iBuyer Opendoor, still the largest of the so-called instant buyers which saw a flurry of media attention and growth during the pandemic, has agreed to settle a lawsuit filed by investors accusing the company of misrepresenting its ability to time the market in order to make a profit off of home sales.
According to court filings last week, Opendoor is paying $39 million to a group of investors including pension funds and individuals, who back in 2022 sued the company, alleging that it “made materially false and misleading statements and omissions” regarding its ability to buy and sell homes for a profit.
The news comes as iBuying appears to be reaching a nadir, with only a couple companies trying to make the practice work on its own (though some have partnered with real estate brokerages to offer services on their platforms). Opendoor reported $1.2 billion in revenue for Q1 2025, compared to $5.2 billion in Q1 of 2022.
Opendoor is not admitting wrongdoing, and is not agreeing to make any practice changes as part of the agreement—which still needs final court approval to become effective. Plaintiffs allege that Opendoor previously made “partially corrective disclosures” regarding its tech and algorithms, which caused the company’s stock to plummet and harmed investors.
A judge previously found that plaintiffs had provided at least some evidence that Opendoor’s claim that its algorithms “can dynamically adjust to leading market indicators and react to real-time macro- and micro-economic conditions” was a violation of securities laws.
Among other things, plaintiffs also claimed that Opendoor’s success back in 2020 and 2021 were driven by practices like manually lowering its automated offers to sellers and charging consumers for repairs that were never made. They also alleged that company executives like Founder Eric Wu and CEO Carrie Wheeler cashed in on “inflated” stock prices, dumping shares of the company only days after misrepresenting its tech abilities to investors.
“As the housing market started changing in 2022, investors continued to rely on Defendants’ false and misleading representations about Opendoor’s ability to quickly adapt to those changing market conditions,” plaintiffs claimed in the complaint.
Plaintiffs relied on eight whistleblowers or “confidential witnesses,” who reported that Opendoor eventually had to ask real estate agents to “help move” properties that were stuck on the market, allegedly because algorithms could not price them accurately. The automated system ran into other issues, and the whistleblowers alleged Opendoor “did not do any research” on markets it was trying to enter.
In San Francisco, for instance, the company did not know they needed to link disclosures on the MLS in order to receive offers, and did not start that practice until informed by an employee.
The settlement resolves all of the claims. Investors seeking to make a claim will have their payout from the $39 million fund prorated based on when they bought, with those who purchased stock between late 2020 and early 2022 deemed as suffering the largest losses.
Opendoor did not immediately respond to a request for comment.
