Opendoor: What to Know About the Home iBuyer
Opendoor, the largest iBuyer in the United States by volume, uses technology to help people buy and sell their homes quickly for cash.
Founded in 2014, Opendoor introduced the world to iBuying when it bought its first home. In the second quarter of 2021, the company says it purchased a record 8,494 homes.
Opendoor debuted its services in Phoenix and now operates in 44 markets in 21 states, including Florida, Texas, Nevada, and North Carolina.
What is Opendoor?
Officially known as Opendoor Technologies Inc., the company offers a suite of services that allows customers to quickly buy, sell or “trade in” their homes, including:
Selling a home directly to Opendoor.
Listing a home with Opendoor.
Purchasing a home owned by Opendoor.
Buying any home available for sale (not just on Opendoor).
To streamline the home buying and selling process, Opendoor also provides these services:
Opendoor Home Loans: Helps customers with financing to buy a home or refinance a mortgage; it boasts no lender fees and a $1,000 incentive toward closing.
Opendoor Cash-Backed Offers: Allows buyers to compete in hot housing markets by backing their offers with cash.
Opendoor’s subsidiary OS National simplifies the closing process by providing fully digital title and escrow services.
As of October 2021, Opendoor buys and sells homes in these 44 markets:
Arizona: Phoenix, Prescott, Tucson.
California: Los Angeles, Riverside, Sacramento, San Diego.
Colorado: Colorado Springs, Denver, Northern Colorado.
Florida: Jacksonville, Miami, Orlando, Tampa.
Minnesota: Minneapolis-Saint Paul.
Missouri: Kansas City, St. Louis.
North Carolina: Asheville, Charlotte, Greensboro, Raleigh-Durham.
Nevada: Las Vegas, Reno.
Ohio: Cleveland, Columbus.
Oklahoma: Oklahoma City.
South Carolina: Columbia, Greenville.
Texas: Austin, Corpus Christi, Dallas-Fort Worth, Houston, Killeen, San Antonio.
Tennessee: Chattanooga, Knoxville, Nashville.
Utah: Salt Lake City.
Washington D.C. (beginning in Northern Virginia areas).
How does Opendoor Work?
Opendoor allows homeowners to sell their home quickly without having to stage, list or show it. You also don’t have to worry about making any repairs yourself. Instead, Opendoor will determine what fixes your home needs and subtract that cost from the proceeds of your sale.
Here’s how it works:
Selling your home to Opendoor
Submit a request for an offer: Request an offer by submitting your address and basic information about your home, including its condition and characteristics, at opendoor.com. The process will take roughly 10 minutes and is free. Opendoor then makes a preliminary offer for your home by researching comparable sales and evaluating market data. You aren’t under any obligation to accept this offer.
Schedule a home evaluation: If you decide to proceed, the next step is Opendoor’s free home assessment. In this step, Opendoor will evaluate the condition of the inside of your property. There are two options: A company representative can virtually complete the assessment over live video with the homeowner, or the homeowner can take pictures and shoot a video with their camera or smartphone. The process takes approximately 10 minutes. Opendoor will also send an estimator to evaluate the exterior of your house. Roughly 24 to 48 hours after these assessments, Opendoor will submit a finalized offer for the home. If you disagree with the final assessment results, you can cancel the deal anytime before closing without penalty.
Close on the home: If you decide to sell, you can move at your own pace by selecting a closing date that works for you. Typically, sellers can close in as little as 14 days or schedule closing up to 60 days in the future. Before closing, you will have to upload information to an online dashboard to ensure your home is in the same condition as when the assessment took place. Then, a few days after closing, you will receive the proceeds from the home’s sale.
What types of homes does Opendoor purchase?
While it varies by market, Opendoor typically buys single-family homes, townhouses, condos, and duplexes that generally range between $100,000 and $600,000. Depending on the location, this valuation can run up to $1.4 million.
Though there are exceptions in some markets, Opendoor usually doesn’t buy homes built before 1930 or properties with a lot size of more than 2 acres. Opendoor also doesn’t purchase mobile or prefabricated houses, homes owned by banks, or those located in flood zones.
How to buy a home with Opendoor
Opendoor allows home buyers to find, tour or purchase houses, whether Opendoor owns them or not. Opendoor’s cash-backed offers also help buyers make all-cash offers for homes (which sellers might find more competitive).
Buying an Opendoor-owned home
When purchasing a home owned by Opendoor, you have the option of buying the house from Opendoor yourself or working with an Opendoor partner agent. You can also bring in your agent who can submit the offer for you. If you go that route, all updates on the sale will be communicated directly to your agent.
To find homes on the Opendoor app or online, first search by city to browse listings and then choose “tour” for directions to the homes you would like to visit. Then, if you decide to buy the house, you can make an offer on Opendoor’s website, through the app or by sending an email to [email protected]. Opendoor will review and respond to your offer within 24 to 48 hours; if it’s accepted, you will be assigned a representative to help finalize the transaction.
Buying any home on the market
In certain cities, Opendoor also offers the option of buying any home that’s for sale — even if Opendoor doesn’t own it.
After submitting an offer on Opendoor’s website or the app, you will be matched with an Opendoor partner agent, who will review your offer and then submit it for you. If your offer is accepted, the purchase agreement will be drafted, and you and the seller will have to sign. Finally, your Opendoor partner agent will help walk you through the escrow process and closing on the house.
Whether you buy from Opendoor or not, the company’s cash-backed offer program can help buyers in specific locations purchase a new home with cash, which can provide a leg up in hot housing markets. In addition, you don’t have to pay any extra fees to utilize the cash-backed offer, and it comes without appraisal, financing, or home sale contingencies.
Opendoor also offers a 90-day guarantee that allows you to return the home if you aren’t happy with your purchase (in some circumstances). To qualify, the house must have been bought with either an Opendoor agent or an Opendoor partner agent and meet particular conditions.
Trading in a home
You can also buy and sell a house with Opendoor simultaneously (which Opendoor calls “trading in” your house). This gives sellers the flexibility of not having to pay two mortgages or move twice by choosing the closing dates to take place simultaneously. You can trade in to buy a house owned by Opendoor, a new construction home or any house that’s for sale (depending on the market area).
If financing falls through and you can’t close on time, Opendoor can purchase your new home to make sure another buyer doesn’t snap it up. In addition, when buying and selling a home with Opendoor under this trade-in program, you may also qualify to receive 1.25% of your current home’s sale price, with that incentive maxing out at $10,000 (though not if you rely on Opendoor to purchase your new home for you).
Selling to Opendoor
If you want to sell directly to Opendoor, the company charges a service fee of 5% of the sale price of your home to cover maintenance costs (but not repairs), as well as buying and later reselling the house. The company says this service charge could potentially end up being more or less based on the time Opendoor thinks it will take to sell your home later.
After you sell to Opendoor, you can utilize a “late checkout” option that allows owners to remain in the home for a maximum of 21 days after closing, as long as you put down a security deposit and pay the daily rate.
Listing with Opendoor
If you are selling your home, Opendoor can also put it on the market for you — even if you don’t want to sell directly to them. You will be connected with local pros to help you manage the entire process, including setting the price of your home.
Opendoor’s commission fee is also 5% of the home’s sale price, which covers the cost of listing with a local real estate agent. This is lower than the 6% agent commission usually divided between the listing agent and the buyer’s agent.
Seller concessions, which are the costs buyers may ask you to pay to make sure the transaction goes through, could be up to around 2% of the home’s purchase price and will be negotiated with the help of your Opendoor agent. After the inspection, the buyer may also ask you to make repairs or give them a credit for how much the repairs may cost.
And whether you are selling or buying a house, closing costs — which are inevitable in any real estate deal — may add up to 1% of the home’s purchase price.
» MORE: Visit Opendoor for more details.
How to get started with Opendoor
To get started, visit the Opendoor website. Then, type in your address and click on the “Get my free offer” button. If Opendoor services the area, you will receive a preliminary offer to purchase your home within a few minutes.
If you want to move forward with Opendoor, sellers typically close within 14 to 60 days.
Yes, Opendoor introduced iBuying when it bought its first home in 2014 and is the largest iBuyer in the United States. After launching in Phoenix, it now buys and sells homes in 44 metro areas in 21 states. Opendoor Technologies Inc., as it is officially known, is a publicly traded company listed on the Nasdaq under the ticker symbol OPEN.
Opendoor calculates the value of your home by evaluating its condition, researching similar homes that have sold, and consulting local professionals. Unlike when flipping a house, Opendoor does not seek to make money by purchasing a home for a below-market rate, renovating it, and then selling it for a profit. Instead, Opendoor makes money from its service fee, which is 5% of the home’s sale price. That’s lower than the standard real estate commission, which is typically up to a 6% split between the buyer’s and seller’s agents.
To an extent, yes. You can let Opendoor know if you think the company overlooked details in its evaluation of your home. You can also negotiate closing costs, which are typically 1% of the home’s purchase price, though Opendoor says this depends on your contract terms.
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