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For nearly a decade, Opendoor Technologies Inc. — or Opendoor, for short — has operated in the real estate market. What is Opendoor? In short, it’s a company that offers to streamline the home selling or buying process.
Specifically, they’re an iBuyer, an online enterprise that makes an all-cash offer on your house using an algorithm to determine its worth. But that’s not all. You have options with buying from Opendoor, too, and can potentially even use them to manage title searches and escrow.
How does Opendoor work, exactly? That depends on which of its services you want to use. So let’s explore your options — and see what might be a good fit for you.
What does Opendoor do?
Historically, residential real estate transactions had four parties: the buyer, the seller, and each parties’ real estate agent.
They target their services toward sellers, offering to make an all-cash offer on your house in a matter of days with minimal hassle on your end. More specifically, their services include:
- Opendoor Complete. This tech-platform-supported service bundles buying, selling and closing into one theoretically seamless process. If you want to sell your current home to buy a new one, it can help you avoid paying two mortgages or dealing with two moves.
- Opendoor Exclusives. Available in select housing markets, this service makes buying a home a lot like shopping online. You can hunt for, choose, and digitally purchase a home — sight-unseen, so to speak.
- Opendoor and OS National. In 2019, Opendoor brought OS National on as a partner so they could wrap title and escrow services into their offering to buyers and sellers.
Opendoor for sellers
If you’re reading Opendoor reviews or digging into the details of their process, it’s most likely because you want to sell your home.
The main definite upside to using them: the ease of their process. To sell, you enter your address into their site. Based on comps in your area and basic info you enter about your home, Opendoor makes you an all-cash offer in minutes.
If you like the sound of it, to move the process forward, you have to do a video walkthrough of your home. Opendoor also sends out an appraiser to check out the exterior of your property. Assuming everything looks good, the rest is easy. You get to set the closing timeline and you should get paid relatively quickly.
Opendoor doesn’t buy just any property, though. Generally, the company buys houses that are:
- Traditionally built single-family houses, townhomes, duplexes or condos (no modular or manufactured residences)
- Valued between $100,000 and $600,000, in most cases (although they go up to $1.4 million in some markets)
- On lots of two acres or less
- Built after 1930 in most cases
- Not located in a flood zone
Does that sound like your home? If so, selling to Opendoor could be an option. In Q3 2022, they purchased more than 8,000 homes and had more than 2,000 under contract for purchase.
Opendoor for buyers
If the company is an iBuyer, what is Opendoor doing in the home-selling space? Theoretically, trying to make the home buying process easier.
You can use them to buy any home, whether that’s one Opendoor owns or one on any MLS.
Buying from Opendoor means getting paired with one of their own real estate agents or what they call a partner agent. In other words, you can’t bring your own hand-picked real estate pro to the table.
The main upside is that Opendoor can make the offer for you, using their cash, and then hold the home for you while you sort out your mortgage. If you’re in a competitive housing market, the ability to make what looks like a cash offer can give you a leg up.
You can’t start the homebuying process from scratch with Opendoor, though. To start buying through them, you need to show them a pre-approval letter from a mortgage lender.
How does Opendoor make money?
Reading all of this, you might be a little suspicious. How does Opendoor work as a company that needs to turn a profit?
They charge, of course. If you sell your home to Opendoor, you pay a 5 percent service fee. But since selling your home the traditional way means paying a real estate agent’s commission — which is commonly around 6 percent — this might not hurt you too much.
If you buy a house via Opendoor, you’re still subject to the normal expenses of purchasing a home — like your down payment and closing costs — but you don’t need to pay any additional fees. How does Opendoor make money on this side? Assumedly, just like any other buyer’s agent: by taking a cut of the agent’s commission the seller pays, which would otherwise go to your real estate agent.
Where does Opendoor operate?
If you feel like you have a handle on these processes and you’ve dug into Opendoor reviews, you might be seriously considering this iBuyer for yourself. Before you get too excited, though, make sure they operate in your area.
They primarily service major metro areas. More cities have options with selling to Opendoor than buying from Opendoor. Setill, the company expands into new areas all the time, so check their service coverage chart to see if they operate where you live.
Opendoor pros and cons
Opendoor comes with advantages and disadvantages.
Selling your home through an iBuying platform can be ultra convenient. Suddenly, one of the most stressful, involved processes in your life gets streamlined.
This can be particularly helpful if you’re on a tight timeline. If your dream home just came on the market and you need to sell your current one in order to buy it, for example, getting a cash offer fast can make all the difference. Or if you need to relocate quickly, selling your home to a company like Opendoor can get you where you need to go in time.
Also, you save time and money in getting the home show-ready. No costs for staging, curb appeal or quick fixes; none of the inconveniences of open houses and viewings. And none of the nail-biters that often plague the period when a home’s in contract: Will the buyer fail to get financing, will they demand compensation for the problems a home inspection uncovered, etc.
The downside is that going through an iBuyer like Opendoor usually means you’ll pocket less than you would if you sold your home the traditional way, on the open market. The exact amount depends on your home and your market. But part of the way iBuyers stay in business is by offering convenience in exchange for slightly lower bids. And they don’t negotiate, so don’t think about counter-offering.
If money is a major driver for you, talk with at least a couple of local real estate agents to see if you could likely make more listing your home. At the very least, try to suss out how much your home is worth, before contactin them.
Opendoor is one of the biggest iBuyers in the game, and they were one of the first, which lends to their legitimacy. They’re not the only player out there, though — even though the iBuyer market is admittedly thinning. Redfin recently closed RedfinNow, its iBuying platform, and Zillow similarly shuttered its Zillow Offers in 2021.
Other similar sell-your-home-fast service providers include:
All told, as the housing marketing cools, you should expect a slowdown in iBuying options. But as one of the biggest names out there, Opendoor will likely stick around.
Even if iBuyers operating on a national scale drop off, you can also explore local firms that offer cash for houses. These types of businesses are most common in hot housing markets, but they exist everywhere, and operate similarly.
Opendoor vs. traditional real estate agent
If you’re comparing Opendoor reviews against other iBuyers, don’t stop there. You should also explore working with a local, vetted real estate agent.
While Opendoor can take a lot of the hassle out of home selling, so can a good real estate professional. And as we’ve mentioned before, listing your home the traditional way might help you pocket more money from your sale.
Ultimately, talking with a few agents should help you get a better feel for your best path forward. If you meet with local real estate pros and don’t click with anyone or feel the process with them feels overly complex, an iBuyer like Opendoor might be the right choice. But if an agent thinks you could list your home for more than Opendoor offers and you have the luxury of time to navigate the traditional selling process, that might make more financial sense for you.
The same goes for buying from Opendoor vs. traditional home shopping. Buying from Opendoor might make the process quicker and easier, but working with a dedicated real estate agent could help you negotiate a better price or avoid specific pitfalls.
The bottom line: Should you use Opendoor?
Is Opendoor legit? Absolutely. They’re one of the pioneers in the iBuyer space and have bought homes all over the country. If you need to sell your home fast — and you’re willing to leave a little money on the table to make the process less stressful — Opendoor gives you an excellent option to explore.
Is Opendoor worth it? That depends on what you value. If a quick, convenient process matters most to you, they might be a good bet. But if you want to sell your house for top dollar or buy your next place knowing you worked with a pro who had your back, you should explore working with a real estate agent instead.
If you’ve got some bandwidth, look into both options. You can compare Opendoor’s offer against a local agent’s listing price recommendation to gain the clarity you need to make the right choice.