There are a few of us agents in this area who have been trying to raise the red flag about Opendoor for a long time. Some agents are actually data minded and we can figure out pretty quickly when the numbers don’t add up to what the hype says they should. The problem was, nobody wanted to listen to us few data folks, because we’re real estate agents and OF COURSE we’re not going to be happy about Opendoor scooping up our business. And dare I say it? Because we are real estate agents, nobody thinks we can do spreadsheets, or do math in our head. Oh but some of us can.
Listen, I expected, based on the fairy dust that was being air dropped on us, that when I showed an Opendoor property IT WOULD BE FANTASTIC. Holy hell, no. NO NO NO. That was my first clue. I smelled a big rat, and mildew and cigarette smoke and pet odors while walking over rotten wood and black carpet. Not all in the same house but several were in one house. Now keep in mind this horrible house was BOUGHT from a seller, who PAID FOR THESE REPAIRS, but they were NOT done. Following me?
I started out by building a spreadsheet and tracking the performance versus hype of Opendoor. My spreadsheet confirmed (of course it did) what my quick takes were telling me. Opendoor was NOT doing what they said they were doing, and they were outright misleading consumers. Let me give you some examples:
First, they factored in exorbitant rental costs the seller would face if they sold through a real estate agency, for SIX MONTHS, and put that overinflated number on the ‘cost of using a realtor’ list. Where in the HECK did they come up with that? People have somewhere to go usually; nobody I have EVER dealt with rented for 6 months. Then they added in 7% commission, which nobody I KNOW does or ever did unless the seller wanted to (never happens), and they added THAT overinflated number to the ‘cost of using a realtor’ list. Then they added up an average repair cost for repairing ALL of the things usually found on an inspection report (in NC the seller doesn’t have to do ANY repairs), and they added that overinflated number to the ‘cost of using a realtor’ list. Then they added in the woe is me stuff about cleaning and oh the horror of allowing people to view your home while it’s listed. They made it sound like people came in and set up camp, when in FACT, shopping buyers are always accompanied by an agent AND they are vetted up front to be sure they’re not just being nosey. And…they made it sound like opening a closet door to see the size of a closet was burglary, when in fact buyers just want to see how big the closet it. They open, they peek in, they close. THEN, OD gave a price before they sent in their inspectors. Then they added up all of the so-called ‘necessary repairs’ and lowered their offer by that much. Charged the sellers for ALL repairs, when if they worked with an agent, that would NOT happen unless the seller wanted it to. In NC the seller is not even obligated to DISCUSS repairs, let alone do them.
THEN…they often did NONE of those repairs the seller paid for, or jury-rigged them (like filling rotten wood with white caulk and painting over that), pocketing THAT money, then listed the house for thousands higher. I’ve SEEN this stuff. But…nobody wanted to listen. I used to say people thought it was worth 30 grand to not have to vacuum and repair a broken door knob, for crying out loud.
Opendoor painted a wholly incorrect picture for sellers, using fear tactics and slight of hand, to get listings. I tried to encourage people to track this stuff, watch the listing service and then look at tax records when they sell…nobody did. Check for yourself! Be careful! Nobody did. They just kept trusting this corporation. Does anybody just see that one sentence as a problem? I do.
Now listen, I haven’t been happy about my business being diminished, but it IS the age of electronic everything and online everything, so I have rolled with the punches and tried to use the e-momentum in my favor. I call it real estate jujitsu. It has worked. But when I see clients losing tens of thousands of dollars on the ‘deals’ with Opendoor, well it makes me angry. I’m going to have business no matter what Opendoor does; I just go on to the next transaction, Opendoor or no Opendoor. But I abhor watching anyone be taken advantage of. In some cases, I tried very hard to prevent it, but Opendoor made it sound like fairy dust and magic. And a LOT of people fell for it. I admit, at times I thought they got what they deserved. But then no, they did not.
What OD DID was lowball on the buy side, hold on to the home for the allotted, mandatory time period, and then list the home 30 or 40K higher than what it ‘was worth’ (sometimes less) 60 days ago, spending minimal to no money on repairs. Unbelievable. The problem is, consumers don’t know how to research this stuff, or are too uninterested to do it. I watched one young couple with a little baby lose 30 thousand on the sales price of their home, by going with OD. Let me use that acronym because I don’t’ want to type Opendoor any more than I have to.
So now OD is being fined by the FTC to the tune of 62 million or so; and that, my friends, is not enough. In my opinion, of course. This company has very likely bilked FAR more than that out of unsuspecting sellers. And don’t forget, buyers are buying this houses with shoddy ‘repair’ work too! Again, I have seen the tactic in action. So I’m glad this is coming to light. And the other I-buyers should take heavy note. There are not clean hands in this kitchen as far as I AM concerned.
See, right now, because of the fast market, people need to have an idea of the condition of the home before making an offer, because there’s often a big amount of due diligence on the table. So if, for example, there’s a leak under the bathroom that has rotted the substructure, you are not going to see that until you inspect. And you cannot inspect until your offer has been ACCEPTED. So if you have an untrustworthy seller, one who is not required to disclose any issues…or can claim ‘no representation’, you had better know you’re at big risk.
I’m willing to bet that it costs WAY, FAR, HUGELY less money to use a real estate agency for your real estate transactions. I’ve seen some pretty scary stuff out there. I saw one of news reports where one young person actually went to look at the house she sold to OD, and she found that none of what she ‘paid for’ in reduced offer price, was actually done. I hope she gets well compensated for being hoodwinked. My first time buyers don’t have to worry about that kind of stuff with me as their agent. I protect my buyers and their interests.
One more note: Opendoor bought a home on my street, way lower than market price…I knew that because duh, I’m a real estate agent. I was livid. Why? They just nuked MY property value and those of my neighbors. Then they listed it for 30 grand higher…might have been more, not sure. They did a few repairs on that one…paint and carpet I think…but it was a flip for sure. Buy low, sell high. AND I GUARANTEE the seller didn’t know and STILL doesn’t know how he/she got screwed. And that, my friends, is how OD gets away with this crap. People do NOT pay attention.
Anyway that’s my rant. Pay attention folks. Don’t let anybody take advantage of you.
I’m Brenda and I’m a Coldwell Banker Advantage agent in Raleigh NC. If I can help you, call me. You can find me on my web page.