What a way to kick off a new month. That’s likely on the minds of one of iBuying’s most prominent players, Opendoor, as it launches a new product after being fined by federal regulators.
Days before the Arizona-based company is expected to report its latest earnings, Opendoor found itself on the receiving end of a $62 million fine from the Federal Trade Commission (FTC). The FTC accused the iBuying giant of “cheating potential home sellers” with misleading information about how much more money they could make selling their home to Opendoor than on the open market with traditional processes.
“Opendoor promised to revolutionize the real estate market but built its business using old-fashioned deception about how much consumers could earn from selling their homes on the platform,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a Monday statement.
The FTC claimed that Opendoor advertised that consumers would make “thousands of dollars more” by selling to the iBuyer. An investigation by the agency found that most consumers lost money selling to the company.
The agency’s investigation highlights several other alleged misdeeds, including Opendoor misstating that consumers would likely have paid less in costs by selling to the tech company than they would in traditional transactions.
The FTC also claimed that Opendoor violated the law by using projected market value prices when making offers to buy homes. The expenses included downward adjustments to the market values.
While Opendoor disagreed with the FTC’s allegations, the company announced in a Monday statement that it would pay the $62 million. According to the FTC, the company has also agreed to “stop deceiving potential home sellers” and to “stop making baseless claims.”
The iBuyer also noted that the FTC’s allegations are related to activities that occurred between 2017 and 2019, and the company changed its target marketing messages “years ago.”
“Our decision to settle with the Commission will allow us to resolve the matter and focus on helping consumers buy, sell and move with simplicity, certainty and speed,” Opendoor said in a statement. “We are pleased to put this matter behind us and look forward to continuing to provide consumers with a modern real estate experience.”
The company seems to be doing just that as it launched a new product called Opendoor Exclusives on Tuesday.
Touted as a “one-tap buying experience for homebuyers,” Opendoor Exclusives is a self-service product designed to offer an e-commerce-like experience to the home-buying process, according to an Opendoor statement.
“Between rising interest rates and low housing stock, it’s a challenging time to buy a home,” said Merav Bloch, vice president and general manager of Opendoor Exclusives. “In a competitive environment with high mortgage rates, aspiring homeowners feel frustrated, anxious and defeated after losing out on bids. We built Opendoor Exclusives to make home-buying more certain and hassle-free.”
Launching in Austin, Houston and Dallas-Fort Worth, Texas, Opendoor Exclusives makes the iBuyer’s listings available to consumers for 14 days before they are listed on a multiple listing service (MLS).
During that 14-day window, buyers are offered discounted prices from what Opendoor will list the home for on an MLS, according to the company page.
If a consumer buys an Opendoor Exclusives home that appraises for less than the purchase price, the company said it would reduce the price by up to $50,000 to match the appraised value under its Appraisal Price Match Guarantee.
“This gives you more confidence that you aren’t overpaying for a home,” Opendoor stated.
“Our Exclusive price means no haggling, no lack of transparency, and no more love letters to sellers. With Opendoor Exclusives, you’re in control,” Opendoor said.
Additional perks include a fully digital checkout and no penalties if buyers change their minds and back out at any point before closing.
Shoppers can explore and tour Opendoor-owned homes on the Opendoor Exclusives site and complete a short verification process. To buy a listing, consumers can click a “buy” button that will let them sign a contract, submit an earnest money deposit, schedule inspections and finalize lender details (including an appraisal) online.
“We have heard from our customers how hard it can be to purchase a home in this market environment and how stressful the process can be, so we decided to build something better,” stated Opendoor in the FAQ section of the program’s webpage. “Since we own these homes, we can give our customers an opportunity to purchase them before anyone else and make the purchasing process simple and streamlined.”