February 25, 2022
In 2014, Opendoor, a young startup company in San Francisco, disrupted the real estate industry. It offered a streamlined digital real estate buying and selling service to address the massively fragmented real estate market. Opendoor is an IBuyer that uses technology to give potential sellers an almost instant offer. They purchase homes with cash, make any needed repairs, and resell the property. Although the basic concept isn’t new – buying/fixing/reselling – doing the entire transaction online is. Today we’re going to compare Opendoor to the traditional hands-on option of using a realtor, listing your home, showing it, and selling it.
How Does Opendoor Work?
It’s pretty simple. A homeowner visits Opendoor.com and fills out a short form about the property they are considering selling. The homeowner is under no obligation to use their services. Within 48 hours, most properties receive an initial cash offer. After the initial offer, there’s an inspection or video walk-through to confirm the offer amount.
And since this is a cash transaction, many of these properties can close in 14-days.
There are two basic options with Opendoor. You can either sell them your home for cash or list it with them and work with one of their realtor partners. Both have a 5% fee which is less than the traditional 6% that realtor's charge.
If you sell to Opendoor, you don’t have to go through the hassles of listing and showing your home. Plus, you can choose when you want to sell. You can close in as little as 14 days or take longer if you need to.
Opendoor will also do any repair work. If you’re looking for convenience, you’ll get it. You can also choose the day you close. That way, you’re not rushed, and you can move once you’ve closed on your new home.
Some Things to Keep in Mind with Opendoor
Opendoor’s offer can be lower than what you can get on your own.
They’re not in all markets. Currently, Opendoor is in:
- North Carolina
Opendoor will inspect your home and give you a list of needed repairs. The cost of the repairs will be deducted from your proceeds. If you disagree with their suggested repairs, you can let them know and try and negotiate.
How Does it Compare with Selling Your Home Through a Realtor?
When you’re working with a realtor, they’re on commission. So, they’re going to be very motivated to get the highest price for your home. In the sellers’ market – you could have multiple offers that drive the price up, giving you more profit than you thought you’d have.
But on the flip side, there will be much more work on your end which can translate to additional stress. You’ll have to get your home ready to sell, do any initial repairs, and the eventual ones a buyer will request. And you’ll always have the possibility that the buyer’s financing falls through. That means you start all over again, which could be a problem, especially if you’re buying another home contingent on selling yours.
If you have a trusted realtor, you may feel more comfortable working with them than doing the entire transaction online. And suppose you want to use Opendoor along with your agent. In that case, your realtor has the option of becoming an Opendoor partner and representing you in this transaction for a lesser commission.
If convenience is essential to you, Opendoor could be the answer. That is unless your home is in excellent shape already, it’s a seller’s market, you know and trust your local realtor, and they have cash buyers lined up.
With Opendoor, you’ll have:
- No Showings – If you dread showing your home and keeping it in pristine condition – Opendoor has the advantage here.
- No Repairs – Same goes for repairs. If you don’t want to hassle getting repairs done, Opendoor will do that for you and deduct the costs from your proceeds.
If you’re selling through an agent – you can always sell as-is and price accordingly.
- 14-Day Rentback - Opendoor offers a 14-day late check out once your home closes.
But keep in mind that you can write this continency into your sales contract if you’re going through a realtor instead of Opendoor.
Unlike most realtors who deal in all types of properties, Opendoor mainly buys single-family homes and townhomes. In some markets, they’ll purchase duplexes, condos, and properties in gated and age-restricted communities. They don’t purchase pre-fab homes, mobile homes, homes on more than two acres, or homes in flood zones. Their target home purchase prices are $100k to $600k. But sometimes it goes higher.
And if you have a fixer – Opendoor might not be your best option. But – you can always get a quote from them on how much they’d be willing to buy your home for.
Buy from Opendoor
Buyers can purchase directly from Opendoor without using an agent. The platform shows you the chance you have of your offer being accepted. You may find listings on Opendoor that aren’t on other platforms.
Pros and Cons
Opendoor Wins on These Points
- Time-Saving – Opendoor saves time and can be an excellent solution for sellers in a rush. With a cash offer from Opendoor, you can remove the contingency that your home has to sell first.
- Stress-Reducing – With Opendoor, a seller has much less to deal with, so the process can be less stressful.
Best for: Experienced Sellers - Opendoor might work better for experienced sellers who know how the process goes and are willing to negotiate on certain things – like needed repairs.
Traditional Real Estate Agents Wins on These Points
- Maximum Profits - You might be able to get more for your house if you sell it through the traditional channels using an agent since they’re on commission.
- If you’re comfortable with showing your home multiple times and doing needed repairs.
Best for: Inexperienced Sellers – Who need lots of advice from their realtor and are unfamiliar with how the selling process works. And for those sellers wanting to make the most regardless of the possibility of increased stress.
To wrap it up, some sellers will prefer the fast and easy solution Opendoor offers. At the same time, others want more control and maximum profits. Regardless of what home sellers prefer, it’s always good to have more options.