Opendoor, the well-moneyed, tech-enabled homebuying startup, will temporarily stop making cash offers on houses it values at over $300,000 in the Dallas-Fort Worth, Texas, market, according to statements by Opendoor and an email it sent out to some of its customers and partners in that area that was forwarded to Inman by a source.
In the email, Opendoor says “Effective 7/16/18, Opendoor is going to stop making offers on homes above $300K in the DFW market until a later date.” Previously, Opendoor made cash offers on homes in Dallas-Fort Worth between $100,000 and $500,000. It has been operating in Dallas-Fort Worth for over two years, since February of 2016.
“We are making a temporary reduction to the price range of homes we purchase in order to refocus on hiring, training and growing our Dallas team to serve our rapidly-growing business in the Metroplex,” an Opendoor spokesperson told Inman, when asked about the email and the policy adjustment.
“Opendoor has an unwavering commitment to the customer experience, and this interim adjustment will allow us to maintain that highly-rated experience, while still continuing to grow both our business and our team.”
The change, which Opendoor says is a common part of the process as the company figures out how to navigate rapid growth with consistency of service, comes as it prepares for expansion into two new markets: Minneapolis-St. Paul, Minnesota, and Tampa, Florida, according to its website.
“I think it’s a smart move and is evidence of Opendoor’s disciplined approach to the market,” Mike DelPrete, an entrepreneur and real estate tech expert, told Inman. “The instant offers model only works well when the companies buy and sell in their sweet spot. Opendoor knows it’s sweet spot and sticks to it.”
Cindy Miller, the COO of North Texas Real Estate Information Systems, the region’s multiple listing service, would not comment on how Opendoor’s change would affect the area’s housing market. But she said that the Dallas-Fort Worth area “has always been a stable market and has a very diverse economy.”
According to Opendoor, the change is necessary as the company figures out the best way for it to grow and keep its iBuyer service sustainable going forward.
“We’ve seen tremendous growth in Dallas-Fort Worth, nearly doubling our business since mid-2017 with 95 percent year-over-year growth,” Opendoor’s spokesperson said. “At Opendoor, we’re constantly evaluating the best ways to serve customers with exceptional service and low fees.”
Opendoor is perhaps the best-known of a wave of new tech-enabled, all-cash homebuying startups Inman dubbed “iBuyers.” It recently raised $325 million in Series E funding and plans to expand to 50 markets across the U.S. by 2020, and it works like this: sellers visit Opendoor’s website or app to enter in their home’s basic information and receive an algorithmically determined cash offer price less a service charge ranging between 6 percent to 13 percent (average 6.5 percent), which they can accept or reject.
Opendoor also conducts an on-site assessment and determines if the home needs any repairs, which Opendoor can do and deduct from the offer price, or the sellers can undertake on their own. If a seller takes the offer, Opendoor can close in days and give a seller money rapidly, and then it relists the home for sale on its site and app, where prospective buyers can do on-demand showings.
This format allows sellers to get rid of properties quickly, for a guaranteed price, without showings and without employing a real estate agent or brokerage to list their home (though Opendoor and other startups do work with sellers’ agents).
Opendoor has so far serviced over 13,000 customers according to its website, and attracted the backing of prominent Silicon Valley venture capitalists such as Andreessen Horowitz. It has also drawn competing services from other established real estate companies including Zillow and even a Keller Williams team.