The Thing About Opendoor

You’ve Heard of Opendoor

Opendoor is a real estate company with headquarters in Arizona that will purchase homes directly from the seller. This allows the seller to forego the traditional process of employing a professional agent or REALTOR® to list directly on the market. While they have gained some traction because of a certain level of convenience, Opendoor has also faced some criticism and legal problems for its deceptive business practices.

Legal Trouble

In 2019, the Arizona Department of Real Estate fined Opendoor for failing to disclose material facts about the condition of homes it was selling. They had allegedly made false statements about the homes’ inspections and repairs and buyers ended up purchasing homes with undisclosed issues.

Opendoor was also hit with a class-action lawsuit in 2019, with plaintiffs alleging that company inflated the sale price of homes by charging their buyers undisclosed fees. The lawsuit also accused Opendoor of failing to disclose potential conflicts of interest, such as the fact that they might be representing both the buyer and seller in the same transaction.

In 2020, they were fined again by the Arizona Department of Real Estate over issues related to the home inspection process. The company was accused of using unlicensed inspectors and failing to provide adequate information to buyers about the inspection reports.

Buyer (and Seller) Beware

If you are still considering using Opendoor, do some research. Use a website like Trust Pilot to see what others with direct experience have to say about them. Both buyers and sellers report issues. Here are just a few of many, many similar reviews:

“I received an initial offer from Opendoor, and it was low, but I figured the virtual walk-through would help raise it. Not only was the final offer $10,000 lower than the inital, they added $50,000 in repairs and cited “market conditions” as to why it was lower. I have been in real estate for 19 years and I know what my property is worth. There are some repairs needed, but I could remodel my house to pristine condition for $50,000!! Opendoor appears to hope sellers are desperate so they will give their equity away. I suspect that Opendoor fixes very little unless a buyer requests the repairs….”  -Robert B., December 2022

“If I could give zero stars I would. Opendoor seems adverse to working with buyers directly. They refuse to return calls or communicate on offers that have submitted….”  -Catherine Brewer, December 2022

“DO NOT BUY WITH OPENDOOR… WORST BUSINESS PRECTICES EVER. Twice we tried buying houses from Opendoor. Twice they accepted our CASH offer, twice they ended up selling the houses to someone else. ALL WHILE CLAIMING TO BE DOING PAPERWORK AND STRINGING US ALONG WHILE ACTUALLY WAITING FOR A HIGHER….”  – Jason Piontek, May 2022

“Opendoor is the typical bait and switch company with ridiculous fees and just bad tactics. They offered $371,000 at first then after the video walk through came back with $346,000 but then proceeded to take 5 percent off for fees, and another $4000 off for (repairs) as a standard expense when all the house needed was paint and a cleaned carpet as the house was 5 years old and in move-in condition. So the final offer after there fees is $326,000 and they give you a week to accept them they lowered it down $20,000 a week later saying market changed. Just fake, shady investors as they were going to close in 21 days so how is the price changing 20k less in a week. They knew them that we needed the deal so thought they could go even Lower. Meanwhile my neighbor had just sold his home of same builder and layout for $375,000 3 weeks earlier but they want to say his lot was bigger.”  -Beatrice Jordan, July 2022

Federal Trade Commission Action

In October 2022, the FTC finalized an order which requires Opendoor to pay $62 million, expected to be used for consumer redress; prohibits it from making the deceptive, false, and unsubstantiated claims to consumers about how much money they will receive or the costs they will have to pay to use its service; and requires it to have competent and reliable evidence to support any representations made about the costs, savings, or financial benefits associated with using its service, and any claims about the costs associated with traditional home sales. Read the FTC brief here.

Unfortunately, these are just a few examples of the issues that consumers have had with Opendoor. While they may seem like a convenient and modern option for selling your home, it is critical to do your due diligence and research any potential pitfalls before making such important financial decisions.

For an informal estimate of your home’s current value, start here: CB Estimate