The U.S. Federal Trade Commission (FTC) has imposed a $62 million financial judgment against Opendoor in a proposed settlement to settle charges of “misrepresentations to homeowners,” opening the door to other iBuyer companies who have made similar claims in recent years.
Opendoor has claimed since its inception that they help people make more money selling their house to the company rather than listing it traditionally.
Like most iBuyer companies and programs, the claim is that pricing technologies provide “more accurate offers and lower costs,” per the FTC, and advertising claims of sellers making substantially more money than if they had listed in a traditional method.
The aforementioned claims are what the FTC says is not true, and why Opendoor must now pay hefty penalties.
In fact, the FTC investigation uncovered that Opendoor’s offers ended up being lower than a home’s market value.
Further, the investigation indicates that Opendoor ended up asking sellers to spend more in home repair costs “that were higher than what people would typically spend on repairs in a market sale.”
The FTC will use the $62M “for customer refunds.” But as with all major enforcement agencies, the Department of Justice (DOJ) is the body charged with collecting the fees, which they are legally able to negotiate down or dismiss altogether. Just last week the FCC Chair expressed that the DOJ should no longer be the collections department for federal agencies.
Although settling, Opendoor refutes the FTC’s investigation, stating, “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.”
Their statement concludes: “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. We are pleased to put this matter behind us and look forward to continuing to provide consumers with a modern real estate experience.”