You know, I’m all in favor of technology that works for us, makes our lives easier. I use technology tools all the time in my real estate business. And while Opendoor’s ads may make it look “easy” to buy or sell a house, I’d like to make the case for when a local realtor might be a better choice. (Do I have a vested interest? Yes, I do, but just hear me out!)
Selling Your Home To Opendoor
The basics of Opendoor for sellers in the Raleigh/Durham market are as follows. After you put in the basic information at your home, Opendoor will make you a cash offer, usually within 24-48 hours. If you accept, they will then let you set an escrow period, and evaluate your home to see if repairs are needed. If they determine repairs must be made to the home, they can lower your offer to cover those costs.
There are some criteria that Opendoor follows when determining whether to buy your home for resale. Usually, the home must be built after 1960, have a sales price between $100k and $500k, with a lot size up to .5 acres. It must be owner-occupied and be a single-family or a townhome. Opendoor does sell duplexes and condos in certain markets.
Sounds fairly simple, right? They don’t take a traditional commission, but they charge an “Opendoor fee” of around 5% which is basically the same thing. Total costs can be from 5-13% when closing costs and repair deductions are included. Opendoor does not usually cover closing costs on either buying or selling transactions; in a traditional real estate transaction, closing costs are often negotiated.
Opendoor says it takes fair market value into account, recognizing which markets are “hot.” Remember, though, they are in the business to buy and sell homes, so they are not in the business of negotiating on your behalf. If they get the price that works for their model, they will take it. On the open market, a motivated buyer is likely to offer you much more than Opendoor is paying, especially during a bidding war.
I’ve heard some Opendoor buyers express relief at not having to get their home ready for sale or allow potential buyers in their private space, and I can understand that in theory. However, the flip side without Opendoor is some showings and achieving $20,000-$80,000 in additional profit, which is what I'm seeing in the current market. Sure you have to do a little prep work and leave the house for showings, but for the extra money it is well worth it.
Also, we have seen recently that Opendoor has really pulled back on their offers. I had a client who was offered $670,000 for their home by Opendoor, and then 3 months later was offered $480,000 for the same home. What a crazy difference! Opendoor and other companies like Offerpad got caught up in the really hot market, and ended up paying too much for the homes. Now they are ultra-conservative on the other end of the spectrum.
Buying a Home From Opendoor
If you’re a buyer, you can visit the Opendoor website to see what homes they have listed in your desired neighborhood and make an appointment to view the house at your convenience. There is not usually an agent to walk you through, so you’re dependent on a lockbox code and if it doesn’t work, you have to call a support line to get help.
What is of more concern to me is that you’re buying a home from Opendoor, not the last seller of the property. Although they say they make some repairs to bring the home up to a certain standard, I’ve found from experience that Opendoor does not do a home inspection before they list the property; many times the properties are not in great shape. Opendoor is certainly not going to be tuned in to all the repairs that might actually be needed as the previous owner living in the home was.
And North Carolina is a “buyer beware” state, meaning sellers have to disclose certain facts about the home, but can also “opt-out” by saying “no representation” on the disclosure form. Brokers, on the other hand, by law, must disclose a wider range of potential trouble spots.
So I’m not really worried about Opendoor and don’t consider them competition for our Raleigh/Durham market. Can these technology companies working as an “agent” open a door or write a contract? Yes, but they can’t take away the human touch of your local real estate professional. The pro who knows the market inside and out, takes the time to get to know you and your needs, and hustles to get you the best deal possible as either a buyer or seller.
I think that makes us not only valuable but actually invaluable. So if you’re thinking of buying or selling in the Triangle area, and Opendoor comes knocking, read reviews from my past clients and give me a call. I may have a better door to open for you!