For homeowners looking to sell fast, selling to an iBuyer for an instant cash offer might sound appealing. With the iBuyer market growing, we took a look at Opendoor and its top competitors to determine the pros and cons each can provide. Read on to decide if an iBuyer is the best fit for you.
iBuyers like Opendoor are companies that use technology and data to disrupt the real estate industry's status quo.
Each iBuyer's model is slightly different, but most will make near-instant, all-cash offers on qualifying homes, usually within 24-48 hours of your request.
In exchange for this streamlined, flexible service, iBuyers typically charge a fee, which ranges between 5-15%. That said, fees typically average in the 7-10% range.
If you're considering this route, Opendoor is by far the biggest and most established iBuyer in the industry. In 2018, it bought upwards of 10,000 homes — 3x more than its closest competitor.
That said, there are a number of different iBuyers — and options for selling a home — to choose from, and it's important to do your homework before making a final decision to ensure you come away with the best possible outcome.
Read on to learn more about selling to Opendoor and how its business model works, along with a brief overview of six of its top competitors in the iBuyer/cash buyer space.
JUMP TO SECTION
What is Opendoor?
Opendoor operates in 21 markets nationwide to buy, sell, and trade-in homes through its website and mobile app.
Rather than go through the traditional selling process, homeowners fill out an online form with details about their home — including age, square footage, amenities, and more. From there, a market expert will prepare a no-obligation, all-cash offer based on the latest local trends and Opendoor's algorithm.
If a homeowner accepts the offer, they can set their own timeline to move. An in-person assessment from Opendoor will determine the home's condition.
If repairs are needed, the owner can fix them or leave it to Opendoor, with the cost deducted from proceeds. Homeowners also choose the closing date with the option for a rent back 14-day late checkout.
What is Opendoor's business model?
In exchange for its speedy, streamlined home selling service, Opendoor charges a service fee of 5%, which is similar to the standard commission rates real estate agents charge for their services.
Bear in mind that in exchange for this fee, you get the certainty that comes with an all-cash offer, the flexibility to move according to your own timeline, and the ability to handle all the paperwork online. You also avoid typical seller paint points like staging and showings, negotiations, and buyer financing issues.
The truth is that this service fee isn't entirely how Opendoor makes money. Rather, it's there to help offset the carrying and resale costs that Opendoor incurs by purchasing your home outright — e.g., utilities, taxes, marketing, other selling expenses, and so on.
Opendoor relies on short-term market appreciation to generate the bulk of its revenue. Unlike a traditional house flipper that operates on a buy-low-sell-high model, Opendoor pays fair prices for the homes it purchases, cleans them up, then resells them for a small profit — typically less than 5%.
Because Opendoor buys and sells thousands and thousands of homes each year, this slim per-transaction margin, multiplied many times over, becomes highly profitable. In contrast, a traditional flipper operates on a much smaller scale, which means they need to maintain much higher margins on each transaction to come out on top.
Long story short: Opendoor's model allows it to pay fair prices for the homes it buys. It can maintain the same margins and become increasingly profitable as the business (i.e., number of transactions per year) continues to grow.
Top 6 Opendoor Competitors
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
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
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
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
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
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.
What are the differences between Opendoor and its competitors?
- Opendoor vs. Zillow Offers: While Opendoor provides a free offer within 24 hours of receiving a homeowner's information, Zillow Offers takes about 3 days to prepare an offer. Opendoor is available in 21 major cities while Zillow is in 25.
- Opendoor vs. Offerpad: With Opendoor, a homeowner is eligible to cancel the sale for any reason at any time in the process without a penalty. Offerpad does not offer the same penalty-free cancelation policy. Offerpad also buys homes in only 14 metropolitan areas.
- Opendoor vs. RedfinNow: RedfinNow requires an in-home visit before giving an official offer price compared to Opendoor's online only. Opendoor can also close in 14 days while RedfinNow's closings range is 10-30 days.
- Opendoor vs. Knock: While Opendoor provides home buying, selling, and trade-in, Knock works exclusively with trade-ins.
- Opendoor vs. Orchard: Currently, Orchard only operates in five metropolitan areas.
- Opendoor vs. We Buy Ugly Houses: We Buy Ugly Houses deals typically take longer to complete — about 30 days. Homes are sold as-is, with no fees, repairs or closing costs paid by the homeowner. Offers are also typically even lower than iBuyers, ranging from 50-70% of fair market value.
Which is the right service for you?
Depending on your specific priorities and needs, selling to an iBuyer like Opendoor could be your best option. For qualified sellers, it represents a convenient, stress-free, and flexible alternative to the traditional home selling process.
Also, requesting a cash offer from Opendoor is free and comes with no obligation, so there's really no reason not to. If you qualify, you'll know exactly how much you'll get for your home if you want to pull the trigger — if you don't, then you can start focusing on other options.
That said, it's worth exploring all of your options before making a final decision.
Opendoor pays fair market value for the homes it buys, but there's always a chance you could net more than fair market value listing with an agent on the open market. We recommend speaking to at least one or two top agents in your area to get their take on your chances of selling for a high price — and how long it might take to do it.
The key takeaway is that there's no single right answer — the best approach for you will ultimately depend on your specific situation and goals. If you're currently weighing your options and trying to figure out how to sell fast without sacrificing sale price, Clever can help!
Our team of licensed real estate experts is standing by to answer questions, offer advice, and refer you to different services and solutions to fit your needs. 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 get in touch!
Top FAQs about Opendoor Competitors
Can I trade my house for a new one?
Yes, Opendoor offers trade-in services. Eligible sellers can request an offer on their home and go on to tour hundreds of new homes from the app. Opendoor agents will coordinate the offer and closing on the new home and arrange the moving date to prevent the seller from moving twice or paying a double mortgage.
What is the difference between realtor.com and Zillow?
The main difference between realtor.com and Zillow is where they receive listing information. realtor.com's data comes primarily from regional MLS systems operated by local real estate boards. Zillow aggregates listings from individual brokerage sites — such as Century 21 and Sotheby's Banker's — and in some cases from real estate boards as well. They also allow homeowners to claim their own properties to list them as “for sale.”
Does Opendoor pay realtors?
Opendoor does pay realtors in some instances. The company works with both buyer and seller agents. If a homeowner buys a home from Opendoor, the agent will be paid a commission. Co-broke commissions are included on their MLS listings. Listing agents who work with Opendoor to sell a home will receive a negotiated commission in the listing agreement with the homeowner.
Opendoor also offers a 1% referral fee to listing agents who introduce an unrepresented homeowner to work directly with the company.