USA-based home flipping platform Opendoor.com has launched the industry's first satisfaction guarantee for its home buyers, aiming to eliminate the risk and uncertainty associated with buying a new home using disruptive tech.
The two-year-old, San Francisco-based startup buys homes without seeing them when a home seller visits its site, asks for a quote, and accepts Opendoor’s bid.
The company typically comes up with an offer one to three points below what the seller might get on the open market roughly three months into the future, based on public market information about historical home sales and its own proprietary data.
Three months, it says is the average time required to sell a home in the US.
Once purchased, the company refurbishes the house in order to re-sell more profitably to other users.
Now Opendoor says, "subject to terms and conditions" its Guarantee enables buyers to return the home within 30 days if they're not completely satisfied with their purchase.
In other words, "If buyers are dissatisfied with their purchase for any reason, from neighborhood noise to the traffic on the commute from home to work -- they can simply return the home, and Opendoor will repurchase it," clarifies Opendoor CEO and co-founder Eric Wu.
The policy also provides home buyers a rigorous 180-point inspection report on the condition of the home, giving them complete transparency and a 2-year warranty from OneGuard Home Warranties so they can avoid unexpected out-of-pocket expenses.
"Typical warranties only include 1 year of restrictive coverage," Wu says. "With Opendoor, home buyers get a free 2-year warranty that goes above and beyond what is typically covered.
"Buying a home is life's most important purchase," he says.
"We want every Opendoor buyer to love their new home and we are standing behind that promise."
Wu co-founded Opendoor in March 2014 with three others, investor Keith Rabois, former head of data science at Square, Ian Wong and JD Ross, a former product manager at the Addepar investment management platform.
To date, he says, Opendoor has serviced thousands of buyers and sellers, transacting over 1,000 homes. The company has raised $110 million including from its biggest shareholder Khosla Ventures, and currently has over 100 full-time employees.
However Wu told TechCrunch the company has also incurred “hundreds of millions of dollars” in debt in order to carry the homes on its balance sheet while it works toward re-selling them.
He also told TechCrunch OpenDoor typically buys 10 houses a day across the two markets in which it’s currently operating: Phoenix and Dallas and that the company charges sellers “less than 10 per cent” of the value of their home in fees.
In return, Opendoor gets enough money to ensure that a home is whipped into move-in-ready state, including addressing any safety issues.
The TechCrunch report adds "to keep from buying any real lemons", Opendoor won’t purchase any home built before 1960.
It also sticks with homes that range in value from $100,000 to $600,000, which apparently covers 90 per cent of homes in the US Not last, Opendoor says it inspects all homes after its online offer is made but before it writes a seller a check.
According to co-founder and executive chairman Keith Rabois Opendoor's mission is to simplify the process of buying and selling a home.
"And we are going to fix every piece of the transaction."