perhaps you dont know who they are. They along with Zillow and a couple of other companies have an interesting business model that is about to get crushed. Maybe you have seen their ad’s on TV. Basically they are flippers, they buy a house directly from a homeowner so the homeowners avoids the realtor commissions. ( in a home sale, the Seller pays all of the realtors commission, usually 6% of the sale price. ) It’s a big number. On a $900000 dollar sale, realtor commissions @ 6% is $54000. That’s a new Tesla, almost. So the pitch if you sell your house to Opendoor or Zillow is you cut out the realtor and save that 6%. Cash offer, close in 10 days., as - is, no repairs and no inspections, lmao. Pretty compelling. They were also very aggressive with their price offers, paid way above market value. Once they buy the house, they remodel it and put it right back on the market at a much higher price than what they paid for the house. Works great in a hot market. Zillow exited the business late last year, after they lost $250 million. Opendoor kept going with the stupid business model. In August, they lost money on 55% of Los Angeles flips, and 76% of Phoenix flips. They lost money on 42% of their flips nationwide. And they are still holding a shit load of houses in inventory. I have been watching their sales in the IE. Almost every house I see, they are selling for way less than they paid. Plus the amount spent on remodeling the house. These guys are partially responsible for the huge increase in prices and it’s also why regular buyers were making offers like crazy but losing out on the homes to these idiots. Karma is here. Home sales is seasonal, and the slow season is upon us. It’s already ugly for builders, it’s gonna get real ugly for retail sales this winter. Might be the worst winter since 1942 Stalingrad. Until winter 2023 comes along when we will be in a full blown crash and recession. Cheers.
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Edited: Sep 20, 2022
OpenDoor about to be renamed, Brokedoor
OpenDoor about to be renamed, Brokedoor
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If you're going to pay a 5% sericie fee, imho you may as well pay a realtor. You get experience and with the right one it can definitely make a difference. Now, if the service fee was zero or 1%, it's a compelling concept.
Good post. Just for fun for over a year I dealt with open door just out of curiosity what they would offer on my house when the market was really hot. They would send pretty fair offers every other month or so always increasing it incrementally. It’s convenient you don’t have to list it with a broker or put it in multiple and have to always be ready to have everything looking good for a showing. However the catch was in their offer was a hidden commission or as they called it a service fee of 5% which would be deducted from your proceeds. Sounds like their in trouble.