Open Door Opens in Minneapolis-What’s Open Door?
Open Door has what is called an I-Buyer program in real estate. The company will come to your home and give you a market price on your property, charge you a 6-13 percent service fee based on what they determine the risk of the sale to be, and then charge you for any work that needs to be done after they inspect the home. The whole process can close within 10 days. Once they close on the home, Open Door makes the repairs, and then turns around and puts the home back on the market. Research shows that this “flip” is usually done on an average of 20 days until the home is relisted and at roughly a 5 percent profit to them after they resell.
There is definitely a market for this type of a home buyer. Say, you as a seller has inherited a property that needs a lot of work and the family can’t agree on or doesn’t want to mess with the hassle of getting it ready to show, dealing with pricing, dealing with showings and then dealing with negotiations on price and inspection items. This method can be a quick method of cashing out and moving on.
In general, the market price you receive from an I-buyer will be less than you receive on the open market. Especially in today’s market where there is a large pool of investors looking for these type of fixer-uppers and they usually sell for cash in multiple offers. In addition, the average price charged in the Twin Cities area for the Realtors commissions are 6 percent (commissions negotiable). So the additionally fees you are paying to Open Door are basically you subsidizing their resale of the home. I think most importantly here is that you as a seller do not have any representation during the sale. So any negotiations you may need to do with the company, or any other questions on contracts or post-sale issues you may need to hire a lawyer for assistance.
As in any situation in real estate it’s always the best policy to speak with multiple agents and determine which one is best for your situation. By doing this analysis you will have the knowledge of choosing what the difference in net sales price will be for your specific property, and what the sales process will look like for each method being proposed. Then it becomes a question for the sellers on what their priorities are for the specific property in question.
For more information on Open Door see the video below from an agent in Arizona who has experience with the company in his market area. And for a seller’s consultation on your property to determine what its price would be if sold through the MLS contact Realtor Dan Kokesh.