Oh my God, Becky, look at that article that just came out by the FTC! Holy crap folks, the FTC is (can I say finally?!) cracking down on OPENDOOR for what they’re describing as “cheating” sellers into working with them. Holy hell folks, you’re going to like this one so sit back, relax – well before you do hit that like button dinger bell thingy and subscribe too ’cause hey, that’s how this works. Let’s dive into this magic…
So the FTC released this article – I know I’m a little late on it, but this is big new nonetheless – about cracking down on one of the most popular iBuyers out there, because they are making absolutely false claims about selling with them. Let’s just read directly from the top paragraph of the article…
“The Federal Trade Commission today took action against online home buying firm Opendoor Labs Inc., for cheating potential home sellers by tricking them into thinking that they could make more money selling their home to Opendoor than on the open market using the traditional sales process. The FTC alleged that Opendoor pitched potential sellers using misleading and deceptive information, and in reality, most people who sold to Opendoor made thousands of dollars less than they would have made selling their homes using the traditional process. Under a proposed administrative order, Opendoor will have to pay $62 million and stop its deceptive tactics.”
I feel like I’ve talked about this before maybe, probably in a really judgy way. But now you know why! Yes, iBuyers make selling your home convenient, but the absolute truth is that if you run the numbers it really isn’t the case that working with a company that is claiming to get you the most is actually going to get you the most you can get.
Here are some misrepresentations made by OPENDOOR the FTC found in their investigation into the company:
– Opendoor used projected market value prices when making offers to buy homes, when in fact those prices included downward adjustments to the market values;
– Opendoor made money from disclosed fees, when in reality it made money by buying low and selling high;
– consumers likely would have paid the same amount in repair costs whether they sold their home through Opendoor or in traditional sales; and
– consumers likely would have paid less in costs by selling to Opendoor than they would pay in traditional sales.
You may be saying “wow”. Cause I am. Like you, I assume that companies like this would not be so blatantly misleading in their marketing and ways of doing business, because we have serious laws against this. In fact in Tennessee I can lose my license for this type of activity. It makes me wonder if the local real estate commissions in our state markets, or HUD, will have anything to say about these FTC findings, and if it will affect their ability to continue to operate. I know that $62 million fine is going to hurt. It also makes curious about some claims made by other iBuyers to sellers. Looks like Zillow is totally out of the game at this point, I think they realized the human element for the agency relationship is far too important for this marketplace. Redfin will buy your home, or they’ll promise you a 1% agency fee right? Read that fine print at the bottom of the page, it doesn’t include the Buyers’ Agency fee. Is that misleading? Technically it’s not illegal.
I don’t know guys, I’d love your thoughts on all this. If you like it please do, share it with a friend. And if you have something to say, leave it in the comments below! Talk soon.