As the old adage goes, the three rules of real estate are “location, location, location.” But according to the FTC, online real estate company Opendoor Labs pitched its services to home sellers with “misrepresentation, misrepresentation, misrepresentation.” A proposed settlement imposes a $62 million financial judgment and requires the company to change its business practices.Arizona-based Opendoor advertised its iBuyer service to people looking to sell their homes. The pitch: Opendoor’s cutting-edge technology would save sellers money by providing “market value” offers and reducing transaction costs. According to the company, “We don’t try to make ‘low ball offers’ because, unlike a home flipper, our business model isn’t based on buying low and selling high. The way we make money is by charging a fee for our service” – a process the company described as “transparent, fair, and accurate.”
Once homeowners expressed initial interest, Opendoor sent them eye-catching charts that claimed to show a side-by-side comparison between customers’ projected net proceeds from selling their home to Opendoor versus selling it “traditionally” by listing on the market. The FTC says the charts almost always projected that homeowners would get thousands more by selling to Opendoor. As the complaint alleges, “As of November 2019, over 90 percent of these charts used in accepted offers projected that the consumer would realize more net proceeds by selling to Opendoor. The average projected gain was more than $6,000.”
That’s how Opendoor promoted its services, but the FTC says that’s not how it panned out for most people. According to the complaint, “In fact, the vast majority of consumers who sold to Opendoor lost thousands compared to what …