Learn how Opendoor's business model works. Discover the difference between selling your home to Opendoor or selling your house with the help of Clever Real Estate. Find a top-rated Clever Partner Agent working in your area.
Opendoor is part of a new real estate movement known as "iBuying" — companies that make near-instant, all-cash offers on qualifying homes.
If your home fits the company's criteria, you'll get a preliminary offer within 24 hours. In some cases, the entire sale can take as few as 14 days, from accepted offer to closing.
This can be a great option for people who need to sell quickly or simply want to avoid the stress and hassle of the traditional listing process.
In exchange for this service, Opendoor charges a fee — 5% — which helps offset carrying costs and ensure it turns a profit on each transaction.
Of course, Opendoor isn't the only fish in the sea. There are a number of other iBuyers out there, each with its own set of unique advantages and drawbacks.
Keep reading to learn more about Opendoor and how it stacks up against top competitors.
JUMP TO SECTION
Opendoor's Business Model: A Quick Overview
Founded in 2015, Opendoor is often credited with launching the iBuyer movement in the United States.
Its primary goal is to save homeowners time and stress by offering a quick and convenient alternative to the traditional home selling process.
It also offers potential cost savings: when you sell to Opendoor, there's no need to hire a real estate agent, post a property listing, pay for professional photos, negotiate with buyers, or hire a real estate attorney.
The company uses advanced algorithmic technologies, massive amounts of data, and a team of in-house experts to make fair, competitive offers on the properties it buys.
In order to turn a profit, the company charges a service fee of 5%.
Because it buys and resells properties at an incredibly high volume, Opendoor is able to mainly relatively thin margins on each sale, relying on its fee and market appreciation to turn a profit.
Importantly, this sets the company apart from traditional house flippers and cash buyers (think We Buy Ugly Houses), who profit by lowballing sellers then turning around and re-listing for a massive profit.
A few additional key considerations:
- Even if your home qualifies for an Opendoor offer, you may still be on the hook for repairs. These will be assessed during an on-site inspection, and costs will be deducted from your final offer price.
- The company has strict criteria and is currently active in only 21 U.S. markets — read our full Opendoor review to find out what kinds of homes Opendoor will buy, and where.
Top Alternatives to Opendoor
We've compiled a list of some of the top Opendoor alternatives out there today — click on the link to read a full, in-depth review of each company:
Min. Time to Close
2.1/5 (53 reviews)
- Offerpad is an iBuyer buying homes that meet their requirements in 14 cities across the southern United States.
- To receive a cash offer, complete their online questionnaire. You can choose to add a virtual tour or pictures for additional value.
- Once the offer is received, you can choose to accept or decline — there's no negotiation.
- If you accept the offer, you select the closing date.
Offerpad is currently purchasing homes in 14 locations.
|Atlanta, GA||Austin, TX||Birmingham, AL|
|Charlotte, NC||Dallas-FW, TX||Houston, TX|
|Jacksonville, FL||Las Vegas, NV||Orlando, FL|
|Phoenix, AZ||Raleigh, NC||San Antonio, TX|
|Tampa, FL||Tucson, AZ||Charlotte, SC|
Click here for a specific list of sub-locations.
- No need to prep, market, or list your home
- Close on your timeline
- Free local moves
- Service fee does not include closing or repair fees
- No negotiations for sellers
- The repair deductions may be more expensive
As of October 20, 2020, Offerpad's average customer rating is 2.1/5 based on 53 reviews.
» READ: The full Offerpad guide here
6% + 1.5-7.9%
Min. Time to Close
- Zillow Offers is an iBuying branch of Zillow, one of the most popular real estate listing and pricing marketplaces.
- Fill out an application to receive an offer within 3 days.
- Schedule an in-person evaluation and inspection to receive a final cash offer.
- Close on your own schedule — from 7-90 days after taking the offer.
Zillow Offers currently purchases homes in 25 locations.
|Atlanta, GA||Austin, TX||Charlotte, NC|
|Cincinnati, OH||Colorado Springs, CO||Dallas, TX|
|Denver, CO||Fort Collins, CO||Houston, TX|
|Jacksonville, FL||Las Vegas, NV||Los Angeles, CA|
|Miami, FL||Minneapolis, MN||Nashville, TN|
|Orlando, FL||Phoenix, AZ||Portland, OR|
|Raleigh, NC||Riverside, CA||Sacramento, CA|
|San Antonio, TX||San Diego, CA||Tampa, FL|
- Offers are valid for 3 days
- Set your own closing and move-out date
- Offers are typically within 1-2% of fair market value
- Could pay as high as 13.9% (6% selling fees and up to 7.9% in service fees)
- Not all homes are eligible for purchase
As of October 20, 2020, Zillow Offers does not have any verified customer reviews on reputable third-party review sites.
Min. Time to Close
4.6/5 (97 reviews)
- Orchard (formerly Perch) is an iBuyer and home exchange company, focused on providing "hassle-free" home sale and purchase services.
- Use the Move First program to purchase a new home before selling you old one.
- Fill out an online form and receive an offer on your home to fall back on if your home doesn't sell in 120 days.
Orchard is available in five major Metro areas across the country:
|Austin||Dallas-Fort Worth||San Antonio|
Orchard's services appear to be consistent across all their areas, but check their website for specific details on what they offer.
- Pay only one mortgage at a time
- Move into a new home while your previous home sells
- Orchard's agents provide the same services as traditional agents do
- You'll always have a cash offer to fall back on if your home doesn't sell in 120 days
- Offers will be below home's value to benefit Orchard
- Taxes, fees, and closing costs are not included
- Offerings limited to limited metro areas
- Orchard's 6% fee is more costly than a traditional agent's fee
As of October 20, 2020, Orchard's average customer rating is 4.6/5 based on 97 reviews.
» READ: The full Orchard guide here
Min. Time to Close
3.8/5 (3 reviews)
- RedfinNow is the iBuying part of Redfin, a national real estate brokerage offering a variety of services.
- Request an online offer to receive an initial assessment and offer
- If you accept, there's an inspection and appraisal to calculate service and repair fees
- You must close 10-30 days from offer acceptance
RedfinNow is currently available in California, Colorado and Texas. The list of serviced cities is currently in flux due to COVID-19, so check their website for an up-to-date list.
- Quick and reasonable cash offer
- No additional work needed
- Choose your own closing date
- High service fee
- Additional nonnegotiable repair costs
- Limited availability
As of October 20, 2020, RedfinNow's average customer rating is 3.8/5 based on 3 reviews.
» READ: The full RedfinNow guide here
We Buy Ugly Houses
Time to Offer
Varies - pending home evaluation
Minimum Time to Sell
Close in as few as 30 days
We Buy Ugly Houses is a national franchise owned by Homevestors. Franchises are independently run by local investors who use the We Buy Ugly Houses brand to advertise their services.
Steps to sell with We Buy Ugly Houses:
- Call We Buy Ugly Houses and speak to a representative about your home, or fill out the form on their website.
- Schedule a visit for a local franchisee to view your home. They will answer any questions you may have and evaluate you home. If the franchisee thinks your home is worth investing in, you will receive a cash offer on the home.
- Set up a time to close on the sale if you choose to accept the deal. This can happen as fast as three weeks after accepting the cash offer.
As a franchise, experiences with We Buy Ugly Houses will vary from region to region, based on the local investor you're paired with.
We Buy Ugly Houses has partnered with local investors in the following states:
As of May 22, 2020, We Buy Ugly Houses's parent company, Homevestors, has an A+ rating on the Better Business Bureau. No other third-party reviews are available at this time.
This rating is based on overall national data. Research local franchises for specific reviews that reflect their quality of service.
Min. Time to Sell
4.8/5 (710 reviews)
- As a variation of an iBuyer, Knock operates on a trade-in model, consolidating the buying and selling process into one package.
- Once you sign onto Knock's contract, Knock will buy you a home for cash before listing your current home, ensuring a clean and easy move
Knock currently operates in Phoenix, Denver, Orlando, Tampa, Atlanta, Charlotte, Raleigh-Durham, Austin, Dallas-Fort Worth, Houston, and San Antonio.
- Knock won't list your home until they've bought you a new one — no overlapping mortgages or payments
- Applies to more homes than competitors - you can upsize or downsize
- Guaranteed new home
- Repair costs may be higher than doing repairs independently
- No negotiations on fees
- If you have already bought a second house (or intend to rent) the Knock model does not apply to you
As of October 20, 2020, Knock's average customer rating is 4.8/5 based on 710 reviews.
» READ: The full Knock guide here
Which option is best for you?
As you may have guessed, there's no single, correct answer to this question. The right choice ultimately depends on your unique situation, priorities, and requirements.
Your home is one of the most valuable assets you'll ever own. As such, we recommend exploring as many options as possible before making a final decision on how to sell.
That means not only requesting offers from multiple iBuyers, but also speaking to a few local real estate agents to see if you might be able to net you more money on the open market within your required timeline.
Either way, we recommend seeking some advice from an expert.
If you're currently weighing your options, Clever can help! Our team of licensed experts is standing by to answer your questions, offer free advice, and refer you to the best home selling solutions, given your specific needs and goals.
Importantly, our referral service is 100% free and there's never an obligation to move forward with any of our recommendations. Fill out the form below to speak with one of our licensed experts!
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