Buying or selling a home can often be a time-consuming and uncertain process. First, you have to find or list the house on the market. Then, there’s the back and forth as you negotiate on price. After that, contracts have to be signed and settlement has to occur. At any point, the deal can fall through, leaving you firmly back at square one.
Enter the new guard
The business model for buying and selling properties has remained relatively unchanged for decades. As such, a number of companies have eyed up the real estate sector and decided they can shake things up using the power of technology. This ‘new guard’ wants to reinvent the entire process by turning traditional concepts of property sales, property management and property listings on its head. They promise a streamlined experience that prioritises convenience, speed and certainty.
One of these disruptors is Opendoor.com, a San Francisco-based startup that pioneered the concept of ‘iBuying’. Opendoor launched in Phoenix in 2014, and since then has bought and sold over 50,000 houses. Every 60 seconds, an American homeowner requests an offer from the company.
How the process works for vendors
- First, you fill in a simple online form
- Opendoor makes you an all-cash offer within 24 hours
- If you’re interested, Opendoor inspects your home
- If Opendoor identifies repairs that need to be done, you can either do them yourself or accept a discount in your sale price
- You choose the settlement date, giving you a chance to find your next home before you sell
- After buying your home, Opendoor then sells it to another party
How the process works for buyers
- You visit homes owned by Opendoor either by unlocking them with an app (self-tour) or by scheduling an on-demand tour with an agent.
- If you like the home, you submit an online offer
- If you change your mind after purchase (for whatever reason), Opendoor offers a 90-day buyback guarantee
For people who want to buy and sell at the same time, Opendoor offers a ‘trade-in’ service. This lets you swap your existing home for one of Opendoor’s on-market properties.
Is there a catch?
In exchange for making the selling process “as simple as the click of a button”, Opendoor charges sellers a fee to use its service. This service fee varies for each home (depending on condition and location) and ranges from 6-14%. The average charge is 7.5%. For comparison, the typical real estate commission fee in America averages around 5-6%.
Is Opendoor coming to Australia?
Currently, Opendoor only operates in America (and even then coverage is limited to 21 larger cities.) While Opendoor has been very successful at raising funding, and is now valued at US$3.8 billion, it’s unclear if it, or similar disruptors, has managed to develop a sustainable business model.
As such, only time will tell whether Opendoor makes it to Australia. However, one thing that can be said for certain is that real estate in 2030 will look very different from real estate in 2020.