Opendoor
- Thread starter ReliableOstrich
- Start date
I did. I posted about it in another thread a few months ago, and I'll copy what I said here:
I just got through using one of them, so wanted to share my experience, because as I recall, several of us were intrigued by the idea, but nobody had first hand experience. This is not an endorsement, but I remember the discussion and there was some curiosity. Otherwise, skip it...definitely a TLDR.
Background...we were looking to move, and would need to sell our house we've been in for 18 years. House is at low end of desirability in the neighborhood (no basement, stucco exterior, etc). On top of that, we'd done minimal upgrades...slightly upgraded vinyl and laminate in places, granite countertops, better light fixtures) but no hardwoods, carpet from 7-20 years old, hadn't painted since we moved in (and not neutral colors), wallpaper borders in some rooms that were peeling. In addition, I was never really great at non-essential maintenance, so there were a lot of little things here and there. Basically, in the rush of life, we hadn't really kept it up. We didn't really realize it, until we started researching and saw what other houses for sale in the neighborhood looked like in the listing photos.
We had been sort of ballparking somewhere between $300-320 based on what other houses were selling for, our house's position in the neighborhood desirability etc. We had a realtor that specializes in our neighborhood and took a look around and threw water all over that. Said that we needed to have everything moved out, replace all the carpet, paint everything, fix everything, and she'd list it at $285k and we should anticipate $275k.
So I had gotten a postcard from this service that said they'd buy the house, which I had originally dismissed as one of these "we buy ugly houses" type services that offered you <50% of value. But that's not exactly it. They offered $302k, minus their "fee", and repairs.
That was good enough for us. Their price was at the low end of what we'd originally hoped, but more than what a realtor told us to expect. Their "fee" was 6%, the same as a full service realtor, but obviously more than you'd pay with a low commission or FSBO. Their position on the repairs was that they wanted either a fix, or a deduction, for anything that needed REPAIR, but did not ask for compensation on cosmetics. We ended up getting dinged for about $10k there. The majority of that was two items. One legit...we still had the original 20+ year old HVAC. I had no doubt that any way we sold, I was going to have to replace that or give a concession on it. The other was legit-ish...they dinged us for painting the exterior. Legit because it was more than due based on time...it didn't look glaringly bad, but it was absolutely due and might have triggered a concession from a buyer...but on the other hand, it did seem to fall into the "cosmetic" category that by the letter of their terms, so I was hoping to escape that.
If I'd gotten by on the exterior paint, I'd have been thrilled, but I was ok with it. Didn't have to replace carpet, paint, fix nail holes, fix all the little things around the house, replace a 20+ year old oven, etc. No closing costs to the buyer or anything like that.
Process was smooth, you can close whenever you want. We had a really long timeline, but I think they can turn the whole thing around in a week or two from calling if that's what you want.
Overall, I'm decently satisfied. If the house had been sell-ready shape and I could have listed it FSBO or low-comission broker, I could have done better, and I kind of regret that. But it was better than going through the whole realtor and prepping and listing process, having it drag out, and then having to get rid of it for less than we wanted six months later, or having to carry two mortgages for months. For our exact situation, it worked out pretty well.
As a current update, we closed in May, and Open Door still hasn't sold it. They were asking what I would consider a very high price. If they had sold it at that price in a week, I have to admit I'd be feeling very regretful...but it's been on the market for six months now, and they've lowered the price over that time. They still may sell it for $15k more than they bought it from us for, but I won't look back. Well worth not having to deal with it from my perspective.
I think it's possible that their algorithms overvalued our home, and they paid us way closer to the true value than they wanted to. One of the pitfalls of not having people on the ground and depending on analytics I guess. The schools were getting unbearable overcrowded and there was risk of redistricting, year long road construction is scheduled to begin, and the pool/clubhouse was closed all summer because they started renovations and the county couldn't be bothered to approve permits withing months. Those were all things we were aware of but may well not have shown up on their analytics.
More Current update-
Just talked to my wife, they finally sold it this week for $320. I sold it to them for $302. I have no idea what upgrades they did in terms of putting in wood, appliances, etc if any, or if they covered any buyer expenses. So if you figure carrying the mortgage would have cost me $7k or something, I'm comfortable with leaving <$10k on the table not to have dealt with any of the headaches and uncertainty of the past six months. Overall satisfied.
I just got through using one of them, so wanted to share my experience, because as I recall, several of us were intrigued by the idea, but nobody had first hand experience. This is not an endorsement, but I remember the discussion and there was some curiosity. Otherwise, skip it...definitely a TLDR.
Background...we were looking to move, and would need to sell our house we've been in for 18 years. House is at low end of desirability in the neighborhood (no basement, stucco exterior, etc). On top of that, we'd done minimal upgrades...slightly upgraded vinyl and laminate in places, granite countertops, better light fixtures) but no hardwoods, carpet from 7-20 years old, hadn't painted since we moved in (and not neutral colors), wallpaper borders in some rooms that were peeling. In addition, I was never really great at non-essential maintenance, so there were a lot of little things here and there. Basically, in the rush of life, we hadn't really kept it up. We didn't really realize it, until we started researching and saw what other houses for sale in the neighborhood looked like in the listing photos.
We had been sort of ballparking somewhere between $300-320 based on what other houses were selling for, our house's position in the neighborhood desirability etc. We had a realtor that specializes in our neighborhood and took a look around and threw water all over that. Said that we needed to have everything moved out, replace all the carpet, paint everything, fix everything, and she'd list it at $285k and we should anticipate $275k.
So I had gotten a postcard from this service that said they'd buy the house, which I had originally dismissed as one of these "we buy ugly houses" type services that offered you <50% of value. But that's not exactly it. They offered $302k, minus their "fee", and repairs.
That was good enough for us. Their price was at the low end of what we'd originally hoped, but more than what a realtor told us to expect. Their "fee" was 6%, the same as a full service realtor, but obviously more than you'd pay with a low commission or FSBO. Their position on the repairs was that they wanted either a fix, or a deduction, for anything that needed REPAIR, but did not ask for compensation on cosmetics. We ended up getting dinged for about $10k there. The majority of that was two items. One legit...we still had the original 20+ year old HVAC. I had no doubt that any way we sold, I was going to have to replace that or give a concession on it. The other was legit-ish...they dinged us for painting the exterior. Legit because it was more than due based on time...it didn't look glaringly bad, but it was absolutely due and might have triggered a concession from a buyer...but on the other hand, it did seem to fall into the "cosmetic" category that by the letter of their terms, so I was hoping to escape that.
If I'd gotten by on the exterior paint, I'd have been thrilled, but I was ok with it. Didn't have to replace carpet, paint, fix nail holes, fix all the little things around the house, replace a 20+ year old oven, etc. No closing costs to the buyer or anything like that.
Process was smooth, you can close whenever you want. We had a really long timeline, but I think they can turn the whole thing around in a week or two from calling if that's what you want.
Overall, I'm decently satisfied. If the house had been sell-ready shape and I could have listed it FSBO or low-comission broker, I could have done better, and I kind of regret that. But it was better than going through the whole realtor and prepping and listing process, having it drag out, and then having to get rid of it for less than we wanted six months later, or having to carry two mortgages for months. For our exact situation, it worked out pretty well.
As a current update, we closed in May, and Open Door still hasn't sold it. They were asking what I would consider a very high price. If they had sold it at that price in a week, I have to admit I'd be feeling very regretful...but it's been on the market for six months now, and they've lowered the price over that time. They still may sell it for $15k more than they bought it from us for, but I won't look back. Well worth not having to deal with it from my perspective.
I think it's possible that their algorithms overvalued our home, and they paid us way closer to the true value than they wanted to. One of the pitfalls of not having people on the ground and depending on analytics I guess. The schools were getting unbearable overcrowded and there was risk of redistricting, year long road construction is scheduled to begin, and the pool/clubhouse was closed all summer because they started renovations and the county couldn't be bothered to approve permits withing months. Those were all things we were aware of but may well not have shown up on their analytics.
More Current update-
Just talked to my wife, they finally sold it this week for $320. I sold it to them for $302. I have no idea what upgrades they did in terms of putting in wood, appliances, etc if any, or if they covered any buyer expenses. So if you figure carrying the mortgage would have cost me $7k or something, I'm comfortable with leaving <$10k on the table not to have dealt with any of the headaches and uncertainty of the past six months. Overall satisfied.
Last edited:
Ah interesting. Thanks for sharing!
So they had a several month carrying cost + additional cosmetic improvements but sold it for about $46k more than your effective sale price - i think that adds up, doing this pretty quickly.
302000
-10000 (repairs)
-18000 (6% fee)=
274000
320000
-274000=
+46000
So they had a several month carrying cost + additional cosmetic improvements but sold it for about $46k more than your effective sale price - i think that adds up, doing this pretty quickly.
302000
-10000 (repairs)
-18000 (6% fee)=
274000
320000
-274000=
+46000
This could be the starting point of a real estate trend in which big data makes it possible for analytics to effectively commoditize the home selling process. I wonder where it goes from here...
Thanks Lou. I am in a similar position. Roof is 14 years old. Pool needs resurfacing. Some cosmetic issues. I am waiting for the spring selling season and will do some work myself prior.. My house is dated, and I don't want to do a complete remodel guess what the next buyer wants. I am sure they will want a new kitchen and likely bathrooms. It makes more sense to me to adjust my price and let them do what they want than trying to invest money for a negative return.
Yeah, sounds about right. For me to sell it traditionally, it would have been say:
320,000
-10000 (repairs)
- 3000 (cosmetics)
- 19200 (Realtor commission)
- 7000 (mortgage while on the market)
--------------------------
280,800
So that's about $5-6k on the table, depending on cosmetics. The realtor we met with before going with Open Door instructed new carpet, new painting, stainless appliances. Who knows if that would have all been necessary, but who knows if we would have been asked for buyer closing costs. Maybe I make a little more if I use a low commission broker, and get off for 3.5% or 4%.
So anywhere from probably $5k to $10k on the table, depending on if we sold it as fast. That's a very fair cost to me for getting rid of it on our terms and not dealing with the uncertainty, which would have frozen up a lot of other things.
Pretty much a win/win for both sides. The crux of it is that Open door is basically getting/keeping the realtor's cut on both sides.
Yeah, worth calling them. I thought their condition assessment was pretty fair. There was SO much little stuff that was just daunting if we were going to sell it normally, stuff you never really notice, until you look at it like a buyer. Hinges that don't quite work, old windows that fog up, cracks in baseboards, whatever. The idea of taking care of all that, with me not being a DIY person myself, was just daunting. And true to their pitch, Open Door didn't ding us for most of that stuff. What it "cost" me was worth it.
Now, if it had been mostly sale ready, and I wasn't paying a mortgage, I would have taken a swing at FSBO'ing it, where I could have made a nice chunk more.
Yep totally fair logic. I’m on board.
They’ve also likely streamlined the renovation process to where they can do it faster and cheaper than us. With fewer hassles.
I’m sure bringing down the days on market is big on their agenda.
Absolutely, and I imagine they've got volume pricing deals with contractors, and enough swing to get things actually done on time.
As for time on market, I think you're right in the long run, but not as sure in the short run. I was talking about the business model with my wife, trying to kind of figure out what they were thinking. At first that seemed like a failure of the analytics, but I'm not so sure. They are pretty new to the Atlanta market, and the home buying is only one half of their deal, they also try to establish themselves as brokers obviously. I'm wondering if in an establishing market, they're trying to build and keep a certain amount of inventory at all times toward establishing a presence. So even the time on the market might have a method to the madness, being slow to bring it down to market rate.
And although the offer was very fair to me for a "we'll buy your house" operation, I'm a bit hesitant to recommend them without a YMMV, because who knows what their terms are like in a well established market. I have to imagine in a new market there is quite a bit of incentive to get deals done, and I wonder if they play a little more hardball when they're no longer trying to get their feet down somewhere. Let's say I maybe took as much as a 5% haircut for the convenience and peace of mind and freeing up capital, etc. It wouldn't surprise me if their ultimate goal was for that to be more like 10-15%, which would still get a lot of deals done with people dealing with job transfers, divorces, etc.
All good points.
Curious, if one were to buy a home from Opendoor, would there be a broker fee on that transaction as Opendoor is effectively serving a the buyer and sellers agent as well as the home owner.
Great opportunity for them to make another 6%, or market a discount on fees and knock it down to 2-3%... or just charge no fee and make their homes more competitive than the rest on the market. (I get that the seller pays it - but it's usually baked into their sale price, so effectively could lower price on the home).
If they are both the buyer and ultimate seller, there isn't a commission. It's all profit, no?
In theory they could act as dual agent and collect the commission for the sellers agent and the buyer (when they are selling a house they’d previously bought).
Gives the 6% on the initial purchase and another 3% on the post renovation sale.
