Does OpenDoor Have Hidden Fees?
Opendoor has quickly established itself as one of the most popular online real estate companies in the United States.
Offering to buy houses for cash, and only charging a service fee of 5% on the sale price, Opendoor eliminates a lot of the headache and hassle. Because listing and selling real estate is so easy with Opendoor, homeowners, landlords, and investors can make quick, predictable, and easy transactions.
For many home sellers, dealing with Opendoor is a super simple and straightforward process. They offer a quick sale, which people like. Plus, you don’t have to worry about the headache and hassle of dealing with listing agents. You also don’t have to worry about running expensive repair projects.
But a common question of people looking at listing with Opendoor is, “Does Opendoor have hidden fees?”. The company is clear about its 5% service fee on all transactions. But are there other fees sellers have to pay?
Keep reading to learn, “Does Opendoor have hidden fees?” in this breakdown of fees, charges, and other costs sellers have to fund when selling via Opendoor.
Opendoor Fees: A Breakdown
Firstly, when doing business with Opendoor, all sellers have to pay the 5% service fee for listing and selling a property on their site. This is a standard, across-the-board fee that everyone has to pay for all transactions.
On top of that, though, you have extra “hidden fees” from Opendoor, which can include:
- 1% to 3% extra to cover closing costs
- 1% to 2% to cover repairs that may need to be done
- 1% to 2% to cover any extra “miscellaneous” fees you might get hit with
At the end of the day, this usually means that Opendoor clients are going to be ponying up between 7% and 10% of their total home sale price when they go with this service. A lot of folks feel like this isn’t an unreasonable charge in return for the streamlined transaction of Opendoor sales.
Other folks, though, are going to be a little bit miffed at the fact that there are so many hidden fees – to the point where the 5% fee advertised is, essentially, doubled.
The Truth About Opendoor Hidden Fees
Opendoor has built a pretty solid reputation with its client base on top of really transparent pricing. While you aren’t going to be hit with surprise fees when the transaction closes, there are some “associated fees” that you might not expect when doing business with this company.
For example, higher repair costs that are negotiated between Opendoor and the cash buyer can end up being higher than the 1% to 2% mentioned above. This is especially the case if you’re selling a property with code violations or the property is damaged due to construction work or poor home maintenance.
Sometimes closing costs will be higher as well. This is especially the case if you’re selling a property with a mortgage. Higher closing costs could technically be considered a “hidden fee” – even if Opendoor is transparent when it comes time to invoicing this charge.
To avoid as many surprises as possible, it’s important to be crystal-clear about the condition and value of your property when working with Opendoor. The more they know about the property (i.e. the more accurate a picture you present to them prior to listing), the more accurate their actual Opendoor estimate is going to be.
Will Opendoor Cover Closing Costs?
It’s critically important to understand that if you sell your property with Opendoor, they are not going to cover every penny of the closing costs. Opendoor will handle 50% of the fee for covering the real estate closing on your property.
But you are going to be on the hook for the other 50%. So, when selling via Opendoor, you can expect to pay between 1% and 3% of the final sales price to cover this half of the closing costs.
These fees will go towards covering:
- Title fees
- Transfer taxes
- Any associated prorated property taxes that might need to be paid off before the sale can finalize
Opendoor often advertises these fees as being 1% of the final sale price. But in reality, it’s not uncommon for this number to be bumped up to between 2% or 3%. To better understand typical fees and hidden closing costs when selling a house, read this in-depth article explaining seller closing costs in detail.
How Do Opendoor Fees Stack Up Against Realtor Fees?
Selling your home with Opendoor is (generally) going to cost between 5.5% and maybe 10% of the total sale price when you really break things down. That might seem like a lot – especially if you compare this to the 5% that Opendoor regularly advertises.
But when you stack the 5.5% to 10% with Opendoor against the 8% to 13% (or more) you’re likely going to pay with a traditional realtor, you can see why so many like to do business with Opendoor.
Combine that with the fact that you usually get a faster sale and are working with all-cash buyers (so you don’t have to worry about financing falling through), working with Opendoor vs Zillow or a realtor quickly becomes a bit of a no-brainer for many.
At the same time, Opendoor is always looking to sell properties quickly. They do everything they can to facilitate fast turnarounds and quick transactions. Whereas a local realtor who better understands your market specifically may be able to plan for a longer-term transaction.
This guarantees that you get every penny of potential profit from your real estate sale – money you inevitably would have left on the table with Opendoor. That’s something to consider, too.
Additionally, Opendoor is pretty famous for being transparent about the reality of its business model. The company states that it’s not uncommon for their clients to leave about 3% of the total sale price on the table going with Opendoor versus a traditional realtor. That’s something you want to factor into the equation.
Example: Selling via Opendoor
To give you a complete picture of what it’s like doing business with Opendoor, let’s assume (for the sake of simplicity) that the sale price is $300,000, with $200,000 left on the mortgage.
Selling with Opendoor might look like this:
- 5% service fee
- 2% in repair costs
- 1% in closing costs for the seller
This will leave the seller with a net profit of about $76,000.
Whereas the same homeowner could sell the property with a realtor in a transaction that looks like this:
- 6% realtor commission
- 2% in repair costs
- 1% in closing costs for the seller
This leaves a net profit of about $73,000.
That’s in a bit of an idealized kind of situation, though. It may be that the folks at Opendoor weren’t able or willing to pay $300,000 but instead offered $280,000.
In this case, a seller would only be taking home a net profit of about $57,000 (give or take) – making it a no-brainer decision to go with a local realtor instead.
At the end of the day, it really all comes down to running the numbers and thinking about how you want to sell your property.
Contact us for more information about how to sell your house for cash and keep more money in your pocket.
Frequently Asked Questions
How Much Will Opendoor Charge For Selling Your House?
Opendoor has a service fee of 5% across the board. However, it’s not uncommon for that number to double in reality when you consider all “hidden” fees, like closing costs and repair fees.
Is Opendoor More or Less Expansive Than Hiring a Realtor?
Opendoor and their service fees are competitive compared with standard realtor commission rates across the board. However, every property is unique (as is every transaction). The only way to determine for certain if it’s better value is to get a quote from both Opendoor and a real estate agent.
Will I Get Hit With Opendoor Hidden Fees?
Opendoor themselves don’t have hidden fees. But the claim that you only have to pay 5% of the sale price when working with them isn’t realistic when you consider other fees that come with selling a house online.
Opendoor has a legendary reputation for pricing transparency and you’ll know exactly what you are on the hook for before you sign on the dotted line.
If you are wondering how to sell your house online, we can help. At Brotherly Love Real Estate, we buy houses as is. Instead of dealing with a large iBuyer like Opendoor, you can sell your house to a company that you can trust when working with us.
Plus, because we buy properties quickly for cash, you don’t have to pay closing fees or repair costs when working with us. We cover these costs for you and offer you a fair price for your property that works for both parties.
Give our expert team of real estate agents a call today at (215) 769-9875 or contact us online to get your cash offer.