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Comment by frgtpsswrdlame | Hacker News Reader

It seems to me that they actually disagree with you, see the comment further up this thread.

>Opendoor is much more focused on the customer experience, trying to give fair offers to every home - everyday homes, not distressed ones.

So do you think that this response is being a bit coy and they are in fact buying deeply discounted homes?

Also, I guess I don't understand where they actually make money. If someone is unable to sell a home for a long period of time and then sells it to OpenDoor, why are they able to then turn around and sell it for more? In this very thread they attest that they're not flippers because they're not adding much real value to the home.

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It is a nuance.

Opendoor: Targets sellers that want to sell quickly without any hassle.

Flippers: Targets sellers that want to sell quickly without any hassle. Some of them are distressed. Some of them are just in a hurry.

There really is no real distinction. How they make money is clearly laid out on their website. They buy for low, sell for higher than the bought. I believe they also cut out realtors.

There's inherently wrong with wanting to sell quickly. If grandma died, leaving me her house 3,000 miles away from where I live, the last thing I'd want to be saddled with is trying to sell it. I know nothing about selling (or owning) a house, the real estate market in that area, etc. A fair enough price ASAP is what I'd be looking for.

Why not make one call to a local agent and have it sold for 5% more money?

I'm all for paying $2 for convenience if coffee on the run. Not sure I would pay $20k to save a few hours work around selling a house.

Agents are not free! Around where I live, you can expect to pay 3% to each of the two agents involved. Selling the house for 5% more doesn't help you if you have to give 6% of the sales price to the agents. I wonder how much of what Opendoor is trying to achieve involves removing or reducing the agent involvement.

I never said they were free.

If getting an agent on your own cost 5%-6%, and opendoor is charging 12%... you are losing 6-7% by using opendoor. That is a LOT of money.

Also, real estate agents are just as incentivized to sell the property as quickly as possible. Selling a property at say $1M in one week (3k commission) > 1.05M in three weeks (only $150 more for two more weeks of work).

I wish real estate agents commissions where tiered. 1% for selling at market rate but 10% for anything over the market.

Correction... "There's nothing inherently wrong..."

Longer comment on "flipping": https://news.ycombinator.com/item?id=13835150.

> Also, I guess I don't understand where they actually make money.

Sorry for not being more clear on that. When we make an offer on a home, we present a headline price ("we think your home is worth $X"), and an upfront fee for our service (6-12% depending on our estimation of the risk, where traditional real estate fees are 6%).

We try to make the fee as transparent to our sellers as possible, so they can make a fully informed decision.

Most house flippers are not some evil group going around tricking grandmas. Their typical pitch goes like this:

I will buy your house immediately. The way I can do it is to offer you a lower price than you can get if you wait to sell it. Here is my offer for 88% of what your house is worth.

If they wanted to change their pitch it would be...

I buy houses from people. I can close right away, but I need to charge you a 12% fee for a fast closing. That really only costs you 6% because you dont have to hire a broker.

Economically, they are the exact same pitch. There is nothing wrong with either approach. I do understand you not wanting to be associated with flippers, but the reality is hard to argue against.

Our average fee is below 8% total, so a 1-2% premium for selling vs a broker and we'll continue to push it lower.

If you consider holding costs of a home, prepping to sell, etc Opendoor is often at or below cost parity for a segment of sellers for a dramatically better experience.

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