I'm saying the FTC letter, which i quoted, is very vague and offers no clear argument nor addresses the tradeoffs.
Its like complaining about stock brokerage MARKET orders that hit the ASK PRICE and then saying you could have gotten a better price with a LIMIT order (though then you may not get an executed order at all...)
I got 3 offers from opendoor over about an 18 period. We were on the fence about moving, and explored opendoor and Zillow house buying, to save us some hassle. The offers were easy to see that they were lower than 'market'. Part of what you're paying for is convenience and timing. Is it worth it to me to 'lose' $10k off what I might make in the 'open market' if it means I know for sure the house will be sold on a certain date? IIRC, also, one of those companies offered some discount on their fees if you were buying another one of their houses in their portfolio.
What I did see in our area (slightly rural area) was a year or so of buyers like opendoor coming in with offers fairly low, then flipping and reselling, and making that spread, but fairly quickly. A $300k house they might have picked up for $270k then flipped 2-3 months later for $340k.
Even this may or may not be fair. If the flipper did tens of thousands in repairs, perhaps the extra price is now justified? Any idea of the homes were flipped as-is or after value-add updates?
That's the issue.
If they were literally "promising" more money, that would be a big issue. When I saw Opendoor, it seemed to essentially be a Market Order for home selling. The promise was immediacy and the trade-off was lower-price. However, the immediacy also carried savings w/r/t not having to carry the property costs. So it could actually end up being a better deal to sell immediately depending on carry costs. I was just sad to see such a thin letter lacking details.
source: https://www.redfin.com/blog/how-much-does-it-cost-to-sell-a-...
If that was the case then OpenDoor wouldn't have "asked sellers to pay for home repair costs that were higher than what people would typically spend on repairs in a market sale".
That's not my definition of "as-is", is it yours?
This seems fair to me, there is no guarantee that when selling a home on the market, buyers wont similarly ask for repairs or dollar concessions for repairs.
The letter, which I quoted on my comment, was pretty clear on the trade-offs or iBuy vs traditional. You're trading dollars for upfront pricing, immediacy, and certainty. The letters doesn't mention anything about that. The letter acts as if "price" is the only cost, but in real life there are many costs include hidden costs like carry.
I'm also saying that the US regulatory apparatus right now is very strange and openly antagonistic to tech firms while turning a blind eye to traditional businesses are often may be far more extractive.
Example 1: We're told WhatsApp is "bad" because supposedly competition. Except as a consumer, it costs me nothing, has no 2-yr plans, no mystery fees, no $90/mo bill. On the other hand, the same regulators wont say anything to a mobile phone company.
https://www.ftc.gov/system/files/ftc_gov/pdf/Complaint%20%28...
your overall point stands, but Opendoor does have a 5% "service charge" that's on par with an agent commission.
> Instead, the FTC says Opendoor’s offers were lower than a home’s market value, and the company asked sellers to pay for home repair costs that were higher than what people would typically spend on repairs in a market sale.
FTC Website:
> Consumers likely would have paid the same amount in repair costs whether they sold their home through Opendoor or traditional sales
Those aren't the same
You're paying for convenience, and while I didn't find the opendoor written offers completely confusing, it did seem a little... misdirection-y.
I'm sympathetic to Opendoor on this. Are they counting ALL the costs when they say Opendoor customers "lost thousands"?
- Are they counting the carry of keeping [a potentially empty house] on the market for months? (e.g., real estate taxes, maintenance fees)
- Are they counting the 4-6% real estate real estate commission the agent would take that Opendoor customers arent paying? If I sell the house at a 20k discount to Opendoor, but save a $40k real estate commission, that sounds like a good deal.