The online, all-cash, quick homebuying and re-selling company Opendoor is trying something in Texas that should raise eyebrows of agents and brokers across the country.
In the Dallas-Fort Worth metro area, the company’s mobile app for Apple iPhones now shows all the homes for sale on the entire local multiple listing service (MLS), an Opendoor spokesperson confirmed to Inman.
Previously, the mobile app only showed those homes owned and being sold by Opendoor. This is the first time in any of its 19 current service markets, on either Opendoor’s desktop website or mobile app, that the company has displayed listings from other rival brokerages, to Inman’s knowledge.
However, an Opendoor spokersperson told Inman that it may begin to show all the listings available on the MLS in other regions in which it operates. Opendoor is “experimenting in Dallas first and will determine other markets later based on results,” the company’s spokesperson wrote in an email.
Below each of these listings from other brokerages, Opendoor dangles a mouth-watering offer to buyers: a rebate worth 1.5 percent of the total home’s purchase price. Buyers purportedly will receive the cash, advertised in dollar estimates, at closing.
But the offer is only good if they use the discount brokerage that Opendoor acquired last year, Open Listings, to represent them in their purchase of the home.
Left: An Arlington, Texas listing offers buyers a rebate — “$4,120 back” — in Opendoor’s mobile app. Right: For another listing, Opendoor’s mobile app explains the rebate offer, provided through Open Listings, to users who tap “Start an offer” on the listing.
The integration further expands Opendoor’s ability to simplify the homebuying and selling experience. It also appears to mark Opendoor shifting its emphasis away from partnering with buyer’s agents from other outside brokerages.
Opendoor previously offered a $1,000 credit to buyers who used one its preferred partner agents from another brokerage to represent them. But now, the company no longer seems to be running this promotion in Dallas Ft. Worth.
Opendoor acquired Open Listings in September 2018 for an undisclosed sum. Open Listings, another San Francisco-headquartered startup, was a discount brokerage that used a combination of partner agents and in-house agents and offered buyers a 50 percent refund on the typical 2.5-3 percent commission a buyer paid to the real estate agent representing them in a home purchase transaction.
The plan, according Opendoor CEO and co-founder Eric Wu, was to tie Opendoor’s home sale, mortgage and title services with Open Listings to make it as easy to buy, sell or trade in a home “as it is to hail a ride, book a flight or shop online.”
Marketing the Open Listings rebate on listings from other brokerages marks Opendoor’s latest step toward an end-to-end real estate model, encouraging buyers to not only take advantage of the rebate, but also inviting them to sell a current home back to Opendoor for a guaranteed cash price, and to close on their own schedule, in as quick as days or as long as many months if necessary.
Opendoor is one of a growing list of companies and programs known as “iBuyers,” which all seek to use technology included automated valuation models (AVMs) and considerable capital (often in the form of investment and/or debt) to make fast, all-cash, guaranteed offers to homesellers over the internet. If a seller takes the offer, they are also often charged fees by the company buying their property.
iBuyers typically then make light repairs and renovations and re-list the homes for sale on the open market, frequently selling back to investors. Other rivals in this category include Zillow Offers, Redfin Now, Offerpad and Knock, to name a few.
Opendoor’s Dallas-Fort Worth experiment shows just how it is attempting to go beyond buying homes, making it more compelling for its customers to both buy from, and sell to it.
Let’s imagine Opendoor agrees to buy a seller’s home at market value for a 6 percent service fee (its average fees, though they vary and can go as high as 12 percent depending on the property and how Opendoor values it). Then let’s imagine the seller uses Opendoor’s app to find a new, more expensive home they wish to buy — a typical scenario known as “trading up,” in the housing market.
The seller can then enter into contracts to sell their old home to Opendoor and to buy their new one either from Opendoor directly or using one of its Open Listings agents, and close both deals on the same day.
Factor in the 1.5 percent commission refund, and the Opendoor customer may end up effectively paying a commission of 4.5 percent or less to sell their old home and to buy a new one if it is all done through Opendoor’s app.
That can be less than both transactions would cost using traditional real estate agents, which, unlike Opendoor, can’t guarantee a certain, all-cash sale and a seamless transition from one home to another.
Both Opendoor and its subsidiary Open Listings are licensed members of the local Dallas-Ft. Worth MLS, according to an Opendoor spokesperson.
Looking at Dallas homes on Opendoor’s iPhone app, a user can also tap to filter “Self-tour homes only,” which restricts the listings to only those someone can gain entry to by themselves and tour on-demand, a hallmark of Opendoor’s technology and sensor-driven homes for sale.
By default (without tapping “Self-tour homes only”), Opendoor’s mobile app shows listings from other brokerages, not just its own. Tapping “Self-tour homes only” appears to filter out non-Opendoor listings, which do not offer Opendoor’s smart lock-enabled self-showings.