Opendoor is expanding in the Jacksonville area, reaching its 100th home sold or contracted for sale since entering the market in November.
It has 65 listings on its app, with Middleburg, Orange Park and the Southside in Jacksonville being the busiest.
Greg Hiltz, general manager of Opendoor in Jacksonville, said it wants to expand to a 45-minute drive from Downtown.
It plans to expand into South Georgia by mid-2020.
Opendoor is a San Francisco-based online real estate site for the purchase, sale or trade of residential real estate. It operates in 20 cities.
Hiltz said Opendoor chooses new markets with a lot of real estate transactions, home price appreciation, economic and population growth and stable real estate values.
In Jacksonville, it concentrates in the $200,000-$400,000 range.
Cash offers
Opendoor offers cash for homes based upon their condition, homeowner input, market trends and comparative home sales in the area.
After repairs, it lists the homes for sale.
Opendoor.com says it enables its customers to receive a competitive offer on their home without a showing and on their own timeline.
Customers pay a service charge like the commission that a listing agent collects in a traditional sale.
To date, the impact to the Northeast Florida residential real estate market is small, accounting for about 0.53 percent of single-family resales from November through June, based on data from the Northeast Florida Association of Realtors.
Hiltz said Opendoor has 37 homes under contract to sell and 20 homes under renovation.
To request an offer for their home, applicants answer about 20 questions, such as type of flooring, countertops, appliances, amenities and special features.
Hiltz said Opendoor can make an offer on a home within 24 hours. It does not solicit offers to sellers, other than sending marketing mailers.
If a customer wants to proceed with an offer, Opendoor sends an inspector to look at the roof, HVAC, walls, flooring and other elements. Opendoor can decline to purchase if extensive repair work is necessary.
Hiltz said the benefit to the seller is simple. “You don’t even have to clean it after you leave.”
For repairs, Opendoor uses outside vendors, deducting the amount from the purchase price, or can give the seller the option to make repairs. Repair costs usually range from $4,000 to $6,000.
Each market area has its own set of typical repairs. For example, homes in the Houston market have experienced flooding and have foundation issues. Jacksonville’s market exhibits roof leaks and HVAC problems.
No distressed homes
Opendoor does not buy distressed homes or those in flood-prone areas. It also does not buy properties in gated communities or condominiums because of complications with access.
After Opendoor buys and repairs a house, the property is placed with the Northeast Florida Multiple Listing Service.
Opendoor generally turns the house, ready for resale, in 14 days.
Homes are not staged, due to the volume of homes. Prospective buyers can use a smartphone app to enter the home.
“Most people think about the seller but it’s advantageous to the buyer. It gives a lot of flexibility to see the homes for sale,” Hiltz said.
Buyers can search Opendoor listings on a smartphone app where they can view locations and 25 pictures of the house. The app unlocks the front door, allowing viewings between 6 a.m.-9 p.m.
Opendoor works with Realtors if they want to sell Opendoor homes. At closing, buyers’ agents are paid competitive commissions.
In the future, homes not listed by Opendoor will be added to the smartphone app. It plans to work with third-party Realtors to show those homes.
Opendoor also offers Realtors a cash offer the first day they list a property, along with paying full commission.
Opendoor in the Atlanta and Dallas markets have partnered with Redfin, the real estate brokerage, a possibility in Jacksonville, Hiltz said.
Opendoor makes a profit on its service fees, which Hiltz said are based on a home’s value.
As an example, the median home price in Jacksonville is about $240,000, for which Opendoor charges 6.5%.
Fees increase as home values rise.
Buyers of Opendoor homes have a 30-day money-back guarantee, 97% of the adjusted purchase price, if they change their mind. Hiltz said Opendoor wants to extend that policy to 90 days.
Some homebuilders have partnered with Opendoor.
If a builder’s customer wants a new home that takes months to construct, Opendoor can offer a flat fee for the customers’ existing home.
When the new home is complete, the customer moves out, selling the old home to Opendoor and using the money to buy the new home.
‘Opendoor a positive’
“Opendoor is a positive because it will help some consumers attain their goals of homeownership,” said Pete Dalton, broker-owner with Coldwell Banker Vanguard Realty.
At the same time, customers need to understand that they cannot buy at retail, sell at retail, pay the carrying costs and make a profit, he said.
The “carry” on real estate is expensive for two reasons, he said.
ν It is a large number with finance, repairs and upkeep (utilities, lawn, pool, etc.)
ν No one knows what the final number will be; time frames will vary; and the property is subject to offers and variables in finance costs.
If there is an advantage for the property to be sold in a matter of days, Opendoor, Zillow or other “iBuyer” programs are options for consumers, he said.
The issue is that if the iBuyer takes 5% of the gross for carrying and profit, then the consumer may be giving up 25% or more of his or her equity, Dalton said.