A new app will give you an offer on your home in 48 hours or less
Getting into Daniel Plant’s old townhouse off of I-540 in Apex isn’t very hard.
Though the door is bolted and no one lives there anymore, the front door opens easily, with a click of a smartphone. Inside, the empty house is available for investigation – for as long or as short as you need.
If you like what you see, you can even submit an offer on the townhouse on the spot.
That’s what it’s like to go house hunting with the Triangle’s newest real estate service: Opendoor. No Realtors; just an app.
Funded in part by Lennar, the largest homebuilder in the country, Opendoor uses computer algorithms to buy and sell homes from your phone. Potential sellers only have to fill out an online form, and the company puts together an offer within 48 hours. Buyers open the app to a bevy of homes available, listed over a map of the Triangle.
The startup – valued at more than $1 billion – launched in the Triangle at the end of last year. In its first 100 days here, the company has bought 111 homes. Those homes aren’t immediately listed for sale, however, as Opendoor makes small repairs before putting them back on the market.
Plant, who sold his townhome in Apex to Opendoor, heard about the service from a friend in Phoenix, which was the first market the app operated in. Plant, who works for Disney, moved to Florida after living in the Triangle for 10 years and decided to give the app a try.
He opened the app and filled out a survey about his home, which asked for its characteristics – like square footage, type of appliances – as well as some photos.
“I had an offer by the next night,” Plant said.
Opendoor offered Plant $263,000, which he thought was too little. He rejected the offer and replied that he didn’t think it was high enough based on another townhouse in his neighborhood.
Opendoor sent back another offer, this time for $272,000, which Plant accepted. The home is now listed for $288,000 on Opendoor, and 50 people have visited it already, according to the app.
“It’s a thin-margin business,” said Jon Enberg, Opendoor’s general manager of the Raleigh-Durham market. “We aren’t like the discount cash buyers. ... There is no pressure and there is no cost (to receive an offer). You can get an offer on the house, and there is no obligation; you can let it expire.”
How does it work?
Raleigh-Durham is Opendoor’s sixth market in the U.S. The company currently has five full-time employees but anticipates growing to 20 by the end of the year.
The company said its biggest hurdle in new markets is often convincing people that the app isn’t “too good to be true.” It has full-time employees whose jobs are to walk people through the process over the phone and assure them that "the other shoe isn't going to drop." The company brags that its net promoter score, or the likelihood a user will recommend the service to a friend, is as high as Netflix's.
“Raleigh-Durham is a great place to live and Opendoor recognizes that,” Enberg said. “It’s a growing area, a great, robust economy and people want to move here and be here. For Opendoor … there is enough data [on the market] that we can price accurately, which is very important.”
Opendoor is interested in buying houses worth under $500,000 and in good shape, Enberg said. If your home fits that criteria, you type in your address, answer a survey about the qualities of your house and then wait for the offer.
Once Opendoor’s algorithms compare your house to others in the area, it will send you what it considers a fair price for your house. Real estate agents will traditionally take a commission of around 5 percent to 6 percent of the sales price, while Opendoor charges on average around 6.5 percent, according to a company spokeswoman.
But for that extra commission, Opendoor closes on the sale in three days and is a guaranteed buyer. The price of the home is held in escrow until the day of closing, and then it is wired to the seller’s bank account.
Enberg said being a guaranteed buyer is also a huge plus for many sellers, as typically “about 15 percent of buyers walk away, whether it is financing falling through or change of heart.”
That guarantee is really useful, he said, for those locked into contingency clauses, where the purchase of the seller’s next home is contingent on them finding a buyer for their current residence.
After agreeing to a price, Opendoor sends an appraiser to confirm what the seller answered in the survey about their home. The company then takes your home, makes repairs and puts it back on the market.
Why would you do it?
Plant admits he probably would have made more money not using Opendoor, especially with how hot the Triangle housing market is these days. Available homes usually don’t sit too long.
“Could we have gotten more? Yes,” he said. “But would it have been worth the hassle? No, I don’t think so.”
That hassle, he said, includes having to clean the house before showings, long wait times for inspectors and pressure from a realtor.
“I guess it is the millennial in me, but I could do everything online and there was no pressure and it was on your timetable,” Plant said of why he liked Opendoor.
That’s the main selling point for Opendoor: the removal of the typical hassle of moving, Enberg added.
“You don't have to go through the typical process of listing your home, scheduling showings, keeping it list ready,” he said.
Plant said he wishes buying a home in Florida had been as easy as selling one in Apex. Opendoor announced last November it was entering the Orlando market.
“We couldn't look at this house until (a realtor) was there, or if I didn’t have a realtor I had to use theirs,” Plant said of his recent search for a house. “I didn’t want to have to contact a realtor.”
'I don't think it will work in this market'
But will there be enough Daniel Plants to make Opendoor successful in this area?
Tammi Brooks, the president of the Durham Regional Association of Realtors, doesn't think so. It's too much of a seller's market right now, and using Opendoor prevents competing offers, Brooks said.
"I don't think it will work in this market. The Triangle has a lot of upward pressure on (home prices) right now ... when sellers are using Opendoor they are leaving money on the table," said Brooks, a managing broker at Inhabit Real Estate. "There is so little inventory and so many buyers in our market, we are seeing five, 10, 15 offers per listing. People are offering a lot of money over list [price]."
"I am sure some people will find it a convenience, but I don't think they will have an effect on most agents," she said, noting that some people will like how quickly Opendoor can close on a property.
Brooks does, however, think it will make local brokers step up their digital game because Opendoor has such a comprehensive app.
"I think they are going to put pressure on us as a user of tech rather than our market."
Zachery Eanes: 919-419-6684