Opendoor Will Pair Buyers with Agents to Submit Cash Offers
Cash carries weight during bidding wars, so Opendoor says it will back a mortgage-approved seller’s offer with cash to help give them an edge in a bidding competition.
NEW YORK – iBuying firm Opendoor announced Wednesday that it would help buyers make cash-backed offers to improve their chances in a bidding war.
To participate, a buyer must get prequalified with Opendoor Residence Loans or another mortgage firm. Opendoor says it will then pair the client with a real estate professional affiliated with the company who will review their offer before submitting it to the seller.
Opendoor says the arrangement to back the offer with cash will allow buyers to submit an offer free of financing, appraisal or home sale contingencies. Opendoor also promises the seller that it will buy the home with cash if the client can’t 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. “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 a transaction will fall through during the financing stage. Cash offers comprise about 36% of transactions, according to realtor.com data.
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 a similar one announced by Zillow, which recently said it would begin to make instant cash offers to sellers based on their property’s online Zestimate.
However, other iBuyers are also expected to make similar announcements, such as firms like Orchard and Knock.
Source: Opendoor and “Opendoor Moves Beyond Home-Flipping in Move to Back Cash Buyers,” Bloomberg (March 3, 2021)
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