Correction: An earlier version of this story misidentified Opendoor’s headquarters, global sales, and misspelled names.
Opendoor, a San Francisco-based real estate company, has joined the Nashville real estate market, buying up to eight homes a day through its online platform.
Working with Felix, a separate real estate company, Opendoor is bringing new options to home sellers that make the process of selling homes faster and easier. With the backing of institutional investors, Opendoor will pay cash and make offers within 48 hours.
“Today, if you own a house and want to sell it, it’s quite a painful process,” said PJ O’Neil, who started the Opendoor Nashville marketplace. “We make it as easy as possible for sellers.”
With Opendoor, a seller can avoid the headaches associated with home repairs, viewing the property, and hosting open houses. The company makes an offer on a seller’s home based on the uploaded photos and address they send, and any repairs the house needs are covered by the seller. A seller can withdraw at any time if they disagree with Opendoor’s prices.
Opendoor generates revenue by charging a service fee of around 6-6.5% of the sale price of a house, which is comparable to what real estate agents charge.
The downside for a seller using Opendoor is that they miss the opportunity to test the market, O’Neil said. But, they also miss the hassle of painting, refinishing carpets, maintaining a clean home as they search for buyers, and an uncertain timeline for the sale.
Institutional investors and banks provide lines of credit to Opendoor, allowing the company to make cash payments to sellers. The seller can then make cash offers on a new home, giving them a competitive advantage as a buyer.
Once Opendoor buys the house, it usually takes two weeks to complete the repairs before putting it back on the market. The Opendoor app allows home buyers to view a home between 6 a.m. and 9 p.m. without an appointment, simplifying the home shopping experience.
“When you’re ready to visit, it’s as easy as showing up at home, pulling out your phone, pressing a button on our app, and the door unlocks seamlessly,” O’ said. Neil.
Opendoor chose the Nashville area for expansion because of its strong job growth and housing stock, O’Neil said. Because it targets homes that were built after the 1950s and cost between $100,000 and $500,000, most of its activity has been in counties surrounding Davidson County, rather than central -town.
Opendoor employs 17 people in Nashville and hopes to double its team by next year.
“We’re very bullish on this market and really excited to continue to grow here,” O’Neil said.
Opendoor launched in May in Nashville, buying a house a day for two months. He has since ramped up purchases by around three to five a day. At the beginning of August, eight houses were sold in a single day. The company started in Phoenix in 2014 and now buys about 1,400 homes per month in all markets.
And the agent?
Under the Felix Homes model, launched in Nashville in June, the company pays sellers to list the home and if the home doesn’t sell within three months, Felix buys it at a pre-determined discounted price. It offers an alternative option for those who want to sell in a short period of time, the company said.
Felix also pays cash and makes money when a house sells for more than the company pays.
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Both models work without a traditional real estate agent, but Opendoor says its services are complementary to brokers. With Opendoor, agents can offer customers another option that allows them to sell immediately.
Opendoor pays real estate agents a 1% referral fee, and about 90% of Opendoor buyers use an agent on the resale side. Opendoor pays a 3% commission to all agents who represent buyers.
“We see in other markets that we are the first call an agent will make if a buyer’s financing or a sale fails,” said Opendoor spokeswoman Cristin Culver. “They know Opendoor is a guaranteed buyer that has a transparent process and that the deal will close.”
Contact Jamie McGee at 615-259-8071 and on Twitter @JamieMcGee_.