iBuying Giant Pairs Buyers With Agents to Submit Cash Offers
March 4, 2021
iBuying firm Opendoor announced Wednesday that it will help buyers make cash-backed offers to improve their chances in a bidding war.
To participate, buyers will have to get prequalified with Opendoor Residence Loans or another mortgage firm. Opendoor will then pair the client with a real estate professional affiliated with the company, who will review their offer for a home before submitting it to the seller. The company will back the buyer’s offer with cash, allowing buyers to submit an offer free of financing, appraisal, or home sale contingencies. Opendoor promises the seller that it will buy the home with cash if the client is unable to get financing.
“We’ve made cash-backed offers more accessible, enabling prospects to compete in hot markets, and in a radically simpler way,” writes Tom Willerer, Opendoor’s chief product officer, in announcing the new service. The company says that buyers are able to shop for a home completely online and through an app. “The market conditions right now are screaming for this,” Willerer told Bloomberg. “We’re in a low-interest rate world that’s incentivizing a whole bunch of buyers to come to market and we’re in a low-inventory setting where buyers need a way to stand out.”
Opendoor operates its own brokerage and partners with outside real estate professionals. The company says it isn’t charging buyers extra for the cash-offer service but considers it a way to entice buyers to use their agents and promote the iBuying firm's other services, such as home loans, warranties, and insurance.
Sellers often find cash-back deals more attractive since there’s less chance of a transaction falling through during the financing stage. Cash offers are comprising about 36% of transactions, according to realtor.com® data. A limited number of homes for sale has sparked bidding wars across the country, prompting buyers to have to compete for the homes they want.
Opendoor’s cash-backed service is currently available in Atlanta; Charlotte, N.C.; Raleigh-Durham, N.C.; Dallas-Fort Worth, Austin, San Antonio, and Houston, Texas; Orlando, Fla.; Phoenix; Tucson, Ariz.; and Riverside and Los Angeles, Calif. The company expects to bring the program to Sacramento, Calif., later this month.
Opendoor’s move follows on the heels of Zillow, which recently announced it would begin to make instant cash offers to sellers based on their property’s Zestimate online at its site. Other startups are backing cash offers or offering guarantees to help home buyers stand out in a bidding war, such as firms like Orchard and Knock.
Opendoorand “Opendoor Moves Beyond Home-Flipping in Move to Back Cash Buyers,” Bloomberg (March 3, 2021)
Updated: April 16, 2021