Opendoor is the largest iBuyer company in America, extending cash offers for homes needing minimal repairs. 35% of sellers requesting an Opendoor estimate ultimately sell their properties to them.
However, the unstable housing market has left iBuyers in a dicey situation. Two companies, Zillow Offers and RedfinNow shut down in 2021 and 2022 respectively.
Further, Opendoor has service fees, strict eligibility criteria, and gives low property valuations. So, if you’re wondering if selling to Opendoor is a wise choice, you’re not alone.
Let’s look at Opendoor reviews, its pros and cons, and alternatives to determine if you should invest your time in Opendoor.
Key Takeaways
- Pros: Opendoor.com provides an effortless home-selling process and an instant cash offer. They also have a flexible closing timeline, prioritizing your convenience.
- Cons: Opendoor extends lowball cash offers that may deprive you of a huge amount of money. Further, they have limited coverage and high service fees.
- Our Take: We don’t recommend selling to Opendoor unless you’re on a time crunch. If you have the luxury of time, you can fetch a better offer by listing your home on the MLS with Houzeo.com. Compare Houzeo vs. Opendoor.
What is Opendoor?
Opendoor is the country’s best iBuyer, offering instant cash offers on homes.
While their website emphatically claims that they aren’t a home flipper, they seem to act just like one. They buy relatively good-condition houses for 70% to 80% of their Fair Market Value (FMV). Later, they fix them up and sell them at a profit.
What differentiates an iBuyer like Opendoor from other cash buyers is its proprietary algorithm. It compares millions of historical pricing trends to arrive at a cash offer for your home.
It may possible that Opendoor uses this technology as a justification for its no-negotiation policy.
BIGGEST IBUYER
Opendoor
- Service Fee: 5%
- 📍 Coverage: 45 markets
4.4/5
(out of 3,092 reviews)
4.4/5
(out of 3,092 reviews)Opendoor is the country’s biggest iBuyer. They offer fast cash for homes with flexible closing timelines.
- Service Fee: 5% of Home Sale Price.
- Typical Offer: 70% to 80% of your property’s fair market value (FMV)
- Eligible Properties: Opendoor will make cash offers only on owner-occupied properties built post-1930 with a maximum lot size of 1.5 to 2 acres. Prefabricated homes, inherited properties, or homes with tenants do not qualify for Opendoor’s cash offer.
- Closing Offer Terms: Opendoor lets you close at your pace, up to 45 days out. The final offer terms may change after the home inspection.
» Opendoor Reviews: Why Opendoor will Pay Much Less than Fair Market Value in 2023?
- Wide Coverage: Opendoor pays cash for houses in 51 markets– Boston, Albuquerque, Cincinnati, Indianapolis, Birmingham, Miami, San Francisco, San Jose, etc.
- Flexible Closing Dates: Opendoor gives you the ability to close at your convenience up to 45 days out.
- Late Checkout Upto 14 Days: Opendoor allows sellers to close on their homes, receive sale proceeds, and temporarily rent their homes.
- No Cancellation Fees: You can cancel the contract without any cancellation fee.
- No Upfront Costs: When you sell to Opendoor, you skip the traditional home selling process. No need to fix, repair or stage the property!
» Opendoor complaints: Click here to learn about the pros and cons of them.
In our research, we came across some deal breakers with Opendoor.
- Lowball Cash Offer: Opendoor’s final cash offer may be below the property’s fair market value, around 70%. They also deduct repair and closing costs.
- Hefty Service Fees: Opendoor revises the final cash offer based on the inspection report. The service fees can go from 5% to 14%. This is significantly higher compared to the 6% realtor commission.
- Opendoor May Back Out of the Deal: Some homeowners have had a bad experience with Opendoor. Opendoor backed out of the cash deal at the last minute, leaving the homeowner stranded.
- Undisclosed Repair Cost Breakdown: The difference between Opendoor’s preliminary offer vs. final offer can be humongous. In many cases, sellers were forced to pay for unnecessary “repairs.”
- Strict Eligibility Criteria: Opendoor doesn’t pay cash for inherited properties, homes with tenants, pre-fabricated or mobile homes, and properties located in a flood zone.
» Opendoor Complaints: Check out the common complaints of Opendoor.
Opendoor has a rating of 4.4 out of 5 stars on Reviews.io.
» Opendoor.com Review: Does Opendoor pay the market value of your property?
Is Opendoor Legit?
Yes, Opendoor is a legitimate company with control over 51% of the iBuying market. Founded in 2014 by Eric Wu and Keith Rabois, Opendoor revolutionized American real estate by introducing the concept of iBuyers.
Over time, they have started offering brokerage services, home loans, exclusive listings, a Buying from Opendoor program, and more.
In July 2022, Opendoor entered into a multi-year partnership with Zillow. Now, sellers can request an Opendoor offer via Zillow’s platform.
Opendoor Office Locations
Opendoor has a limited coverage area of just 53 metro cities.
Its other services aren’t widespread either. You will need to check if facilities like Opendoor Brokerage, Opendoor Complete, Opendoor Home Loans, etc., are available in your area.
Opendoor’s restricted coverage may force you to turn to the open market. If that is the case, an MLS listing on Houzeo.com is in your best interest. With near nationwide coverage, the listing can be on your local MLS within 24-48 hours.
- 💡 Did You Know? Home sellers on Houzeo have received offers from a variety of cash buyers, including iBuyers like Offerpad and Opendoor.
What Types of Homes Does Opendoor Buy?
Opendoor has laid down strict eligibility criteria for the homes they purchase. During the sale, if they feel that your property isn’t up to the set standards, they may back out immediately.
To qualify for an Opendoor offer, your property needs to fulfill these conditions:
- Home Type: Opendoor generally purchases single-family homes and townhouses. They also dabble in duplexes and condos, but only in certain markets.
- Ownership and Occupancy: The seller must have a clear, marketable title. Additionally, the property should be occupied by the owner and must be vacant at the time of closing.
- Valuation: Opendoor usually buys homes valued between $100K to $600K. However, in certain cases, they can also consider houses valued as high as $1.4M.
- Year Built: Only houses built after 1930 are eligible for Opendoor offers.
- Maximum Lot Size: 1 to 2 acres of land. But this can vary based on market conditions.
- Home Location: The houses need to be within Opendoor’s coverage area.
What Does Opendoor Do With the Homes They Buy?
Generally, Opendoor makes the necessary changes to the property and lists it on the MLS. However, with the Opendoor Exclusives initiative that launched in 2022, buyers can purchase the house at a 2% to 4% discounted price.
This sale price is valid for just 2 weeks. If the home isn’t sold by then, Opendoor lists the property on the MLS at its full price.
How Does Opendoor Work?
Here’s a quick rundown of how the Opendoor offer process works:
- Request an Offer: To sell your home, enter your address on Opendoor.com and answer questions about your home’s features and condition. You will then receive a free, no-obligation Opendoor estimate based on this information and the local housing market.
- Schedule a Virtual Home Tour: If you accept their preliminary offer, Opendoor will schedule a virtual home tour. You can either speak to the company representative on a video call or send them photos and videos of your property for verification.
- Complete the Home Inspection: After the tour, Opendoor sends an in-house appraiser to evaluate the property and look for any structural issues. Typical areas of the home inspection include the foundation, roof, plumbing, electrical, AC units, etc.
- Receive the Final Cash Offer: Once the inspection is complete, Opendoor makes a final offer on your house within 2 days. This offer includes their 5% service charge, repair expenses, and closing costs.
- Close on the Sale: If you accept Opendoor’s cash offer, you can select a closing date up to 60 days out. You will have to upload photos of your home on Opendoor’s online dashboard to prove that its condition hasn’t changed since the assessment.
You will need to move out of your house by 11.59 pm on the day before escrow closes. The cash sale will go through a few days after closing.
Does Opendoor Pay Market Value?
No, Opendoor may not pay your home’s worth in 2023. In fact, their preliminary offer will never be more than 70% of your property’s Fair Market Value.
Historically, this iBuyer has been known to offer higher than market value for certain properties. However recently, they have been feeling the brunt of the slowing market.
In 2022, Opendoor suffered a whopping 1.35-billion-dollar loss.
To sustain in this market, Opendoor’s cash offer will probably be lower than what you expect. Further, with the added service fee, repair costs, and closing costs, you may end up leaving a lot of cash on the table.
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How Does Opendoor Make Money?
Since Opendoor functions like a traditional home flipper, they earn profits in a similar way too. They buy homes at discounted prices and sell them for a profit.
Additionally, Opendoor fees include a 5% service charge that covers utility expenses and taxes until the home is sold to another buyer. The costs of flipping the house are covered by the repair charges that they deduct while buying your home.
You also have to pay the seller closing costs, increasing the additional fees to 7%-10%.
Opendoor vs. Houzeo
Selling to Opendoor seems quick and easy. But you pay for this convenience by selling your home at a reduced price.
On the other hand, an MLS listing with Houzeo’s Gold plan equips you with advanced technology to call for the highest and best offers. You can also counter offers to help you get a deal closer to your expectations.
| Opendoor | Houzeo | |
|---|---|---|
| Sale Price | 70% to 80% of FMV | Up to 100% of FMV |
| Customer Rating | 4.4 stars (3,092 reviews) | 4.9 stars (1,096 reviews) |
| Coverage | 53 Metro Areas | 47 states + Washington D.C. |
| Fees/Commissions | 5% Service Fee | $399 + 3% Buyer Agent Commission |
| Scope for Negotiation | ❌ | ✅ |
| 100% Online Process | ❌ | ✅ |
» Houzeo Reviews: Still not convinced? Read what others have to say about Houzeo.
Opendoor Reviews
Opendoor has a 4.4 out of 5-star rating on Reviews.io based on 3,109 reviews.
Their positive reviews praise the iBuyer’s easy process and courteous customer support. On the other hand, Opendoor complaints highlight their lowball offers and high repair costs.
✅ Renata was happy with Opendoor’s quick closing process.
I need to sell my house in one state and be able to purchase a new one in another state within a weeks timeframe. With Opendoor I was able to make my dream come true!
Source: Reviews.io
✅ Jaime was relieved by the hassle-free selling process with Opendoor.
I had no idea on everything I needed to do to sale my house. Opendoor made my process so easy and stress free. They did all the work and all I had to do was wait.. They are definitely the team you need with any sale.
Source: Reviews.io
❌ Rick was enraged by Opendoor’s unprofessional customer service.
This company is the absolute WORST. After lowering their contracted offer by $70,000 one week before the close date (which was rejected), they then failed to cancel the transfer orders … resulting in our electricity, internet, water, and gas ALL being cut off over the course of the next 2 months … a total lack of integrity and competence … would highly recommend AGAINST ever using this company!!
Source: Reviews.io
❌ LC was shocked by the high repair costs charged by Opendoor.
Such a disappointment! I had no idea of their fees and what they would charge for repairs! Absolutely, a hoax! I have met with realtors and other cash offer companies. I was initially impressed with the ease of getting an offer…..a virtual walk through and an outside assessment. Then the REAL offer came in. I work in home services, and I’m very well-versed in home repairs and updates. I will NEVER recommend this company!
Source: Reviews.io
Opendoor: Pros and Cons
Companies like Opendoor are convenient for sellers who want to sell their homes fast. However, their pros and cons paint a clearer picture:
✅ Opendoor.com Pros
iBuyers have certain advantages over traditional home-selling processes. Let’s see how Opendoor matches up to these expectations.
- Instant Cash Offer: You receive a preliminary cash offer within 24 hours of submitting your property information.
- Buy As Is Homes: If your home needs minimal repairs, Opendoor can purchase your home as-is. This way, you can save on upfront costs.
- Flexible Closing Timeline: You have up to 60 days to close on your home as Opendoor lets sellers choose a convenient time.
- Zero Cancelation Fees: Opendoor doesn’t levy a penalty in case you want to reject the offer or cancel the sale.
- Late Checkout up to 14 Days: You can close on your home, receive the cash offer, and temporarily rent your home.
⛔ Opendoor.com Cons
Opendoor complaints reflect the following disadvantages of the company:
- Lowball Cash Offer: Opendoor’s final cash offer may be below the property’s fair market value, around 70% to 80%.
- High Additional Fees: You have to pay a 5% service fee, repair costs, and closing costs when selling your house to Opendoor. This reduces the amount of cash you get in hand.
- Strict Eligibility Criteria: Opendoor homes need to meet certain standards. Additionally, they don’t pay cash for inherited properties, homes with tenants, properties located in a flood zone, etc.
- No Scope for Negotiation: The cash offers you receive are non-negotiable. You may have to settle for the discounted sale price if you need cash urgently.
- Opendoor May Back Out of the Deal: According to reviews, Opendoor backed out of the cash deal at the last minute, leaving the homeowner stranded.
Opendoor Scam
In October 2022, the Federal Trade Commission took Opendoor Labs, Inc. to task regarding the iBuyer’s home-buying process. They alleged that Opendoor misled sellers into thinking that they could get a better offer from Opendoor than the MLS.
The Opendoor lawsuit also revealed that home sellers suffered financial losses in the thousands by choosing the iBuyer.
Opendoor has been ordered to pay $62 million to settle the matter. Further, they are prohibited from making any unsubstantiated claims to consumers about the offers they can receive from the company.
Other Opendoor Services
Here are some additional services Opendoor provides, depending on your location.
- Opendoor Brokerage: You can work with an Opendoor agent if you wish to list your home on the MLS. Similar to a traditional brokerage, you will receive all the assistance you need with Opendoor realty.
- Opendoor Complete: With this home trade-in service, you can use your Opendoor cash offer for your old home to purchase your new one. This way, instead of paying two mortgages, you can close on your dream home for just a 5% service fee.
- 90-Day Buyback Guarantee: A marketing tactic to promote Opendoor home sales, the iBuyer offers a 90-day buyback guarantee for a 3% fee. So, if the house doesn’t live up to your dreams, you can return it in three months.
- Opendoor Home Loans: You can finance your new home with the Opendoor mortgage lending solution. You get competitive interest rates on loans and avoid any extra lender charges. In certain states, Opendoor also offers a credit of $1,000 towards closing.
- Opendoor Title: With the acquisition of OS National in 2019, you can avail of title insurance and escrow services with Opendoor Title.
Best Opendoor Alternatives
Even if you want to sell your house fast for cash, look for some alternatives better than Opendoor. We’ve listed three below:
- Houzeo: Houzeo is one of the best FSBO websites in America that lets you list your home on the MLS in just 24 to 48 hours. Here, multiple national and local cash home buyers make offers on your property, driving up its price. You can even get 100% of your home’s FMV.
- Opendoor: Offerpad has the fastest closing among iBuyers. So, if your house needs minimal repairs and you require cash urgently, Offerpad can be a good alternative to Opendoor. They pay 70% to 80% of your home’s FMV.
- HomeVestors: HomeVestors is a cash home buyer franchise offering 50% to 70% of the home’s FMV. However, they may deduct repair costs at closing. Further, since each office is independently owned, you won’t get consistent service across the country.
“We Buy Houses for Cash” Companies Near Me
There are other “We Buy Houses As Is” companies in the market. You can request an offer from multiple cash companies and pick the one that suits you the best.
Is Opendoor Worth it?
We do not recommend Opendoor for sellers wanting top dollar for their property. Their lowball offers, high service fees, and repair costs may reduce the total amount your receive for your home drastically.
Additionally, their final offer could be 2% to 3% lower than their original estimate. With little to no scope for negotiation, your hands are tied when you receive this “take-it-or-leave-it-deal”.
The open market is a much better alternative to get your home’s worth. A flat fee MLS service like Houzeo can open doors to even a 100% FMV cash offer for your home.
Frequently Asked Questions
1. How much does Opendoor charge?
Open door fees include a 5% service charge that sellers have to pay when they sell their homes as is. Opendoor also charges sellers repair and closing costs.
2. Is Opendoor still buying houses?
Yes, Opendoor is still buying homes. However, the number of properties they purchase is decreasing Y-O-Y.
3. Does Opendoor pay closing costs for buyer?
No, Opendoor doesn't pay buyer closing costs. If you sell to Opendoor, you still have to pay 50% of the closing costs.
4. How much does Opendoor charge for repairs?
Opendoor usually charges around 1% to 2% of the sale price as repair costs.
5. What's the catch in Opendoor's preliminary offer vs. final offer?
Opendoor's preliminary offer is usually higher than their final offer. It is non-negotiable, and only if you accept it does the company schedule an onsite inspection. The repair and closing costs and Opendoor's service fee are deducted from your proceeds. The final cash offer is calculated accordingly, and you lose roughly 6% to 14% of the home's sale price.
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