What is Opendoor? | Business model | Top competitors | Key differences | FAQs
🔑 Key takeaways
|
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.
» Click here to request a free, no-obligation cash offer from Opendoor
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.
What is Opendoor?
Opendoor operates in over 20 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 3.5-5%, 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
- buyer financing issues.
» LEARN: The true cost of selling to Opendoor.
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%.
🤔 How can Opendoor afford to charge competitive fees? Because Opendoor buys and sells thousands and thousands of homes each year, the company is able to maintain a slim per-transaction margin. 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 work towards profitability as the business (i.e., number of transactions per year) continues to grow. » READ: How does Opendoor make money? |
Top 6 Opendoor Competitors
Zillow Offers
Zillow Offers
Full ReviewService Fee
6% + 1.5-9%
Closing Date Window
7-90 days
Average Rating
Not available
Zillow Offers can be a convenient option for sellers — but its fees can potentially be higher than competitors. If you're in a market where there are multiple iBuyers, it's worth shopping around to find out which will give you the best cash offer.
Pros
- Extra time to decide: Initial cash offers are valid for 5 business days
- Generous closing window compared to competitors
- Offers are typically within 1-2% of fair market value
Cons
- Fees could total up to 13.9% (6% selling fees plus a maximum 7.9% in service fees)
- Upselling: Zillow will try to get you to work with a premier agent, even if you decline its cash offer
- No option to do repairs yourself
Zillow Offers currently purchases homes in 25 locations.
- AZ: Phoenix, Tucson
- CA: Los Angeles, Riverside, Sacramento, San Diego
- CO: Colorado Springs, Denver, Fort Collins
- FL: Jacksonville, Miami, Orlando, Tampa
- GA: Atlanta MN: Minneapolis
- NC: Charlotte, Raleigh
- NV: Las Vegas
- OH: Cincinnati
- OR: Portland
- TN: Nashville
- TX: Austin, Dallas, Houston, San Antonio
As of February 15, 2021, Zillow Offers does not have any verified customer reviews on reputable third-party review sites.
- Website: www.zillow.com/offers
- Phone: 1-833-963-3377
- Email: zosupport@zillowgroup.com
Offerpad
Offerpad
Full ReviewService Fee
6-10%
Closing Date Window
10-90 days
Average Rating
1.8/5 (57 reviews)
Offerpad promises the certainty of a cash offer and a fast closing on a date you choose. But its restrictive purchase agreement, hidden cancellation fee, and negative online reviews suggest it's riskier than other iBuyers.
Pros
- Generous closing window compared to competitors
- Late checkout option gives sellers up to 3 days to move out after closing
- Access additional services, such as free local moves within 50 miles
Cons
- You'll have to sign a binding contract before knowing the final offer price
- You might face a 1% cancellation fee
- Offerpad reserves the right to back out at any time
Offerpad is currently purchasing homes in 14 locations.
- AZ: Phoenix, Tucson
- AL: Birmingham
- FL: Jacksonville, Orlando, Tampa
- GA: Atlanta
- NV: Las Vegas
- NC: Charlotte (+ neighboring parts of SC), Raleigh
- TX: Austin, Dallas-Fort Worth, Houston, San Antonio
As of February 15, 2021, Offerpad's average customer rating is 1.8/5 based on 57 reviews.
- Sitejabber: 1.81 stars (32 reviews)
- Review.io: 2.17 rating (6 reviews)
- Yelp: 1.5 stars (22 reviews)
- Better Business Bureau: A+ rating (57 complaints)
- Website: www.offerpad.com
- Phone: 844-388-4539
- Email (Sellers): info@offerpad.com
- Email (Buyers): buyers@offerpad.com
RedfinNow
RedfinNow
Full ReviewService Fee
6-12%
Closing Date Window
10-30 days
Average Rating
Not available
Compared to its competitors, RedfinNow handles a relatively small volume of iBuyer sales. However, RedfinNow shines in several niches, thanks to its willingness to accept older homes and its availability in a wide range of California cities.
Pros
- Expanded presence in cities across California, including several not served by other iBuyers
- Large and trusted corporate brand
- Older homes (built after 1930) are eligible in select cities
Cons
- Relatively expensive services fees (up to 12% of the offer price)
- Relatively limited flexibility on closing window, compared to competitors
- Verified customer reviews are unavailable
RedfinNow is currently purchasing homes in 14 locations.
- AZ: Phoenix
- CA: Inland Empire, Los Angeles, Orange County, Palm Springs, Sacramento, San Diego, San Francisco
- CO: Denver
- TX: Austin, Dallas, Houston, San Antonio
- WA: Seattle
As of February 15, 2021, RedfinNow does not have any verified customer reviews on reputable third-party review sites.
- Website: https://www.redfin.com/now
- Phone: 951-229-0511
- Email: redfinnow@redfin.com
Knock
Knock
Full ReviewService Fee
1.25%
Closing Date Window
Varies
Average Rating
4.8/5 (710 reviews)
Knock allows customers to purchase a new home before selling their old one. Unlike typical iBuyers, you'll sell on the open market with a traditional real estate agent. Knock will cover your old mortgage until your home sells — but you'll still eventually have to settle up, and costs can add up fast if your home sits on the market.
Pros
- You'll sell on the open market, potentially receiving offers above fair market value
- $25,000 advance for home repairs before selling
- Compared to competitors, Knock accepts older homes (built after 1930)
Cons
- Fees can add up quickly if your home sits on the market
- You'll have multiple points of contact rather than one dedicated agent
- Buyers will need to be proactive and independent in their home search
Knock is currently operating in 15 locations.
- AZ: Phoenix
- CO: Denver
- FL: Fort Lauderdale, Jacksonville, Miami, Orlando, Tampa, West Palm Beach
- GA: Atlanta
- NC: Charlotte, Raleigh-Durham
- TX: Austin, Dallas-Fort Worth, Houston, San Antonio
As of February 15, 2021, Knock's average customer rating is 4.8/5 based on 710 reviews.
- Zillow: 4.8/5 (710 reviews)
- Website: https://www.knock.com/
- Phone: 866-996-1695
Orchard
Orchard
Full ReviewService Fee
6%
Closing Date Window
14-60 days
Average Rating
4.6/5 (97 reviews)
Orchard is a home trade-in service that allows you to purchase a new home by getting access to your current home's equity. You can then list your old home on the market with an Orchard listing agent.
If you need to move quickly, but still want to get top dollar for your home, Orchard is worth considering. However, Orchard only accepts newer homes compared to its competitors.
Pros
- You'll have a generous 7-day window to consider Orchard's offer
- Use Orchard's Offer Boost program to make a cash offer on a new home
- If your home doesn't sell in 120 days, you can accept Orchard's guaranteed cash offer
Cons
- Homes must be relatively new, compared to competitors (built after 1972 vs. 1930-1960)
- Orchard's cash offers will likely be much lower than what you'd be able to sell for on the open market
Orchard is currently operating in nine locations.
- CO: Colorado Springs, Denver
- GA: Atlanta
- NC: Charlotte, Raleigh-Durham
- TX: Austin, Dallas-Fort Worth, Houston, San Antonio
As of February 15, 2021, Orchard's average customer rating is 4.6/5 based on 97 reviews.
- Trustpilot: 4.6/5 (132 reviews)
- Better Business Bureau: A (4 complaints)
- Website: https://orchard.com/
- Phone: 844-819-1373
- Email: support@orchard.com
We Buy Ugly Houses
We Buy Ugly Houses
We Buy Ugly HousesPhone Number
866-200-6475
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 23 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 nine 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.
It's worth exploring all of your options before making a final decision.
Listing your house is a good alternative
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!
Real Estate Agent or iBuyer?
Our team of experts can help you decide which option is best for you.
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.