Opendoor is an iBuyer — a real estate company that uses technology to make an instant offer on sellers’ homes — that was founded in 2014 and is headquartered in San Francisco, California. They are one of the many companies that buy houses for cash and can help homeowners sell their home fast by giving them an instant (or near instant) offer.
They can also help you buy a house and finance your home purchase in select markets. You may consider working with Opendoor if you need to sell your house fast, but you probably won’t get the full market value of your home in exchange for the convenience of an instant offer.
In contrast, Orchard is a power buyer that empowers homebuyers and sellers by unifying tasks and transactions, and offering services to help give their clients an edge over competition.
Property tech companies have leveraged digital tools to simplify and shorten the traditionally convoluted and elongated process. But the success of these companies has created a proliferation of competitors, and it can be hard for homebuyers and sellers who aren’t in the industry to know the differences between them.
Opendoor’s instant cash offer is the company’s core offering. Sellers who use this service can request an offer online and receive a preliminary number within 24 hours. Sellers who choose to pursue the offer then set up a virtual assessment of their house to determine the condition of the home. Once the assessment is complete, Opendoor submits their final offer to the seller. If sellers choose to accept the offer, they can expect to close within 14 to 60 days.
But this service comes with a significant drawback: You probably won’t get as much money as if you listed on the market. iBuyers typically offer below market value on homes so they can make a profit when they sell the home. That being said, Opendoor offers are higher than other iBuyers, according to an analysis of offer prices in Phoenix (the largest iBuyer market) by real estate technology strategist Mike DelPrete.
While Opendoor’s lower purchase price is a worthwhile trade-off for homeowners who need to sell fast, most home sellers will want to prioritize maximizing profits from their home sale.
Since their founding, Opendoor has expanded their services to compete with the growing field of iBuyers. They now offer more robust, consumer-focused services like flexible home tours and financing, in addition to their original instant cash offer.
You can buy Opendoor-owned houses directly from them or with your own agent. While this may feel like real estate as usual, Opendoor makes home tours available between 6am and 9pm every day with no appointment needed. This is in contrast to traditional home tours where homebuyers have to work around their agents’ schedules to see homes.
In select markets, Opendoor will buy houses on your behalf for cash — whether they’re Opendoor-owned or not. Homebuyers in competitive markets may choose to use this service, as non-contingent cash offers are generally more appealing to sellers.
Homeowners who need to buy a house and sell their current one can also use Opendoor’s trade-in program. With this service, homeowners can buy a new home and sell their old one in one transaction by lining up their closing dates with Opendoor.
Also in select markets, Opendoor can act as your lender. Homebuyers who choose to finance with Opendoor can benefit from perks like no appraisals or origination fees and a $2,500 seller credit (if you buy an Opendoor-owned home).
Opendoor purchases the following types of homes:
Opendoor typically only buys homes built after 1930 with a maximum lot size of two acres. The homes they buy are most often valued between $100,000 to $600,000, but they will sometimes purchase homes worth upwards of $1 million. Many of their standards vary by market.
Many services offered by property tech companies like Opendoor sound too good to be true. But Opendoor is a legitimate real estate company. They are verified on Trustpilot, an independent review platform, and a Better Business Bureau accredited business (although their profile is currently being rated).
Opendoor operates in more than fifty metros across the United States, but all of their services (including, Sell to Opendoor, Buy from Opendoor, Buy with Opendoor, and Opendoor Financing) are only available in the following markets:
Service fees for Opendoor range between 5% to 14% of the home’s purchase price, although they typically fall in the 5% to 8% range. When Opendoor buys your home, they will also deduct the cost of any repairs your home needs from their offer price.
This is a heavy premium compared to real estate agent commissions, which typically cost 5% to 6% of the home sale price. Opendoor’s fees are even high compared to other property tech companies that charge fees more in line with traditional agent commissions.
When you sell to iBuyers like Opendoor, you don’t get the opportunity to list your home on the market. That means no chance to entice bidding wars, which can drive up the purchase price, and no chance to speak with an agent to find out their recommended listing price. Plus, iBuyers often don’t offer the full market value of your home because they need to quickly sell it for a profit with only minimal repairs or renovations.
While Opendoor is a good option for some homeowners, it’s not the best choice for all. Here are some pros and cons to weigh before choosing to work with them.
The chart below outlines some of the major similarities and differences of these two property tech companies.
Homeowners who need to sell fast may choose the convenience and speed of Opendoor’s instant offer, but they pay a price for doing so. Orchard offers the same peace of mind with a guaranteed home sale, plus the additional advantage of listing on the market for top dollar. Orchard even helps prepare your home for sale with our concierge service. We’ll cover listing prep and home maintenance, saving you over $1,800.
If you’re buying in a competitive market, Orchard’s Offer Boost can help you stand out as a cash buyer. In addition, Orchard charges lower fees than the competition, comparable to traditional brokerages.
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