to additional $26,250). Then opendoor would clean the home, maybe paint it, maybe put new carpet if you are lucky then resell your home for $400k in a week or two. Below I have compared 2 examples of selling traditionally with a Realtor at 6% commisions (which it may be less as it is negotiable) vs selling with opendoor or similar service.

Comparing Opendoor to a Traditional Sale with a Realtor

$400,000 Home via Opendoor Home Value: $400,000 Sales Price: $375,000 Charge 12%: $45,000 Commissions 7%: $26,250 Total Costs via Opendoor: $71,250 Net Proceeds to Owner: $303,750

$400,000 Home via a Realtor Home Value: $400,000 Sales Price: $400,000 Traditional Closing Costs 3%: $12,000 Commissions 6%: $24,000 Total Costs via a Realtor: $36,000 Net Proceeds to Owner: $364,000

In this Example Selling with a Realtor will save you $60,250!!!

Most homeowners I know could use an extra $60,000+ in their pocket! It is my firm belief that homeowners do not know how drastically their bottomline is affected by selling with these unethical companies.

BEFORE YOU SELL WITH ANY COMPANY ASK THEM "HOW MUCH MONEY WILL I WALK AWAY WITH?"AND THEN COMPARE THAT TO A TRADITIONAL REALTOR SALE.

I confronted them on a public post of Opendoor on Facebook, you can see for yourself how it went below
(after my question about them charging 19% they stopped responding):
HERE IS THE ORIGINAL POST

[Brian Ploszay]

I am looking into Opendoor, because I was curious about them.  They seem to have an ambitious growth plan.  They created an algorithm that somehow creates an arbitrage for the market.  In reality, they are another, perhaps more sophisticated version of "we buy your house for cash."  Cleverly  marketed.  They are already being copied to some extent.  And their model probably only works in homogeneous markets that have experienced recent appreciation and continue to appreciate.  When you purchase a house in an upswing market, holding onto a house for six months makes a difference.  My bet is that this concept has limited growth.  But there is something on the horizon for all real estate service providers:  technology will be your competition in the future.  Within 10 years, there will be less real estate agents, appraisals will become more automated and there will be less mortgage brokers.  Opendoor carefully studies real estate data - and exploits profitable niches.  In my long experience with real estate, nothing stays the same for long.  And Opendoor won't be creating a feel-good brand if the public eventually perceives that it is just a way to purchase your home below market.  

[Robert Adams]

Originally posted by @Brian Ploszay:

I am looking into Opendoor, because I was curious about them.  They seem to have an ambitious growth plan.  They created an algorithm that somehow creates an arbitrage for the market.  In reality, they are another, perhaps more sophisticated version of "we buy your house for cash."  Cleverly  marketed.  They are already being copied to some extent.  And their model probably only works in homogeneous markets that have experienced recent appreciation and continue to appreciate.  When you purchase a house in an upswing market, holding onto a house for six months makes a difference.  My bet is that this concept has limited growth.  But there is something on the horizon for all real estate service providers:  technology will be your competition in the future.  Within 10 years, there will be less real estate agents, appraisals will become more automated and there will be less mortgage brokers.  Opendoor carefully studies real estate data - and exploits profitable niches.  In my long experience with real estate, nothing stays the same for long.  And Opendoor won't be creating a feel-good brand if the public eventually perceives that it is just a way to purchase your home below market.  

I agree that once homeowners know how much money they are under selling themselves for this will greatly impact their model but it will take a while for the general public to get up to speed with their process and how they work, by then many people will have already given away THOUSANDS of dollars to these companies. My point in posting this was to try to help homeowners figure this out sooner rather than later.