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 — between 6-14% (average 7.1%) — 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.
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 ranging from 6-14% (average fee is 7.1%).
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 20 U.S. markets — read this full 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:
Another well-established iBuyer with a similar business model. Charges a similar fee (average 7.5%) but is currently only active in 12 U.S. markets.
Zillow's iBuyer arm charges hefty fees and makes lower offers. Currently available in 21 U.S. markets.
Perch offers both trade-in and cash offer options, which come with 6% and 6.9% fees, respectively. Currently, the company is only active in three Texas markets.
Redfin's iBuying offering is one of the more recent entrants in the space, offering speedy cash offers on qualifying homes in 11 U.S. cities for a 7% fee.
We Buy Ugly Houses
We Buy Ugly Houses is the largest, traditional cash buyer out there. Available in 46 states and Washington D.C., this company will buy your home for cash regardless of its age, condition, or location. That said, expect to take a hit on price — often to the tune of 30-50%.
Knock isn't actually an iBuyer — instead, it operates on a trade-in model, combing the buying and selling process into one single experience. Knock customers will pay a 6% fee, plus typical buyer and seller closing costs. The company currently operates in 7 U.S. markets, with plans to be in 10 by the end of 2020.
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 more 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!