My Experience with Open Door and Offer Pad Real Estate (3%, mortgage)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Anyone buying with Opendoor, definitely get a home inspection. They seem to be getting worse and worse. In my area, they stopped getting an actual home inspection when they bought the house a little over a year ago. They started using their guys, who previously just looked at finishes to check a little more stuff with the house .
A home of theirs I inspected the other day had multiple pretty severe issues that were not obvious to a layperson but would be found by any competent home inspector. Did one a couple months ago where someone used a saddle tap valve for the icemaker line, it shocker, it couldn’t be shut off. So, when the people moved out they pulled the line through the floor into the crawl, kinked it and placed a cinder block on it. The valve also was leaking at a small drip, had a tray placed under it and a frog was living in the tray.
I believe to save money they are doing as little as possible knowing not everyone will get an inspection and they will save money that way.
This is what unprofitable enterprises do.
Like restaurants that cut back on food quality and portions before auguring in...
I tried to preview an Opendoor house yesterday in Raleigh. It wasn't impressive, but I couldn't get the front door open. "UNOpened Door!"
they are a real estate brokerage, yes? Licensed in the state of NC (among others)? Subject to the same rules of NC and NAR that we are?
When they do not obtain a WWREA at first significant contact (arguably that this is NLT the moment they give you a code to enter a home), that's a violation.
When they do not inquire "Do you have an Exclusive Buyer AGency Agreement with someone else?" that's a violation. Heck, they DO ask if you have an agent, and I've had folks say yes. Certainly in their autoprompts, this could tell their computer to ask about agency. They do not the last time I looked.
When they later ask someone who indicated they had an agent "Ready to make an offer? Click here to get started!" that's another violation.
I didn't even bring this part up.
My point of frustration that we discussed was an offer deadline due to a claim of multiple offers that did not exist. This has happened twice with two different sets of buyers of mine in the past three months. Once in the situation I discussed earlier in this thread and then again just last week. In both cases it seriously turned my buyer off from wanting to look at any more OD houses. I let Mr. Opendoor know that and he took it graciously. In this most recent instance the OD "transaction coordinator" (ie; the computer generated email) even had the audacity to include this little gem...
Quote:
Hi Nick,
Quick Update as things have changed. The seller wanted me to communicate we now have multiple offers in hand.
In order to be fair to all involved we are requesting you send your best offer by 2:00pm tomorrow - or notify us if the offer you have sent is the best.
I wanted to let you know the Seller is VERY tough on appraisal negotiations and will request the contract price be honored. This is especially true in multiple offer situations.
You can reply to this email with your best OTP (no other documents are needed at this time).
After the deadline we will review with the seller and provide feedback no later than 6:00pm tomorrow.
Comps put this house at at least 5% over-priced and we actually came in very close to list price because buyers really liked the house. If in fact there were multiple offers; the rest of them must have really sucked because then I got this the very next day (after upping our offer to about 2% below list price)
Quote:
Hi Nick,
Thank you again for your offer!
** Note: this counter offer is based on the limited number of days on the market and high level of interest in the home.**
Counter Offer:
The seller has reviewed your offer and they are wanting to extend the following counter offer.
Revise OTP items:
Item 2d - Items that Do not Convey: Opendoor security system does not convey with sale of the home. Kwikset 914 lock will be removed and replaced prior to the close of escrow.
Item 15 - Identify other attorney or party drafted addenda: Opendoor Addendum, Opendoor Affiliated Business Arrangement Disclosure
***All other terms remain the same***
Please be advised that Midtown Property Law is the seller's preferred closing attorney/escrow agent. (See attached fee sheet).
Closings would take place at Midtown Property Law, located at: 4800 Six Forks Rd, Suite 120, Raleigh, NC 27609.
I beg your pardon.....do you realize that in NC the escrow attorney is chosen, paid for, and represents the BUYER in the transaction?
But there are so many practices/automated procedures that are such a violation and borderline predatory to the consumer that I have little to no doubt they've been getting a barrage of letters/calls from the RE Commission. Hence why I believe they are reaching out in-person to local agents in a more friendly and professional way now more than previously.
Side-note....the property in question; still active over a week later. I guess those "multiple offers" were all unsatisfactory and wouldn't budge too? Hmm....
My point of frustration that we discussed was an offer deadline due to a claim of multiple offers that did not exist. This has happened twice with two different sets of buyers of mine in the past three months. Once in the situation I discussed earlier in this thread and then again just last week. In both cases it seriously turned my buyer off from wanting to look at any more OD houses. I let Mr. Opendoor know that and he took it graciously. In this most recent instance the OD "transaction coordinator" (ie; the computer generated email) even had the audacity to include this little gem...
Comps put this house at at least 5% over-priced and we actually came in very close to list price because buyers really liked the house. If in fact there were multiple offers; the rest of them must have really sucked because then I got this the very next day (after upping our offer to about 2% below list price)
I beg your pardon.....do you realize that in NC the escrow attorney is chosen, paid for, and represents the BUYER in the transaction?
But there are so many practices/automated procedures that are such a violation and borderline predatory to the consumer that I have little to no doubt they've been getting a barrage of letters/calls from the RE Commission. Hence why I believe they are reaching out in-person to local agents in a more friendly and professional way now more than previously.
That is a negotiable point, just as the builders prefer to use their own attorneys for closing.
The two Opendoor/similar ibroker marketed homes remain sitting on the market and unsold. Why? because people don't want to pay what they're asking. They're usually the most expensive in the neighborhood and aren't really worth it.
For grins, I decided to request an offer from both OpenDoor and Offerpad.
OpenDoor flatly rejected my request since comps in my area were higher than what they (opendoor) were willing to spend. Meaning, if the comps of the sold homes were over $500k, there's no way I'd accept what Opendoor contemplated giving me. Offerpad offered a full $63k below value. MInd you, I had a BPO done for a bank and I'd respect their valuation more than some algorithm driven i-broker, who ultimately would flip the home and re-sell it at the full value price. I LOLOLOLED when I received that offer.
Reaffirming that I will not do business with i-brokers and will take my chances on the open market using an agent. I am not about to put $63k on the table just to "have a smooth experience".
I would think that saying you had multiple offers would be material misrepresentation if you didn't actually have the offers. Personally, I'd say that such a claim, being a material fact, that in multiple offers the listing agent should be required if asked to provide you the names of the agents that had produced offers - so you could verify with those agents.
I chuckle at the "The Seller...." errrrr.... you ARE the Seller.
I would think that saying you had multiple offers would be material misrepresentation if you didn't actually have the offers. Personally, I'd say that such a claim, being a material fact, that in multiple offers the listing agent should be required if asked to provide you the names of the agents that had produced offers - so you could verify with those agents.
I chuckle at the "The Seller...." errrrr.... you ARE the Seller.
Yeah that made me chuckle too. Like they were trying to make it feel more "personal" as if one would be naive enough to not realize they are dealing with a corporation and not an individual selling a home.
At lunch with a friend yesterday, he told me about a repeat client who got an Opendoor quote while he was talking to her about listing her house.
Her net was close to what he would have produced with his 5% commission. So, he said, "Take that offer."
Opendoor thus overpaid for a flip, and would lose money in resale at market price, and they now will have a buy/hold rental house.
At lunch with a friend yesterday, he told me about a repeat client who got an Opendoor quote while he was talking to her about listing her house.
Her net was close to what he would have produced with his 5% commission. So, he said, "Take that offer."
Opendoor thus overpaid for a flip, and would lose money in resale at market price, and they now will have a buy/hold rental house.
I am not sure why you say this. They pretty clearly say their "money" is in the commission - just like yours. On my 200K house they got 10K from me to buy, clean the carpets, and resell in less than a week listed for 5% more than they paid me (another 10K if they got full price). They do have to pay their inspection teams etc.
In my case it was the same as you are mentioning here. The offer was pretty close to what I am confident I would have received NET in a sale - minus all the trouble.
Unless you know they won't be able to sell it for at least what they paid - which it doesn't sound like you are, then they don't "lose" money. Is it profitable enough in the long term? Different question. But I doubt they are hold/renting any properties.
I am not sure why you say this. They pretty clearly say their "money" is in the commission - just like yours. On my 200K house they got 10K from me to buy, clean the carpets, and resell in less than a week listed for 5% more than they paid me (another 10K if they got full price). They do have to pay their inspection teams etc.
In my case it was the same as your mentioning here. The offer was pretty close to what I am confident I would have received NET in a sale - minus all the trouble.
Unless you know they won't be able to sell it for at least what they paid - which it doesn't sound like you are, then they don't "lose" money. Is it profitable enough in the long term? Different question. But I doubt they are hold/renting any properties.
Not yet they aren't...
But they have listings that have been sitting for over a year (this in a market that still generally favors sellers with a median DOM of less than a week).
How long will they be able to hold onto these properties sitting empty while still paying taxes and utilities (not to mention the upkeep/maintenance) without generating any income? Some of have already been lowered to prices below what OD paid for them (I showed one-such house on Monday) and still not selling.
I wouldn't be surprised at all to see an Opendoor Rentals/Property Management division opening up shop soon as a last ditch attempt to stay viable and keep the investors (the real source of income) from getting too nervous.
I am not sure why you say this. They pretty clearly say their "money" is in the commission - just like yours. On my 200K house they got 10K from me to buy, clean the carpets, and resell in less than a week listed for 5% more than they paid me (another 10K if they got full price). They do have to pay their inspection teams etc.
In my case it was the same as you are mentioning here. The offer was pretty close to what I am confident I would have received NET in a sale - minus all the trouble.
Unless you know they won't be able to sell it for at least what they paid - which it doesn't sound like you are, then they don't "lose" money. Is it profitable enough in the long term? Different question. But I doubt they are hold/renting any properties.
No one can flip without ancillary costs, and if the market won't bear the costs, they lose money. Breaking even too often is not good business, either.
That is why I posted.
Just using their money costs them, plus taxes and fees, and those taxes and fees are on the buy and sell side for everyone.
And, they pay agents to bring buyers.
Selling only for what they paid is either a failure or a cash burn exercise, or both. It is only sustainable with an end goal of market dominance which would allow them to get past the ruinous pricing of the disruptor model and raise prices with lower cost of goods sold.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
