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OPENDOOR made me an offer I must refuse!

Posted by jerryclinebell on June 18, 2022
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DON'T TRUST INTERNET AUTOMATED VALUATION TOOLS WITH YOUR EQUITY!

Yes, even mine!

OPENDOOR MADE ME A PURCHASE OFFER. WHAT COULD POSSIBLY GO WRONG?

Their “purchase offer” has a low of $422,000 and high of $515,000.

A $93,000 spread! There’s so much terribly wrong with that.

So, Opendoor sends me a promotional piece in the mail stating I can lock in my offer and get a “stress free sale”. The marketing piece also highlights other benefits of Opendoor:

  1. Get a competitive cash offer in minutes,
  2. Skip stressful home showings and prep work,
  3. Choose the close date that works for “you”.

Items 2 and 3 above are indeed features of the Opendoor program and may be important benefits to you in your decision to sell to them, however Item # 1 is the most critical.

Internet Automated Valuation Tools are flawed. Don’t trust your home equity to a purchase proposal generated by a “bot’ as it could end up costing you thousands of dollars in lost equity.

As noted, Opendoor’s offer has a low point of $422,000 and a high point of $515,000. That’s a spread of $93,000! and in my many years of practice, when a buyer presents an offer that is so inadequate it typically receives no response at all. That’s precisely what I plan on doing … nothing … other than writing this blog post. As in most negotiations the buyer wants the lowest price and the seller wants the highest price, so assuming their offer even has merit (it doesn’t, but more on that in a minute) before we can “do a deal” we have a lot of work to do … or not.

I’m sure the Opendoor letter was sent to many if not all of my neighbors (a neighborhood of some 3,000 homes) so at this point I need to put out a warning – or better yet an invitation – to anyone who receives a similar purchase proposal from ______________ (fill in the blank with XYZ Company name), you need to call me IMMEDIATELY.

Here’s why.

Unbeknownst to Opendoor, although built in 2002 my house has been extensively remodeled, renovated, and updated since we purchased it out of foreclosure in 2014. When we closed on the purchase, the house could not have been lived in because the previous owners took virtually everything out of the home before they “lost it” and essentially left behind a dilapidated shell. Since our purchase, major renovations to the property include: a new roof, two new air conditioning systems, a surround sound system installed in the family room, new kitchen cabinets and high end appliances, lighting fixtures in every room, plumbing fixtures in all bathrooms including vessel sinks and new vanity tops, new flooring, house painted inside and out, swimming pool shell and decking resurfaced, and extensive landscaping upgrades. These improvements are hard dollar investments that substantially reduce the “effective age” of the property and greatly add to its value. Additional unique elements of our house are that it has 12 foot high ceilings throughout, an incredible view of both a lake and (what was) a golf course fairway.

To sum it up, let’s revisit Opendoor’s “offer”: $422,000 to $515,000. The serious flaw with their proposal is that our house has a current market value in the range of $650,000 to $675,000. So even if I were to seriously consider accepting Opendoor’s most generous number of $515,000 (remember the $93,000 gap we have to negotiate away first) and using my most “conservative” value of $650,000, by selling to Open Door I would give up a minimum of $135,000 in market value (equity). That’s a lot to pay for the convenience of a “stress-free sale”.

One last item. Opendoor’s transaction fees are approximately 9.0 percent of the agreed upon sales price, so at the $515,000 price point, I would also pay $46,350 in fees to Opendoor at closing.

The moral of this story is that, 1.) all of the “we’ll buy your house” companies utilize automated valuation tools to derive their purchase proposals, 2,) all automated valuation tools (including the one here) cannot account for any improvements or special features of any property. This flaw is precisely why it’s IMPERATIVE that before you begin negotiations with any party who approaches you about buying your property – whether a corporation or individual – that you consult with an Expert Listing Agent and receive a complimentary ¬†evaluation of your property’s true full market value.

I realize that my situation may be unique and quite different than others, but a free 30 minute consultation could save you from giving away thousands of dollars of equity in your home. Make the call … because you have a lot to lose if you don’t.

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READY TO SELL?

If you enjoyed this article leave a comment below. If you’re ready to sell send me an email and I’ll get back with you to for a free selling consultation.

 

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