Do Opendoor Properties Influence Market Value?

[spittman]

Yesterday I was looking at 8 near matches for potential comps in the sales grid. 6 were in the $225k-$230k range. The other 2 were around $240 with nothing standing out about them other than they were owned by Opendoor. In contrast, there were 2 other active Opendoor homes which were right in range but were still pending. I decided to look in other markets to see how other Opendoor properties fair and most (not all) were selling slightly above the average... maybe $5000 here, $8000 there.

Anybody else seeing this influencing trend in their markets and are you using Opendoor properties as comps?

 

[Terrel L. Shields]

Seen none here. I don't know why it would influence prices.

 

[CindyR]

here they are rarely the highest sales. here they often sell them for less than they bought them for. but they are a factor. i probably have an opendoor sale as a comp in every appraisal this year. and i think they are about 20% of all the VA sale appraisals i have done this year.

 

[KYLECODY]

Nearly every Open Door sale here, and there are 940 in the Phoenix area owned by them, has the same program. Open Door does new interior paint, new carpet, fixes any obvious issues, cleans and lists after they get a home. They won't remodel kitchens or baths or do other upgrades but present solid, clean homes. So basically a little above average. They don't sell at the top of the line for similar properties but usually seem to be in the upper 20% of sales.

I think people are willing to pay a premium versus other similar homes because they like the idea of being able to access the homes by themselves without a realtor and it is ran by professionals. The Open Door people are smart enough to know the game and I would never say their list prices are "conservative". Just like when a realtor, or smart appraiser, lists their home they know if they put a high number on it, as long as its not too high, there's a good chance it will go under contract anyways and most "appraisers" are yes men if its close...

I know I have came in "low" on 3-4 of theirs in the past year and they didn't stir the nest about it. The other dozen or so were well supported.

 

[CANative]

Aggressive marketing and very good customer service? If they're taking a reduced commission that might be part of the reason.

 

[Mr Rex]

A nice clean vacant house versus a "lived in" perhaps smelly or cluttered house?

 

[spittman]

Seen none here. I don't know why it would influence prices.

Over 500 here in my county, multiples in the same neighborhood. Not sure how their operations work and how their concessions/fees are factored into the list/price, but I've read they use their own proprietary AVM to value the home for sellers and they also offer their own mortgage company services to buyers. Maybe I'm reading into it wrong.

here they often sell them for less than they bought them for ... and i think they are about 20% of all the VA sale appraisals

How do they make money selling them for less ... and are you saying that a lot of veterans use Opendoor to sell or buy their home?

I know I have came in "low" on 3-4 of theirs in the past year and they didn't stir the nest about it. The other dozen or so were well supported.

So they are good to use as comparable sales? Trying to understand how they work or if there are some hidden fees I would need to adjust for. I didn't use the two for my Subject because they seemed to sell higher for no reason.

Aggressive marketing and very good customer service? If they're taking a reduced commission that might be part of the reason.

I've read their commissions are actually higher.

 

[CindyR]

How do they make money selling them for less ... and are you saying that a lot of veterans use Opendoor to sell or buy their home?

They still make money because they have something in the contract to get back more $$ from their seller if they don't make enough profit. and yes their fees are higher than standard realtor fees.

and the reference to VA was just that i only do VA appraisals these days and lots of the purchase appraisals i do are buying OD properties. because OD is very active here in Phoenix. they are everywhere.

 

[KYLECODY]

[QUOTE="I've read their commissions are actually higher.[/QUOTE]


They send out mailers and advertise to buy homes directly from owners. They offer at or "near" market value but they subtract 8%. Their offers are usually pretty close to a typical, middle range price before the 8%. Most sellers would be paying 6% in commission plus other closing costs so I think they view it as a wash. The rub is you just email them and they email you an offer the next day and contract if you are good to go. No showings, no people parading through your home, no several months long on the market, no countless inspections, appraisers, bug guys, lenders, etc to have to navigate. Its like Real Estate For Dummies (there has to be that book).

They plan on doing new paint, carpet and minor repairs on everything and they do send one of their guys out prior to close but after the contract is signed to inspect. If there is something significant I'm sure the game changes.

I ran a couple of my flips by them before I updated them just to save myself some headaches and time but it wasn't worth it to me. One was close enough I considered it seriously though. For the average seller who only buys/sells a few times in a lifetime its as fair a game as its going to get.

 

[KYLECODY]

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