The Opendoor Process Revealed
Imagine being able to sell your home in a matter of minutes, without having to enlist the help of a real estate agent. Set up in 2015, Opendoor promises to give an “offer on your home with the press of a button” and have just netted $325 million to expand within the realty market. While the concept might sound enticing, it’s not until you delve closer into the process that you understand sellers are literally losing thousands by cutting out real estate agents. As a result, realtors are refusing to run scared of Opendoor and similar companies, and continue to work hard to offer homeowners methods that help them net the most money off the sale of their home, versus loose money on the sale of their home. But, what do sellers need to know about the Opendoor process?
Every seller wants to make as much cash from their property as possible in order to secure the dream home they’ve been advised will hit the market soon. An in-depth analysis of Opendoor properties sold in Phoenix by Medium reveals that the company are making an average appreciation of 5.5% on each home they purchase. The median value of a home in the U.S today is $218,000. Therefore, if you’re one of the lucky homeowners who did get offered this price for your home, you can expect to see Opendoor re-sells your property for almost $230,000. And, with continued rising house prices, buyers typically need an additional $17,000 down payment to secure their dream home, according to The Seattle Times, that extra cash would be much better off in your pocket than Opendoor’s.
Higher than average service fees
The service fees sellers are charged for using Opendoor’s services vary from property to property. These fees range from 6-12%, with the average fee charged coming in at between 8 and 9%. In comparison, real estate agents typically charge a set fee of 6% following a house sale. As a result, sellers are automatically at a financial loss for favoring Opendoor over a traditional high street realtor. To put that loss into context, consider a home in Los Angeles sold for $674,800 - the median value of homes in LA, according to Zillow. At 6%, you’d pay a fee of $40,488, but at 9% this would rocket to $60,732.
Liability for repairs
Inman reports that Opendoor loses $1,750 per home due to repair costs. As a result, they’ve factored in a way to ensure that repairs are completed in a way which limits the impact on their finances; the seller has to pay. Any repairs which are picked up following an inspection must be paid for by the seller, however, Opendoor sets the cost for these repairs. As you have no control over the contractors who complete the work or the materials used, you could be paying significantly more than you would if you shopped around for the repairs.
Secure a quick sale with a traditional realtor
It’s clear to see that Opendoor and similar companies offer a quick house sale turnaround. However, this service comes at an expensive cost to the seller. Shifting your home via traditional real estate agent can be a simple process so long as you spend a little time preparing your home for sale. Home cooling units and systems are popular home features which you should ensure are in full working order before putting your property on the market. This is especially the case in the summer when potential buyers expect to witness your air conditioning unit blasting out cool air. Other simple ways to secure a quick sale, include enhancing your home’s curb appeal, decluttering and depersonalizing and putting in on the market at a good price. You can also create hype, and dramatically increase your chances of receiving multiple offers by getting your realtor to pre-list and pre-market it nationwide to build anticipation about your homes grand entrance to the market, before showings begin. No matter how far out you are at listing your home, allow your Realtor to pre-market it to begin attracting all buyers instead of just the first few!
Think before you act
Opendoor is a way to quickly sell your home, however, the financial repercussions can be humongous. With Opendoor gaining from appreciation, high service fees and having authority over repairs, it’s wise to stick to traditional real estate agents (who use innovative marketing tactics) and seek methods to sell your home fast while still ensuring you net the most money off the sale of your home.