IBuying behemoth Opendoor announced Thursday that it has launched its own mortgage lending service, marking the company’s latest move to completely upend the real estate industry.
Opendoor Home Loans is now live in Texas markets Dallas-Fort Worth, Austin, Houston and San Antonio, as well as in Phoenix and Tucson in Arizona. The new service is the result of 10 months of work during which Opendoor “built a mortgage business from the ground,” according to a company blog post. And it’s meant to be simpler and more cost effective than other lending options.
“In minutes, buyers can discover their purchasing power and take the first steps toward financing their dream home,” Opendoor explained in its blog post. “Home buyers in Texas and Arizona, whether they’re purchasing a home through our buying service or any home on the market, are already prequalifying for a mortgage with Opendoor Home Loans in the Opendoor app.”
Opendoor claims that its interest rates are competitive with what consumers can find elsewhere, and said that at least initially it will contribute $1,000 toward closing costs in exchange for using the service. The company also guarantees that buyers will close their loans on time; if the process drags on past the set closing date, Opendoor will “credit the buyer $100 per day for every day delayed,” the company explained Thursday in the blog post.
Opendoor Home Loans customers will also have access to a “dedicated mortgage consultant” who will provide updates and guidance. The company believes that all of these features should ultimately lead to a better and faster experience for buyers.
“It typically takes 45 days for buyers to finance and close on a new home,” Opendoor said in its statement. “That’s 45 days of uncertainty, anxiety and stress that we can cut in half with Opendoor Home Loans.”
A company spokesperson further told Inman in an email that “Opendoor Home Loans currently averages 27 days from application date to closing date.” The shortest turn around time during initial tests of the service — which have been ongoing for the past several months — was 20 days.
Opendoor’s announcement comes at a time when lending has been a particularly hot area of interest for real estate firms. In April, for example, Zillow announced its own lending service, Zillow Home Loans.
Redfin’s version of a lending service, which launched in 2017, has steadily expanded this year.
And in February, Chase Home Lending pledged to get borrowers closed in 21 days — or pay them $1,000.
But Opendoor has been particularly upfront about its ambitions to upend the real estate industry. For instance, late last year Opendoor CEO Eric Wu said that he eventually wants to make his company’s services — which involve providing quick cash offers to sellers — free for consumers. He also envisions a “winner-takes-most” world in which his company comes to dominate iBuying the way Amazon dominates ecommerce. He also sees automation growing to the point that agents eventually assume an advisory role in the industry.
The fact that Opendoor has raised more than $1 billion in funding, and is valued at nearly $4 billion, also suggests that the company may be one of the few firms with the war chest to realize its ambitions.
Regarding Opendoor Home Loans, the company plans to expand the service in the coming months, though it has not said which markets might be next. However, in its blog post Thursday, Opendoor did suggest that offering loans is part of a grander strategy that would see it dominate its niche.
“It takes us one step closer to providing an end-to-end experience,” the blog post stated, “where you can buy, sell or trade-in a home in just a few clicks.”