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My old house has been on the market for ten days now. It's barely getting any views and saves on Zillow at least.
I did go and visit it. I can't believe they didn't paint. The house was left (by me) in excellent condition, save for definitely needing paint. Oh well. There is carpet in some areas, and with no kids, no pets, no smoking, and no spills, along with little wear and weekly cleaning, it was very clean and still in like-new condition... but carpet is the one area they DID clean (there really wasn't anything to clean anywhere else in the house).
The description of the home on Zillow is laughably brief, and the pictures are terrible. I could spend two minutes writing a much more engaging yet completely honest ad for the house, and a little longer taking better pictures. It's like they went out of their way to avoid mentioning and showing a few of the nice things about the house such as the big walk-in pantry with all professionally installed Elfa shelving (master closet has lots of Elfa too, so does the garage), the two large ready to plant or harvest gardens, the Icynene foam insulation, the triple-cell cellular shades throughout, and a number of other things... of course all that is not saying much for an upscale neighborhood, but the house is in immaculate condition and has some nice selling points you rarely find in this type of 'starter home' neighborhood.
And yet even I know they priced it too high. The web presence / listing is not going to get people in the door, especially at that price. It's like they WANT it to sit on the market for a while and get no traffic.
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On another note, I did write a review of Open Door as a seller. I forget where it was, might have been on their own post-close survey site. Anyway, I received an email from an Open Door PR guy who works in San Franscisco, and a few days later he interviewed me over the phone. He mentioned that they recognize they have a PR and messaging problem. I reiterated that I was pretty happy with the whole process financially and logistically and went into detail on how painless it was. I feel like a few thousand dollars of profit was more than worth giving up in exchange for having almost none of the downsides of selling a house. I emphasized that I chose OD over Offerpad because of the promise that I could back out of selling at any time (this thread was really the thing that got me to use OD).
I also told him what I thought of the listing of the house as well as some of the quality issues I've noticed in some other Open Door homes I had visited last year and this year. And I mentioned the "a friend of a friend said..." issue (especially with my brother's wife warning I was going to get backbilled thousands of dollars). He acknowledged that they have some changes to make. I suggested they let the seller write an ad for the home, maybe even direct some photography -- I'd have been happy to spend a few minutes writing up a little piece that would get traffic and make the house appealing to web shoppers.
I agree with most of the recent posts in this thread -- Open Door is a much nicer proposition for a seller (specifically in the $200K - $300K range) than for a buyer. The first house I was looking at buying wasn't Open Door, it was Offerpad, but it had a lot of expensive problems (roof, electrical, plumbing, rot) and would have needed an overhaul (by me). They ended up lowering the price three times on that one before it finally went "Pending" on the online listing sites. I got a nicer house with no issues at a better price from a traditional seller. I would say potential buyer beware, but potential sellers who are in my situation might do very well. Open Door's loss could be your gain. They're probably not viable long-term without big changes -- so take advantage of it while you can.
This is very informative and definitely re-iterates my overall impression of OD.
Great option for some sellers.
Cluster%#^* on the buy-side.
Your description of their marketing for your former house is pretty ubiquitous. If they do any "updates" it is usually low-grade beige paint and the cheapest, ugliest warehouse gray carpet.
Listing description is computer generated to include the name, number of bedrooms/floors, and name of the HOA.
Pictures are actually high quality resolution/brightness but are very ineffective at showcasing space.
And...most detrimentally....
Priced at least 10% too high.
If they go the Zillow route and hire local agents to list and sell the homes once they buy them; they'd stand a chance (and probably less resentment from the agent community who they are only now desperately reaching out to)
Considering many traditional brokerages are now developing their own i-buyer models; it may be too little, too late for OD to get as big a market share as they were hoping for; which, in the the long run, is much better for the consumer.
thanks for the answers, let me try to decipher and simplify further...
They paid you $200K, and charged you 8% out the door. Their net payout to you, and thus cost to them, was $184K. You believe $200K was the full market value, if not now above.
They've done virtually nothing to the home, and have listed it for $210K.
If we assume they actually sell for $200K, and pay a BA fee of 3%, then they net $194,000. They make $10K on a $184K investment. "Sounds like" that will be minimum 120 days from when they paid you.
So 10/184 = 5.4%, and they can do that 3 times a year (360/120). That's a 16.3% return.
thanks for the answers, let me try to decipher and simplify further...
They paid you $200K, and charged you 8% out the door. Their net payout to you, and thus cost to them, was $184K. You believe $200K was the full market value, if not now above.
They've done virtually nothing to the home, and have listed it for $210K.
If we assume they actually sell for $200K, and pay a BA fee of 3%, then they net $194,000. They make $10K on a $184K investment. "Sounds like" that will be minimum 120 days from when they paid you.
So 10/184 = 5.4%, and they can do that 3 times a year (360/120). That's a 16.3% return.
Except it doesn't happen in a vacuum. They've had at least a half-dozen employess/contractors in and out of that house - so if you figure a cost per person of $200, that's another $1200. And no matter what, they'll incur closing costs of varying amounts, but figure another $1k there (at least). Those are very tight numbers, with not a whole lot of opportunity for "upside" - and a LOT for "downside" (vandalism, slow sale, etc) - and unless they're flush with cash, they've got financing costs as well.
Yeah - not real excited about that business model.
Except it doesn't happen in a vacuum. They've had at least a half-dozen employess/contractors in and out of that house - so if you figure a cost per person of $200, that's another $1200. And no matter what, they'll incur closing costs of varying amounts, but figure another $1k there (at least). Those are very tight numbers, with not a whole lot of opportunity for "upside" - and a LOT for "downside" (vandalism, slow sale, etc) - and unless they're flush with cash, they've got financing costs as well.
Yeah - not real excited about that business model.
They ARE flush with cash from venture capital speculators.
well, if Nepenthe knows what the Seller costs are in their locale, sure. In my state, the buyer is responsible for most of them and the Seller pays $400 in excise tax and about $200 for legal fees. Nobody gets out of the excise tax, but OD also has specific attorneys that I'm sure charge them less than the $200 (and less when they're buying).
Nobody gets out of the excise tax, but OD also has specific attorneys that I'm sure charge them less than the $200 (and less when they're buying).
The house was cleaned, that's $150-200.
Those in-house attorneys represent overhead, 24/7 - and there's paperwork to be filed, etc., so I honestly doubt they're walking away from a closing for under $1k. And they may have only had to clean, but they had other folks in doing inspections, prep, etc. - no matter what, there's additional costs there. It's like folks thinking a Realtor "rakes it in" with their 3% commission.....between the Broker split, office overhead share, insurance, etc - it's not a cream-filled as many would like to think.
This is very informative and definitely re-iterates my overall impression of OD.
Great option for some sellers.
Cluster%#^* on the buy-side.
Your description of their marketing for your former house is pretty ubiquitous. If they do any "updates" it is usually low-grade beige paint and the cheapest, ugliest warehouse gray carpet.
Listing description is computer generated to include the name, number of bedrooms/floors, and name of the HOA.
Pictures are actually high quality resolution/brightness but are very ineffective at showcasing space.
And...most detrimentally....
Priced at least 10% too high.
If they go the Zillow route and hire local agents to list and sell the homes once they buy them; they'd stand a chance (and probably less resentment from the agent community who they are only now desperately reaching out to)
Considering many traditional brokerages are now developing their own i-buyer models; it may be too little, too late for OD to get as big a market share as they were hoping for; which, in the the long run, is much better for the consumer.
thanks for the answers, let me try to decipher and simplify further...
They paid you $200K, and charged you 8% out the door. Their net payout to you, and thus cost to them, was $184K. You believe $200K was the full market value, if not now above.
They've done virtually nothing to the home, and have listed it for $210K.
If we assume they actually sell for $200K, and pay a BA fee of 3%, then they net $194,000. They make $10K on a $184K investment. "Sounds like" that will be minimum 120 days from when they paid you.
So 10/184 = 5.4%, and they can do that 3 times a year (360/120). That's a 16.3% return.
Numbers are a little off. The offer was $221K. I believe its market value to be actually BELOW that. It would be that or above, if not for all the crap going on behind the house.
As I mentioned, the backyard used to back up to a very quiet farm, a "greenbelt" with various farm animals stopping by to say hello and get a little snack, and with 30 year old oak trees just on the farm side providing excellent shade throughout the morning into mid-day. The city and the developers got rid of the farm, tore out all the trees, and are busy building a 4-story apartment right there. This is all to say I think I would have had trouble selling it for $221K considering the radical change. Had the farm still been intact, it would have been a selling point, but with the loud, ugly construction I think a lot of buyers will want to stay far away. But Open Door's algorithm didn't seem to take that into account (nor did any of their humans), so that's why I think I did well, all circumstances considered, vs. trying to sell to an individual or a family.
They listed at $232K. Just today, day 18, they lowered the asking price by $5K. School has started in the area. The ad is very unappealing and as TarHeelNick mentioned, the pictures are ill-conceived and really don't show the space very well. I wouldn't want to live there either. Not sure how meaningful this is but there are only 6 "saves" on Zillow. I suspect they will end up lowering the price to $217K before anyone takes the plunge.
However, your point about their potential return rate over the span of a year still stands.
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.
Odd - they've been sending me offers for the past year..... So far, they've been woefully underpriced on their offers - all the comps show mine should be at $290-305k, yet their best offer to date was $251k. Others in my neighborhood have reported similar results. I finally told them to stop bothering.
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