Selling a House to Opendoor
It happens in every industry – a new company comes on the scene touting a “revolutionary” way of doing business. With the goal of simplifying the real estate process, there’s a few companies who think they’ve got it all figured out. They advertise to buy your house for “fair market value”, pay no realtor fees, and close on any day you choose. Do you know what company I’m talking about? So before you get sold on these deep pocketed marketing campaigns, let’s see what really happens when you sell your home to a company like Opendoor.
If you haven’t heard of Opendoor or OfferPad, chances are you will at some point. Their “new” business model allows home sellers to sell their home directly to the company. This eliminates showings, and the traditional listing process through a Realtor.
Dont be fooled by the we buy houses for cash. you are almost always better off selling on the open market for a higher price, even if you need work.
However, this model is actually nothing new at all. Investors have been offering to buy properties directly from homeowners for years – most just aren’t backed by Silicon Valley venture capitalists. Have you ever seen the “we buy ugly houses” people? It’s the exact same type of direct investor to homeowner purchase, dressed up in a fancier logo and more intuitive website. There’s actually thousands of individuals out there who do it on their own as well. It’s a for-profit concept as old as time: Buy low, sell high.
The first step in these companies process is providing you with an offer amount. Now you need to understand, most properties have a value range. For example, a home might have a fair market value of somewhere between $485k-$500k. An offer to buy a property from one of these companies would be around $485k. While they are not completely “lowballing”, you are most certainly not getting “top dollar” for property.
The next part, is you’ll find out that while there are technically no Realtor fees, they charge an “Experience Fee”. This fee can range anywhere from 7%-12% of the purchase price. Remember the traditional Realtor fees are 6%.
If you’ve stuck around the process of working with the company this long, and you are willing to take a low price with high fees on your property, then you must have bigger concerns than your financial well-being!
If you managed to get past the sticker shock, there’s one last final blow before closing the deal – Inspections. Opendoor will have a thorough home inspection done on your property, and they don’t go easy. They typically ask for EVERYTHING on the home inspection to be repaired, or they will require you to pay a credit to them to have all the items repaired at retail prices– ouch. Remember, even if you think your home is in great shape, a home inspection will turn up “problems”.
Let’s do a quick comparison of an average Opendoor sale, vs listing and selling with a qualified Realtor.
| Opendoor | Realtor Representation | |
| Price | $486,000 | $499,500 |
| Closing costs | $2,000 | $2,000 |
| Fees | 9% | 6% |
| Repairs | $5,000 | $2,000 |
| Net Proceeds | $436,170 | $466,000 |
| Difference | +$30,270 |
So why on earth would anyone use a company like this to sell their home? Simple – you pay for convenience. I’ll admit it, there is a place for these companies if you want to quickly wipe your hands clean of a property, and don’t care about getting the best price.
In my experience selling homes, the large majority of home sellers #1 goal is to get the most money possible. If that means stepping out for 20 minutes to let someone take a look at the house, is that really worth losing tens of thousands of dollars?
The whole experience is comparable to selling a car. You can trade it in to the dealer and walk away with a lot less money than if you sell it privately. The dealer cuts you a check right away, and goes on to sell it at a much higher price. Your loss is the dealer’s profits.
The other problem with companies like Opendoor is you are completely unrepresented in the transaction. No one is looking out for your best interests. Again, just like at a car dealership, the salesman has the companies best interests at heart, not yours. They will use their real estate knowledge against you to get the best deal possible from your property.
I’m a sucker for convenience, but not at this price.
Jon Knutson, REALTOR®
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