Opendoor hit with $62 million fine

Opendoor hit with $62 million fine

August 4, 2022 0 By Ellen Novack

Opendoor released the following statement on the allegations:

“Since our founding in 2014, Opendoor set out to drastically simplify the real estate transaction, redefine the housing market, and make buying and selling a home as easy as a tap of a button – bringing transparency, competition and convenience to the antiquated and offline home transaction for consumers. And data shows that our customers value and adopt Opendoor; in fact, we maintain an NPS well over 80 and have maintained a real seller conversion of over 35 percent. While we strongly disagree with the FTC’s allegations, our decision to settle with the Commission will allow us to resolve the matter and focus on helping consumers buy, sell and move with simplicity, certainty and speed.

“Importantly, the allegations raised by the FTC are related to activity that occurred between 2017 and 2019 and target marketing messages the company modified years ago. We are pleased to put this matter behind us and look forward to continuing to provide consumers with a modern real estate experience.”

Samuel Levine, director of the Bureau of Consumer Protection for the FTC, said 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.” 

“There is nothing innovative about cheating consumers,” Levine added.

The FTC found that Opendoor misstated that consumers would likely pay the same for repair costs whether selling their homes through Opendoor or on the open market, and that consumers would likely pay less in selling costs with the company.

It also misstated that Opendoor projected market values to determine its offers for home when in actuality those values included downward adjustments, the FTC reported. The company also claimed it made its money from “disclosed fees” when its real source of income was from “buying low and selling high,” according to the FTC. 

One example of the deceptive practices the FTC alleged occurred around August 2018, when the company instituted a policy of lessening offers to cover anticipated repairs.

“The policy reduced offers without disclosing that they were less than market value,” officials stated in the complaint. “If actual assessed repairs were lower than the amount withheld, Opendoor retained the difference as revenue.

“Even before implementing this policy, Opendoor would reduce certain offers to account for potential repairs, which simultaneously provided a sub-market offer and concealed assessed costs from consumers.”

It’s unclear if there were specific racial, ethnic, socioeconomic groups that were targeted as part of the company’s alleged deception, but Daily Kos has submitted a Freedom of Information Act request to the FTC for the demographic data of those said to be harmed. 

To redress the alleged deception, the FTC proposed that Opendoor “stop deceiving potential home sellers” and “stop making baseless claims.”

The proposed actions outlined in the agreement, however, are not final. “The agreement will be subject to public comment for 30 days, after which the Commission will decide whether to make the proposed consent order final,” the FTC said.

RELATED STORIES: 

On my way to being a first-time homebuyer in Georgia: Here’s how I won the contract in a wild market

Black homeowner went to ‘strike conversation’ with neighbor. He responded he doesn’t have any money

Turns out, fighting the temptation to strip property from Black families isn’t asking too much

Homeowners associations are just as problematic as they’ve always been. Twitter users show why



[