Offerpad vs. Opendoor: Which iBuyer Will Survive 2023?

✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home sellers.

Until mid-2022, Offerpad vs. Opendoor was a question about which iBuyer was better. However, 2023’s declining housing market has turned this battle into a question of survival.

Both iBuyers reported catastrophic losses in the fourth quarter of 2022, ranging from 1.2 billion to almost 4 billion dollars. To manage their losses, Opendoor and Offerpad have started buying fewer homes and offering lesser cash.

But that isn’t enough. Opendoor and Offerpad are at risk with the recession looming over the housing market. In such a situation, should you sell your home to either of them? An MLS listing may prove to be more fruitful.

An MLS listing on a cash buyer marketplace like Houzeo can get you 100% of your property’s value. With Houzeo, your listing can be on the MLS within 24 hours. Moreover, you can compare offers from multiple national and local cash buyers.

Let’s look at their reviews, pros and cons, and alternatives to give you the whole picture.

Offerpad and Opendoor: An Overview

Opendoor and Offerpad are Instant Buyers or iBuyers that use technology to extend cash offers on homes.

Offerpad was founded in 2015, just a year after Opendoor. So, it may not be surprising that they share several similarities:

• Both iBuyers pay 70% to 80% of a home’s FMV.
• Their final cash offer is lower than their initial offer.
• Offerpad and Opendoor charge hefty service fees.

But Offerpad takes it a step further. They charge a 1% cancelation fee if you back out from the deal 4 days before closing. Additionally, Offerpad’s cash offers combine expert evaluation and algorithm recommendations.

On the other hand, Opendoor depends heavily on their proprietary algorithms to come up with an offer. If their algorithm doesn’t account for any particular feature of your home, you could be shortchanged with your offer.

Opendoor’s dependency on technology has also affected the company. They have bought homes for higher than their FMV several times, adding to their losses.

👉 Supervised Tech > Unsupervised Tech: In 2022, Offerpad reported just $148.6 million in losses, while Opendoor suffered a loss of $1.2 billion.

Offerpad vs. Opendoor vs. Houzeo

Opendoor and Offerpad are implementing cost-cutting measures to survive the uncertain housing market conditions. So, your cash offer could be much lower than your expectations.

On the other hand, listing your property on the MLS with a flat fee company like Houzeo can get you 100% of your home’s FMV.

*Only in select markets.

» Houzeo Reviews: Still not convinced? Read what customers have to say about Houzeo.

What Types of Houses Does Offerpad and Opendoor Buy?

Offerpad and Opendoor purchase homes needing minimal repairs. Additionally, both companies have strict criteria for the properties they buy:

Offerpad’s Eligibility Criteria:

To qualify for an Offerpad offer, your home needs to meet these criteria:

• Home Type: Offerpad buys single-family homes, condos, and townhomes.
• Year Built: Homes constructed after 1960 are eligible for a cash offer from this iBuyer.
• Valuation: Offerpad.com considers homes valued only up to $1 million.
• Maximum Lot Size: The property cannot exceed 1 acre.

Opendoor’s Eligibility Criteria:

To qualify for an Opendoor offer, your property needs to fulfill these conditions:

• Home Type: Opendoor generally purchases single-family homes and townhouses. They also dabble in duplexes and condos, but only in specific markets.
• Ownership and Occupancy: The seller must have a clear, marketable title. Additionally, the property should be occupied by the owner and must be vacant at the time of closing.
• Valuation: Opendoor usually buys homes valued between $100K to $600K. But, they can also consider houses valued as high as $1.4 million in special circumstances.
• Year Built: Only houses built after 1930 are eligible for Opendoor offers.
• Maximum Lot Size: 1 to 2 acres of land. But this can vary based on market conditions.
• Home Location: The houses need to be within Opendoor’s coverage area.

iBuyers follow these standards very closely. Opendoor may even back out of the deal if your home fails to meet their criteria.

💡 Did You Know: Offerpad purchased roughly the same number of homes in 2021 and 2022. On the other hand, Opendoor purchased almost 2,000 properties less than in 2021 to help control their losses.

Offerpad vs. Opendoor Locations

When you compare Offerpad’s markets with Opendoor’s, Offerpad comes out on top. They offer their services in 1,000+ cities across 15 states.

Opendoor covers just 53 metro cities.

Limited coverage, lowball offers, and high service fees may stop you from selling your home to these iBuyers. Instead, try listing your property on the open market with Houzeo.

For $399, you can get multiple offers on your property and maybe even 100% of your FMV.

💡 Get an Offer on Houzeo: Home sellers on Houzeo have received offers from a variety of cash buyers, including iBuyers like Offerpad and Opendoor.

Opendoor vs. Offerpad: How Do They Work?

Companies like Offerpad and Opendoor cater to sellers looking to sell their homes fast. So, these iBuyers follow a straightforward process to ensure a quick closing timeline.

How Does Opendoor Work?

Here’s a quick rundown of how Opendoor works:

1. Request an Offer: To sell your home, enter your address on Opendoor.com and answer questions about your home’s features and condition. Based on this information and the local housing market, you will receive a free, no-obligation Opendoor estimate.
2. Schedule a Virtual Home Tour: If you accept their preliminary offer, Opendoor will schedule a virtual home tour. You can either speak to the company representative on a video call or send them photos and videos of your property for verification.
3. Complete the Home Inspection: After the tour, Opendoor sends an in-house appraiser to evaluate the property and look for structural issues. Typical areas of the home inspection include the foundation, roof, plumbing, electrical, AC units, etc.
4. Receive the Final Cash Offer: After the inspection, they make a final offer on your house within 2 days. This offer includes their 5% service charge, Opendoor repair costs, and closing costs.
5. Close on the Sale: If you accept Opendoor’s cash offer, you can select a closing date up to 60 days out. You must upload photos of your home on Opendoor’s online dashboard to prove that its condition hasn’t changed since the assessment.

You will need to move out of your house by 11.59 pm on the day before escrow closes. The cash sale will go through a few days after closing.

How Does Offerpad Work?

Offerpad Express provides home sellers with a cash offer within 24 hours. Let’s see how it works:

1. Request an Offer: You need to fill out a 3-minute form with all your property details on the Offerpad website. You can also attach photos of your property, but that is optional.
2. Evaluate Your Cash Offer: In 24 hours, you will receive a preliminary cash offer for your home. This offer has been generated by Offerpad’s proprietary algorithms and vetted by their experts.
3. Sign the Purchase Agreement: You have 4 days to accept or reject Offerpad’s offer. Remember, when you take the offer, you sign a contract without knowing what the final offer price will be. In contrast, when you sell to Opendoor, you sign a contract after you get the final offer.
4. Complete the Inspection: Once you accept Offerpad’s offer, they will schedule a house inspection. The representative will look for signs of water damage, structural problems, and general wear and tear. These factors will affect the final cash offer.
5. Receive the Final Cash Offer: You can choose to deduct the repair costs from the final cash offer or hire a contractor independently to make the repairs. Further, you only have 4 days to decide. If you withdraw from the sale, you must pay a 1% cancellation fee.

You can choose a closing date up to 60 days out. If you need more time, you can use their Extended Stay Program. With this facility, you can move out 3 days after your closing date at no extra charge.

👉 Offerpad Flex: You can list your home on the MLS through Offerpad Flex while still getting a backup cash offer from them. If your Offerpad listing fails, you have 60 days to opt for their cash offer.

How Much Will Offerpad and Opendoor Pay for a House?

Offerpad and Opendoor typically pay 70% to 80% of a home’s Fair Market Value. Their initial offer is almost always higher than their final cash offer, which includes the 5% to 6% service fee and closing costs.

When it comes to repair costs, Opendoor and Offerpad adopt different approaches.

While Opendoor directly deducts the repair costs from the final offer, Offerpad gives you a choice. You can sell your house as is and let Offerpad deduct the repair costs. Or, you can hire a contractor and fix the house yourself.

But if the repairs are extensive, Offerpad makes this choice for you and deducts the costs from the final cash offer.

» What’s My Home’s Value: You can know your home’s market value with Houzeo’s free Home Worth Estimator. It helps you estimate the amount you will get upon sale.

Offerpad vs. Opendoor Fees

Since Opendoor and Offerpad function like traditional home flippers, they also earn profits similarly. They buy homes at discounted prices and sell them for a profit.

Both Offerpad and Opendoor have similar pricing models. They charge a service fee to cover utility expenses and taxes until the home is sold to another buyer. Offerpad charges 6%, while Opendoor charges 5%.

Although Offerpad’s fees aren’t hidden, they do have a 1% cancellation fee. However, they do not mention this fact explicitly on their website.

🚩 High Fees and Low Offers: Many iBuyer reviews highlight that while their cash offers are low, their service fees and repair costs are exceptionally high. So, sellers are forced to look for Opendoor and Offerpad alternatives.

Offerpad vs. Opendoor Reviews

In 2023’s down market, Opendoor and Offerpad’s customer reviews play a crucial role in deciding the future of both companies. Too many negative reviews and sellers may not choose that iBuyer to sell their home.

Let’s look at the reviews of Offerpad and Opendoor to understand which iBuyer meets their consumers’ expectations.

Offerpad.com Reviews

Offerpad has a 4 out of 5-star rating on Trustpilot based on 174 reviews.

Most customers praise their quick cash offers and flexibility in closing timelines. On the other hand, Offerpad complaints highlight their lowball cash offers and high service fees.

✅ Juan was happy with Offerpad’s hassle-free process and competitive cash offer.

✅ Lisa was grateful for the flexibility and empathy shown by Offerpad’s team when selling her house.

❌ John was enraged because Offerpad reduced his final cash offer drastically.

❌ Brent, a veteran who served the country for 8 years, was furious with Offerpad’s deceitful practices.

Opendoor.com Reviews

Opendoor has a 4.4 out of 5-star rating on Reviews.io based on 3,104 reviews.

Positive reviews praise the iBuyer’s easy process and courteous customer support. On the other hand, Opendoor complaints highlight their lowball offers and high repair costs.

✅ Jeff was happy with the help he received throughout his home-selling journey.

✅ Renata was happy with Opendoor’s quick closing process.

❌ Dawn was unhappy with Opendoor’s lowball offer. They opted for a better offer from another buyer.

❌ LC was shocked by the high repair costs charged by Opendoor.

Offerpad vs. Opendoor: Pros and Cons

Companies similar to Offerpad and Opendoor are convenient for sellers who want to sell their homes fast. They both have some common advantages like:

• Extending cash offers in 24 hours
• Providing quick closing timelines
• Purchasing homes needing minimal repairs

These iBuyers also have similar disadvantages. They:

• Give lowball cash offers
• Provide little to no room for negotiation
• Charge high service fees
• Follow strict eligibility criteria

Apart from the pros and cons mentioned above, Offerpad and Opendoor have some unique positive and negative aspects.

Opendoor: Pros and Cons

Opendoor’s hassle-free process makes them an attractive alternative. But let’s look at some of their positive and negative aspects to make an informed decision.

✅ Zero Cancelation Fees: Opendoor doesn’t levy a penalty if you want to reject the offer or cancel the sale.

✅ Late Checkout up to 14 Days: You can close on your home, receive the cash offer, and temporarily rent your home.

⛔ Opendoor May Back Out of the Deal: According to reviews, Opendoor may back out of cash deals at the last minute, leaving homeowners stranded.

⛔ Limited Coverage: Opendoor offers their services only in 53 cities. Such restricted coverage prevents many sellers from selling their homes to Opendoor.

Offerpad: Pros and Cons

Offerpad’s quick closing timeline is one of their most significant selling points. However, look at some of their pros and cons before opting for this iBuyer.

✅ Extend Your Stay After Closing: Offerpad let’s you move out of your home 3 days after closing. This way, you can finish your packing without the stress of a ticking clock.

✅ Free Local Move: If your new home is in a 50-mile radius of your old house, Offerpad will help you move for free. But you will need to pack your belongings yourself.

⛔ Unprofessional Customer Service: Many reviews of Offerpad mention that their customer service is condescending. Further, their agents don’t guide or advise sellers who are selling their homes to them.

⛔ Enter Into a Contract Before Knowing the Final Selling Price: Offerpad requires you to sign a legal contract if you accept their initial offer. Since the company lowers the offer after the home assessment, you don’t know what the final price will be.

⛔ 1% Cancelation Fee: If you back out from the transaction 4 days before closing, you must pay a 1% cancelation fee. Offerpad’s cancellation policy may be frustrating as you’re paying the company after rejecting their lowball offer.

What are Some Offerpad and Opendoor Alternatives?

If you want to sell your house fast for cash, here are two alternatives better than Opendoor and Offerpad:

1. Houzeo

Houzeo is one of the best FSBO websites in America that lets you list your home on the MLS in 24 to 48 hours. Here, multiple national and local cash home buyers make offers on your property, driving up its price. You can even get 100% of your home’s FMV.

So, why settle for just one offer when you have the pick of the lot with this Flat Fee listing service?

2. HomeVestors

HomeVestors is a cash home buyer franchise offering 50% to 70% of the home’s FMV. However, they may deduct repair costs at closing. Further, since each office is independently owned, you won’t get consistent service across the country.

“We Buy Houses for Cash” Companies Near Me

There are other “We Buy Houses As Is” companies in the market. You can request an offer from multiple cash companies and pick the one that suits you the best.

Offerpad vs. Opendoor: Which One Will Survive?

Given the direction iBuyers as a sector are heading in, we don’t recommend either Offerpad or Opendoor. They might not even be around in a year or two.

Both companies are drowning in debt and have resorted to cost-cutting measures for survival. For example, they now purchase fewer homes and extend lowball cash offers to save money.

Additionally, their high repair costs and service fees lower your offer, which is already below market value. Ultimately, the price you pay for a quick closing may be too high.

Houzeo can give you the convenience of a quick closing along with top dollar for your property. With their flat fee packages, your listing can be on the MLS in 24-48 hours. You get multiple offers that could net you even 100% FMV of your home.

 

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