Opendoor is a company that was formed 3 – 4 years ago that currently operates in 15 – 20 cities nationwide with plans to expand rapidly throughout the country. Its’ business model is to purchase homes between $150,000 and $500,000 directly from owners and then re-sell them within 90 days. It uses data and technology to price the home and submits an Offer to Purchase to the owner. The fee to the owner averages six and one-half percent (6.5%). Their claim is that home owners can avoid the annoyance of preparing their home for sale, putting their home on the market with a real estate agent and, risking the home will not sell at the price they’re hoping to get and closing when the owner wants to move. The homeowner can just agree on the sales price and then set the closing date of the transaction.
I don’t believe the real estate industry should be too concerned with Opendoor. Investors who purchase homes to flip in the near term typically want to buy low and sell high. A single-family home is generally the largest single investment an owner has in their portfolio and is unlikely to sell it for less than its highest value. Unless Opendoor hopes to sell their homes to other investors (also looking to purchase at a low price) they’ll have to pay a commission to a real estate agent and abide by the particular State Rules and Regulations and the local Multiple Listing Service Rules. I’m not sure if Opendoor is prepared to do all of this.