Opendoor To Repay $62 Million In FTC Settlement

The Federal Trade Commission is sending payments totaling nearly $62 million to 54,689 homeowners who sold their home to Opendoor, the agency announced Wednesday. 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.

“Opendoor promised to revolutionize the real estate market but built its business using old-fashioned deception about how much consumers could earn from selling their homes on the platform,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “There is nothing innovative about cheating consumers.”

The iBuyer claims to use cutting-edge technology to save consumers money by providing “market-value” offers and reducing transaction costs compared with the traditional home sales process. The original complaint against Opendoor states the vast majority of consumers who sold to Opendoor actually lost thousands of dollars compared with selling on the traditional market, because the company’s offers have been below market value on average and its costs have been higher than what consumers typically pay when using a traditional realtor.

The agency’s investigation found that Opendoor also violated the law by misrepresenting that:

• 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.

In addition to the financial payment, Opendoor has also agreed to stopmaking the deceptive, false, and unsubstantiated claims it made to consumers about how much money they will receive or the costs they will have to pay to use its service; and requires Opendoor to have competent and reliable evidence to support any representations made about the costs, savings, or financial benefits associated with using its service, and any claims about the costs associated with traditional home sales.