Opendoor in Review: What to Know for 2021 & Beyond

By 

Andrew Whytock

Updated 

April 14th, 2021

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What is Opendoor? | How Opendoor works | Fees | Locations | Customer reviews | Opendoor vs. realtor | Competitors | Services & initiatives | FAQs | Contact

Note: Clever Real Estate has a referral partnership with Opendoor. However, we are not required to give a favorable review. The opinions expressed below are our own. Learn more.

Opendoor is an iBuyer — a company that buys houses for cash and then resells them on the open market.

Opendoor’s promise to customers is that they’ll make the home buying or selling experience fast, easy, and predictable by taking the hassle out of the transaction.

Home sellers can receive an offer from Opendoor in as little as 24 hours and choose a closing date that works for them.

Home buyers can tour Opendoor listings privately by using the Opendoor app to unlock houses. Offers can also be submitted online or by using the app.

Rather than the typical 6% commission that you’d pay a realtor when selling your house, Opendoor charges a service fee that ranges from 3.5-5% of the sale price.

✍️ Editor’s take
Opendoor is a good option for home sellers who need a fast, predictable sale with minimal hassle. While the price that Opendoor pays might be slightly below the value of comparable homes on the open market, the difference might be worth it for people who value convenience and speed. See the full cost comparison.

 Opendoor, at a glance
3.5-5% of sale price
⭐⭐⭐⭐ (845 reviews)
OR, CA, NV, AZ, UT, CO, TX, MN, TN, NC, GA, FL, ID
14-45 days for buyers, 14-60 days for sellers (depending on the customer’s desired closing date)

What is Opendoor?

Opendoor is the largest iBuyer by volume in the United States and is currently active in 30 markets, with plans to reach 100 markets.[1]

iBuyers buy houses that require minimal repairs and renovations, so they can resell them on the open market for a small profit.

Opendoor is able to offer such a competitive fee because they operate at a much larger scale than their competitors and therefore work on a high volume, low margin business model.

Opendoor charges sellers a 3.5-5% service fee, which is slightly less than the typical realtor commission of 6%.

Opendoor offers an end-to-end experience for customers, so they can buy, sell, and trade-in their home online with minimal hassle.

During the customer’s journey, Opendoor offers other services like repairs, financing, and title insurance to streamline the process while generating more revenue.

What kinds of homes does Opendoor buy?

Opendoor door buys the following types of homes:
  • Single family
  • Townhouse
  • Duplexes (select markets)
  • Condos (select markets)
In addition, Opendoor’s criteria for purchasing a home includes:
  • Valuation between $100K and $600K
  • Maximum lot size of 1-2 acres
  • Built after 1930
  • Owner occupied
While these are the general criteria, there may be exceptions or additional requirements in certain markets.

To find out if your home qualifies, request an offer from Opendoor now!

Pros and cons of selling to Opendoor

Pros
  • Ease and speed. You'll receive an offer within 24 hours and you can close within weeks. Without the need for an agent and with many services bundled in, working with Opendoor can be a seamless experience.
  • No need to prep your home. Opendoor will take care of repairs and other home prep tasks that you’d normally have to worry about on your own if you were getting ready to show your house to potential buyers.
  • Choose your own closing date. No need for extensive negotiation between agents, you can choose the perfect date for closing, whether you've already bought a new home or not.
❌ Cons
  • Lower sale price. Opendoor will pay fair market value, at most, for your home. On the open market, motivated private buyers are likely to pay more.
  • Limited market availability. Opendoor is currently only available in over 20 cities in the United States, so if you don't live in one of these locations, you can't sell your home to them.
  • Only certain homes qualify. Opendoor generally only buys single-family homes, townhomes, duplexes, and condos between $100K-600K, although there are exceptions in some markets. If your home doesn't meet these criteria, Opendoor likely won't purchase it.

Pros and cons of buying from Opendoor

Pros
  • Self-guided tours. You can tour any Opendoor listing on your own time by using the Opendoor app to unlock the house. This means that you don’t have to wait to schedule a showing with an agent and you see the home at a time that’s the most convenient for you.
  • Flexible closing. Opendoor isn’t living in or moving out of the house like a private seller would be, so the closing date is up to the buyer!
  • The buyer’s agent still gets paid. If you’re working with a real estate agent, Opendoor will still cover the cost of their commission.
❌ Cons
  • Possibly more difficult to negotiate with. When you work with an agent or a private seller, they’re personally invested in the success of the sale. When you buy from Opendoor, you’re communicating with a customer service team at a large company, often by email.
  • Repairs may not be adequate. Because homes that are purchased from Opendoor aren’t owner-occupied before they’re sold, the seller (Opendoor) might not be as tuned into all of the repairs that are actually needed as someone who is living in the home might be.

How Opendoor works

Whether you’re buying an Opendoor home or selling your home to Opendoor, most customers start their experience online.

  • Sellers can get an offer from Opendoor within days of submitting the online form and close in 14-60 days, depending on their desired timeline.
  • Buyers can submit an offer online or through their agent and close in 14-45 days, depending on their desired timeline.

Since Opendoor isn’t living in the property that their customers are buying or selling, they have much more flexibility when it comes to the closing date.

How Opendoor works for sellers

Sellers start the process by completing an online estimate form to request an offer from Opendoor.

The form asks for things like:

  • Your location
  • A picture of your house
  • A description of your house
  • Details about any upgrades/renovations that you are aware of

Opendoor will use this information to provide you with their initial estimate before sending an inspector to the property.

The process goes like this:

  1. Complete the online estimate form to request an offer.
  2. Receive an offer from Opendoor.
  3. Schedule a visit from an Opendoor inspector.
  4. After the inspection, get a final offer from Opendoor that includes repair deductions.
  5. Accept the offer, sign the purchase agreement, and pick a closing date.
  6. Get paid within a few days of closing.

⚡ Quick tip
There’s no penalty for deciding to cancel any time before closing if you aren’t satisfied with Opendoor’s offer, so it’s worth requesting a quote. Other leading iBuyers, like Offerpad, may charge a cancelation fee if you want to back out of the deal too late in the process.

Get a free comparative market analysis from an agent!

If you’re interested in selling, a real estate agent can provide you with a comparative market analysis (CMA) to help you determine what your home is worth. A free, no-obligation CMA is a great way to compare your Opendoor offer with what your house might be worth on the open market.

Connect with an agent and get a free CMA today!

How Opendoor works for buyers

Opendoor lists the houses that they own on their website where potential buyers can browse and request information.

  1. Find a home online or through the Opendoor app.
  2. Take a private tour using the app.
  3. Submit an offer through your agent or by yourself.
  4. Opendoor will respond in 24-48 hours.
  5. If your offer is accepted, your agent can draft a purchase agreement.
  6. Sign and go to escrow.
  7. Make your earnest money deposit.
  8. Schedule inspection and negotiate repairs/closing costs.
  9. Close in 14-45 days.

How much does Opendoor cost?

Opendoor’s service fee for home sellers ranges from 3.5-5%, but the total cost ranges from 5.5-10% when closing costs and repair deductions are included.

Closing costs are approximately 1-3% while deductions that Opendoor makes for repairs can range from 1-2%.

Service fee
3.5-5%
Closing costs
1-3%
Repair costs
1-2%
Total
5.5-10%

Given these expenses, Opendoor is still slightly cheaper than working with a realtor. However, a realtor might be able to get you more money for your home.

» READ: Our complete breakdown and analysis of Opendoor’s fees.

Opendoor locations

Opendoor is currently active in 30 major markets across the country, including:

  • Phoenix
  • Atlanta
  • Houston
  • Los Angeles

As Opendoor expands and iBuying becomes a more popular alternative to a traditional real estate sale with an agent, Opendoor plans to become active in 100 markets from coast to coast.

Customer reviews of Opendoor

🔑 Key takeaways
  • Many customers felt that the experience was fast and seamless.
  • Customers liked the ease of selling to Opendoor.
  • Some customers felt that Opendoor was not transparent about the true cost of repairs.
  • Some customers were frustrated by the limitations of negotiating with Opendoor.

We gathered reviews from actual Opendoor customers to find out what they liked and what they didn’t like about their experience.

Although we did our best to source accurate, honest reviews, it’s important to remember that this is a limited sample of Opendoor customers from markets across the US.

Because there are so many variables when it comes to buying and selling a house, your experience with Opendoor may differ.

What customers liked about Opendoor

Trey noted that the offer he received was competitive, and he was very pleased with his experience selling to Opendoor.

Ellen appreciated not having to show her house to multiple buyers and said that working with Opendoor was easy.

JL said he wasn’t convinced that Opendoor had his best interests in mind, so he paid close attention to the details when he sold his home, but he was satisfied overall.

What customers didn’t like about Opendoor

An anonymous reviewer from Texas said that Opendoor did not negotiate fairly.

R Pearis says that the experience didn’t meet his expectations, but he really likes the idea behind Opendoor’s service.

Mac was frustrated with Opendoor because they wouldn't make him an offer on his home.

Selling to Opendoor vs. listing with a realtor

Selling to Opendoor is more predictable and sometimes faster than selling with a realtor. That’s because Opendoor can make an offer quickly and close when you want while realtors can’t guarantee that the right buyer will come along quickly.

However, a realtor might be able to net you more money by getting your house in front of multiple buyers.

Opendoor charges a 5% service fee that’s slightly higher than the 6% commission that realtors are typically paid. Closing costs and repair fees are still a factor in either case.

Agents have an incentive to get the most possible money for your home because the more you make, the more they make in the form of commission. Opendoor, by contrast, has incentive to pay less than a private buyer for your home.

However, in cases where the difference between selling to Opendoor and selling with an agent is negligible, some sellers might choose Opendoor because of the speed and certainty they’re able to offer.

Opendoor
Realtor
Only 5% service fee
6% realtor commission
Pays fair market value at most
Sell for whatever the highest bidder is willing to pay
Flexible closing
Closing negotiated with buyer
No showings or prep work required
Must prep and show home
Fast, predictable selling time
Unknown selling time

» LEARN: Does Opendoor negotiate?

Opendoor alternatives

Opendoor isn’t the only iBuyer on the market, even though they’re currently the largest. The alternatives include leading competitors like Zillow Offers, Offerpad, and Redfin Now.

Opendoor stands out because:

  • Their service fees are low.
  • There’s no penalty for walking away from a deal.

Here’s a quick comparison of how Opendoor stacks up against the alternatives:


Opendoor
Zillow Offers
Offerpad
Redfin Now
Orchard
Average Rating
4.05
Unavailable
1.77
Unavailable
4.6
Service fee
3.5-5%
1.5-9% + 6% selling costs
6-10%
6-12%
6%
Trade-in incentive

None

None

Markets served
23
25
14
14
9
Repair costs
Deducted from offer
Deducted from offer
Deducted from offer
Deducted from offer
Deducted from offer
Partner agents
In-house agents + partner agents

In-house agents
In-house agents
In-house agents
Flexible closing date





Cancellation penalty
None
None
1% if outside the 4-day post inspection report window
None if the repair addendum is not signed.
None
Listing options





Late checkout option

None

None
None

Opendoor incentives

Beyond buying and selling, Opendoor offers a variety of invcentives and services, such as home buyer rebates, that help customers to save money while benefiting from a streamlined transaction.

These incentives allow sellers and/or buyers who are work with Opendoor to do things like:

  • Trade in their home
  • Trade up for a newly built home
  • Get a cash rebate at closing time

Opendoor trade-in

Once the deal has been closed on both homes, the customer gets a rebate of 1.25% of the sale price of the first home. The rebate is either paid out in cash or counted as a credit toward the closing costs on the new home.

Customers who choose to sell their home to Opendoor and then purchase their next home from Opendoor are eligible for this trade-in rebate.

Opendoor builder trade up

Opendoor provides complimentary services to help customers transition into their newly built home, such as moving, same-day closing, and even a late checkout.

To accomplish this, Opendoor has a partnership with national home builder Lennar homes. As a result, customers who are building a new home with Lennar can trade their old home into Opendoor.

Direct buyer incentive

If you purchase a home directly from Opendoor without the help of a real estate agent, Opendoor offers a 1% credit back at closing (in select markets).

One of Opendoor’s greatest costs when they sell a home is having to pay the buyer’s agent commission, which is around 3%. This incentive rewards sellers for helping Opendoor reduce their costs.

Buyer refund

If you buy an Opendoor home with one of their partner agents, you are eligible for 1% cash back at the time of closing.

Opendoor has a network of partner agents that they can refer buyers to when necessary. These agents don’t work for Opendoor, but they do pay Opendoor a referral fee for the customers that Opendoor sends them.

Other Opendoor entities

As Opendoor has grown, the company has moved into other parts of the home buying and selling process in order to offer more services to customers while getting a bigger piece of the overall transaction.

Opendoor now has entities that offer mortgage solutions, realtor services, and title insurance.

Opendoor Home Loans

Opendoor Home Loans is Opendoor’s mortgage lending solution. As an Opendoor customer, you have the option (but not the obligation) to finance the purchase of your new home using Opendoor Home Loans.

The lender offers mortgages with competitive interest rates and does not charge any lender fees. Opendoor home loans also offer a $1,000 credit at closing, subject to eligibility.

Opendoor Brokerage

Opendoor’s brokerage can provide you with an Opendoor real estate agent who will represent you if you want to list your house for sale through Opendoor. This is similar to working with a real estate agent at a major brokerage as you would in a traditional sale.

However, Opendoor real estate agents cannot represent buyers who want to buy an Opendoor home as this would constitute a conflict of interest.

Opendoor Title

In 2019, Opendoor acquired OS National, a national title insurance company.[2]

As a result, Opendoor can now offer title insurance and escrow services to customers internally through Opendoor Title.

FAQs

Does Opendoor pay closing costs?

Opendoor does not cover closing costs — whether you're buying, selling, or trading in. This stands in contrast with a normal real estate transaction where who pays what closing costs is typically up for negotiation.

That said, one of the benefits of selling to Opendoor is there are no hidden fees. Everything, including how much you'll have to pay in closing costs, will be presented to you before you accept the final offer.

»LEARN: How Much Are Closing Costs for Sellers

Does Opendoor negotiate with buyers?

If you're buying a home from Opendoor, you or your buyer's agent can try to negotiate the price point, but according to customer reviews, the company likes to sell close to listing price and doesn't budge much on concessions. If you're considering buying from Opendoor, the experience will likely differ from negotiating with an individual seller.

»LEARN: How to Negotiate When Buying a House

What is Opendoor's business model?

Opendoor's business model is buying and selling homes at scale through its digital platform. Relying on a combination of algorithmic valuations and advice from local experts, it can offer close to market value for homes and then sell them for an appreciated value soon after.

In exchange for speed and convenience, Opendoor charges a service fee of 5%.

Between appreciation, service fees, and other ancillary revenue — such as partnerships with contractors, lenders, and other businesses — Opendoor is able to turn a small profit on each sale. Buying and reselling at a high volume is ultimately what allows it to increase its bottom line.

Does Opendoor pay fair market value?

Yes, according to industry experts and prevailing data, Opendoor pays fair prices for the homes it buys. Traditional house flippers rely on a buy low, sell high approach to make money. That's because these investors are operating on a small scale, meaning they have to maintain big margins to remain profitable, year-over-year.

In contrast, Opendoor operates on an immense scale, enabling it to pay a fair price for homes then rely on short-term market appreciation to generate a profit. While this means a narrower margin on each transaction, remember that Opendoor is buying and selling at an incredibly high volume. Spread across thousands of transactions per year, those slim, per-transaction profits add up to a huge amount of revenue.

Contact Opendoor

Email
contact@opendoor.com
Phone
1-888-352-7075
Website

ARTICLE SOURCES
[1]

Opendoor. "Opendoor Investor Presentation." Page(s) 21-23. Accessed February 8, 2021. Updated September, 2020.

[2]

Opendoor. "Welcoming OS National to Opendoor." Accessed February 8, 2021. Updated September 5, 2019.

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