Homeowners who sold their properties to Opendoor Labs could get money from a settlement with the Federal Trade Commission over deceptive marketing tactics, the agency announced April 3.
The nearly 2,500 people who sold to Opendoor in California could qualify for a median refund of $1,553 because the company “tricked them into thinking that they could make more money selling their home to Opendoor than on the open market,” the Orange County Register reported.
Opendoor’s marketing pitch was that homeowners could save money in the selling process by foregoing the expenses of fixing, listing and showing their home, instead selling it directly to Opendoor on the company’s app. The owner would receive a cash offer after the company’s algorithm determined the home’s value.
But the FTC found a majority of sellers would have been better off marketing their homes the regular way.
“Most people who sold to Opendoor made thousands of dollars less than they would have made selling their homes using the traditional process, and many paid more in costs than what sellers typically pay,” the FTC said in a statement.
Opendoor was one of the so-called iBuyer companies that plied the California market before and during the pandemic. In March 2019, Opendoor, RedfinNow, Offerpad and Zillow Offers were active in the market.
In the spring of 2021, those four companies paid a total $512 million to buy 789 houses in Los Angeles, Orange, Riverside and San Bernardino counties, according to a Zillow study cited by the Register.
In the settlement with Opendoor, the company is prohibited from making deceptive or unsubstantiated claims to consumers. Also, the FTC will spend $4 million from the settlement to compensate 2,472 buyers in California. The California distribution comes eight months after the FTC and Opendoor agreed to a settlement.
— Joel Russell