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Thought I would post a final update here on this one.
So, as I mention in my earlier posts I sold my house to OpenDoor for 198,600 with zero repair costs, and a 5.5% fee. Net to me was 186K. They listed it for resale at 210K after ONLY cleaning the carpets - no other work was done. It went pending in 4 days.
BUT, it took them until just last week - so better than 60 days - to close. It does show a sale price of 210K, but of course I have no way to know if there were any seller incentives involved.
So at worst it was a 5% hit to me to sell for cash to OD - and that was if I got their same 210K offer, and then I might have had a 60 day escrow issue as well, which would have been negative for me as I had to close on my new place.
Too many variables to know if traditional would have gone for MORE than 210K, but I doubt it - I am pretty familiar with my market.
For me this all worked out just fine.
So they probably paid a Buyers agent 3% when they sold it, did repairs and paid closing costs. Plus they paid their agents to handle the transaction and they owned the house on the market 60 days which meant property taxes and other carrying costs.
You think they made any money buying your house? Doesn't sound to me like they did.
So they probably paid a Buyers agent 3% when they sold it, did repairs and paid closing costs. Plus they paid their agents to handle the transaction and they owned the house on the market 60 days which meant property taxes and other carrying costs.
You think they made any money buying your house? Doesn't sound to me like they did.
But that's their problem.
Well, they did make the 10K from me for the fee they took...at a minimum. They claim that is all they are after...
210K - $6,300 (3% Buyer Agent Fee) - 186K net cost = $17,700. Then it depends what costs a Seller has to pay in your location. Plus as noted 1/6 of annual costs (2 months). Plus whatever overhead they assign to each home.
*Sounds like* they owned it at least 75 days, or 4.9 turns/year. So if they somehow netted $10K, they make 26% annually which should be an acceptable return to investors ... though I'd imagine their target is above 30%
On a 200k home, call it an annual tax bill of $5k - so 1/6th of that is about $833.00. Add another $120 for insurance (at least), now you have $950. If you figure 4 of their employees touched the property, add another 12 hrs labor @ $50/hr - $600. Now, say $500 misc touch-up/clean -up expenses....
$2,050.00 minumum hard costs. It wouldn't take much to flip those numbers on their ears - and not much way of "making up" for unscheduled losses (hard freeze that burst pipes in wall, etc). Even with insurance to cover the bulk of the cost, you'll have additional carrying costs, etc. That might explain why their more recent offers are SO far below market - at least, around here - and we're a "hot" market.
and in the end, there remain 2 critical components for the Opendoor IBuyers of the world...
1. If they're paying too much for homes, the Sellers don't care and that's all that matters.
2. In order for it to be profitable, they're going to need 3 things:
* a higher fee from the Seller than they've been advertising and getting
* to largely eliminate the Buyer's Agent fee by convincing consumers to deal directly with them
* much better pricing determination.
to use my market, where Opendoor has been a pretty good while (2nd Q 18) ...
10% haven't had an agent. These Buyers paid 97% of list, so much of OD's savings went away. Further, these homes sat 2 weeks longer, so they essentially had to wait Buyers out.
61% of their homes have sold within (their expected?) 30 days and at an average 99.5% of list. But since so many involved buyer's agents, there went ~2.5% of their profit margin.
39% have taken over 30 days, and they sold for 95% of list price, and the BA fee, and the carrying costs.
they are advertising an average fee locally of 7%.
so 7% - [(61% x 3% discount) + (39% x 7.5% discount)] (I think I'm doing this right, hey it's Monday)
7% - 4.8% = 2.2%, average of 41 DOM/70 day close = 5.1 turns x 2.2% = 11.3% - and that considers $0 cost to prep and carry the house.
to use my market, where Opendoor has been a pretty good while (2nd Q 18) ...
10% haven't had an agent. These Buyers paid 97% of list, so much of OD's savings went away. Further, these homes sat 2 weeks longer, so they essentially had to wait Buyers out.
61% of their homes have sold within (their expected?) 30 days and at an average 99.5% of list. But since so many involved buyer's agents, there went ~2.5% of their profit margin.
39% have taken over 30 days, and they sold for 95% of list price, and the BA fee, and the carrying costs.
they are advertising an average fee locally of 7%.
so 7% - [(61% x 3% discount) + (39% x 7.5% discount)] (I think I'm doing this right, hey it's Monday)
7% - 4.8% = 2.2%, average of 41 DOM/70 day close = 5.1 turns x 2.2% = 11.3% - and that considers $0 cost to prep and carry the house.
It's worth noting that those percentages are based off the list price at time of contract as well; most of those OD listings, especially the ones that took longer than 30 days to sell, started at a much higher list price initially.
I'd be interested in seeing what the numbers would be factoring in ORIGINAL list price too.
My client connect notifications light up at the end of the month when OD does their across-the-board price reductions; generally in $1000 increments regardless of price range.
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