Opendoor Labs disagreed with the allegations but did agree to pay $62 million in customer claims to the Federal Trade Commission.
It’s the biggest blow an iBuyer-style company has absorbed in its short history.
The FTC’s action was based on allegations that the San Francisco-based company used misleading market practices to persuade people to sell their homes on its site.
“While we strongly disagree with the FTC’s allegations, our decision to settle with the commission will allow us to resolve the matter and focus on helping consumers buy, sell and move with simplicity, certainty and speed,” the company said in a statement issued Monday.
“Importantly, the allegations raised by the FTC are related to activity that occurred between 2017 and 2019 and target marketing messages the company modified years ago.”
Opendoor statementIn a press release Monday, the FTC said Opendoor “pitched potential sellers using misleading and deceptive information, and in reality, most people who sold to Opendoor made thousands of dollars less than they would have made selling their homes using the traditional process.” | PDF of action
“Opendoor promised to revolutionize the real estate market but built its business using old-fashioned deception about how much consumers could earn from selling their homes on the platform,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.
“There is nothing innovative about cheating consumers.”
Opendoor opened an office in Dallas at Mockingbird Station in 2015. The corporate office handled all comments related to the FTC case.
On its website, the company said that over 6,000 D-FW customers have sold their homes to Opendoor. The company does not disclose how many homes it owns in each market, but Opendoor is known to own more than 13,000 homes in 50-plus markets in the first quarter.
A Zillow report released in June said that homebuyers who used an iBuyer service made up 5.1 percent of the D-FW market and 1.3 percent of the national housing market.
The company also claimed that it’s infused over $75 million into the D-FW small-business economy “through our work with local contractors and tradespeople.”
On Tuesday, Opendoor launched Opendoor Exclusive, a service that offers homes for sale on its website before listing them to the public. It’s a move aimed at helping buyers avoid negotiations and bidding conflicts.
