Opendoor—an iBuying specialist based in the US—has been fined by $62 million by the FTC for misleading customers and posted disappointing results in Q2.
The company will also partner up with former iBuying rival Zillow in a long-term deal.
Opendoor was fined $62m by the Federal Trade Commission this week for "misleading" customers by saying that they could make more money by selling their property with Opendoor than via traditional methods.
The FTC alleged that Opendoor's marketing implied consumers would make more by selling their property to the company because all fees were bundled together. However, consumers often paid more, with Opendoor paying under market value for those properties.
Opendoor said it disagreed with the FTC's allegations, but agreed to pay the fine as part of a settlement deal, with fines going back to customers who were misled by the company. Opendoor will also stop making “deceptive” claims in its advertising.
The fine coincides with poor performance in Q2 after a record-breaking Q1 (revenue dropped from $5.2bn to $4.2bn). Opendoor posted significant losses of $54m. However, share prices soon jumped up when Opendoor announced a "multi-year" partnership with Zillow.
Zillow will feed its users to Opendoor’s iBuying platform, allowing Zillow sellers to request an offer from Opendoor to purchase their home either independently of or in addition to other Zillow offerings. The terms of the deal remain undisclosed.
The companies had been rivals in the iBuying sector, but Zillow's very public departure from the market late last year means they can now have a symbiotic relationship: Opendoor gets access to Zillow's massive audience, while Zillow gets to keep an interest in the iBuying sector.