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`COMMISSIONERS:
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`192-3191
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`UNITED STATES OF AMERICA
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`BEFORE THE FEDERAL TRADE COMMISSION
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`Lina M. Khan, Chair
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`Noah Joshua Phillips
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`Rebecca Kelly Slaughter
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`Christine S. Wilson
`Alvaro M. Bedoya
`________________________________________________
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`In the Matter of
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`OPENDOOR LABS INC., a corporation,
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`________________________________________________
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`DOCKET NO.
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`COMPLAINT
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`The Federal Trade Commission, having reason to believe that Opendoor Labs Inc., a
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`corporation (“Respondent”), has violated the provisions of the Federal Trade Commission Act,
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`and it appearing to the Commission that this proceeding is in the public interest, alleges:
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`Respondent Opendoor Labs Inc. (“Opendoor”) is a Delaware corporation with its
`1.
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`principal place of business at 410 North Scottsdale Road, Suite 1600, Tempe, AZ 85281.
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`The acts and practices of Respondent alleged in this complaint have been in or affecting
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`commerce, as “commerce” is defined in Section 4 of the Federal Trade Commission Act.
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`Respondent Opendoor operates an online real estate business that, among other things,
`3.
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`buys homes directly from consumers as an alternative to sales on the open market or, as the
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`company describes them, “traditional sales.” Opendoor promised consumers that they would
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`make more money selling their homes to it than by selling on the market. In fact, consumers who
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`sold to Opendoor lost thousands compared to what they would have received from a market sale.
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`Opendoor Promised that Consumers Would Make More by Selling Their Homes to It.
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`Respondent advertised to consumers an “iBuyer” real estate service that directly
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`purchases consumers’ homes. Opendoor told consumers that, rather than making money from
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`“buying low and selling high,” the company made money from a fee or “service charge,” which
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`ranged from 6 to 14 percent of Opendoor’s offer price. Opendoor promised to use cutting-edge
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`technology to save consumers money if they sold their homes to it by providing “market-value”
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`offers and reducing transaction costs. Indeed, Opendoor provided consumers selling their homes
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`with a chart comparing the consumers’ projected net proceeds from selling to it versus selling
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`“traditionally” by listing on the market. These charts almost always projected that consumers
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`would receive thousands more by selling to Opendoor, even accounting for Opendoor’s
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`substantial fee. In fact, the vast majority of consumers who sold to Opendoor lost thousands
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`compared to what they would have realized in net proceeds from selling on the market because
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`Opendoor’s offers have been below market value on average and its costs have been significantly
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`higher than what consumers typically pay.
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`Opendoor designed its marketing to convince consumers that they would make more
`5.
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`money selling their homes to it. Opendoor’s advertising and website promised “fair market” or
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`“market value” offers with lower costs. When consumers requested an offer, Opendoor provided
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`a multi-page document claiming to provide a market-value offer and a custom chart comparing
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`the net proceeds the consumer should expect from selling to Opendoor versus on the market. For
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`percent of consumers who received these comparisons and sold to Opendoor, the
`more than
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`comparisons projected that the consumers would realize more in net proceeds selling to
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`Opendoor.
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`Opendoor Promised Consumers “Market Value” for Their Homes.
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`Respondent advertised its home-buying service by claiming that Opendoor made “fair
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`market” or “market value” offers. For example, on Facebook, Opendoor claimed that it allows
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`consumers to “[g]et a fair market offer on [their] home without ever listing.”
`ffl Opendoor
`a Sponsored· 0
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`,, Like Poge
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`Get a fair mar1<et offer on your home without ever listing. Sell to
`Opendoor for a certain sale with no risk of financing fall-through.
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`Opcndoor
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`OPEN DOOR.COM
`No showings, cleaning, or listing necessary.
`Opendoor buys quality homes valued between $1 OOK ...
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`Get Offer
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`Opendoor similarly claimed on social media that its offers represent “our best estimate of
`7.
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`full market value”:
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`0pendoorO @Opendoor · Feb 23, 2016
`V
`Look, simpler pricing! Now better for more sellers. As always, your offer is
`our best estimate of full market value.
`
`Pricing & Fees I Opendoor
`Learn about Opendoor's pricing and fees. Our goal is
`to be transparent, fair, and accurate when making ...
`6' opendoor.com
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`2
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`Opendoor’s mail advertisements encouraged consumers to request offers from Opendoor
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`to find out “how much [their] home is worth” and claimed that:
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`Until now, there hasn’t been a fast and simple way to check on the true market
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`value of your home. At opendoor.com you can see how much your home is worth
`in minutes. Our [local] real estate experts use market data and an assessment of
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`comparable homes near you to prepare your home price.
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`Other mail advertisements represented that Opendoor “aim[s] to make a competitive, fair market
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`offer on your home using the most current data.”
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`An Opendoor video ad similarly represented that consumers who go through the process
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`of selling their homes on the open market could get “the same offer from Opendoor” without
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`ever listing.
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`Opendoor’s ads encouraged consumers to visit opendoor.com to request an offer. The
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`website represented that Opendoor “aim[s] to offer fair market value for your home and take a
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`service charge that enables us to provide world-class service from offer to closing.” It further
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`claimed that Opendoor does not make money from a “buy-low, sell-high” strategy. Similarly, if
`consumers called Opendoor for more information, its call scripts instructed phone representatives
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`to say that “Opendoor only makes a small amount on each sale.”
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`A video on Opendoor’s website further explained that it uses home-sales data, “local real
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`estate experts,” and sophisticated technology to provide “market value” offers:
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`Every Opendoor offer relies on our robust data model that analyzes thousands of
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`recent home sales in your market, as well as insights from our teams of local real
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`estate experts.
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`The website has also encouraged consumers planning to list on the market to request an
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`Opendoor offer to learn their “home’s value” because it has “a deep understanding of market
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`conditions and trends.” Respondent has specifically represented that Opendoor’s calculation of
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`“home value” “is an estimation of what your home is worth. Also referred to as fair market
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`value, it’s the price that a willing and informed buyer and a willing and informed seller can agree
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`on.”
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`Opendoor also sent emails promising a “competitive market price” and stating, “You
`13.
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`deserve nothing less than what your home is worth.”
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`Opendoor Promised to Provide Lower Costs than Traditional Sales.
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`Opendoor’s advertising invited consumers to compare Opendoor’s costs to costs
`14.
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`associated with selling on the open market. For example, it ran the following ads on Facebook
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`and Twitter, respectively:
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`3
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`II\ Opendoor
`~ PubUshed by o Mavis Huang (?I · March 12, 2018 · 0
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`Selling a home on the market often costs more than the 6% commission
`fees. When you sell to Opendoor, we estimate the entire cost upf ront so
`you'll have a better sense of your net: proceeds. See how our costs
`compare to a traditional sale: http ://bit.ly/ 2f06dhd
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`t Realto,'s oomm issions (6")
`2. Stag.ing and home p,eparation costs ( .. 1%)
`3. Seller concessions (1.5% - 2%)
`4, Repair oosts (detennined basod on i nspeccion}
`5. Home ownership and overl.'lp CO$tS ( 1%)
`6. C loslng 00Sl$( .. 1%)
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`0pendoorO @Opendoor · Mar 12, 2018
`Selling a home on the market often costs more than the 6% commission
`fees. When you sell to Opendoor, we estimate the entire cost upfront so
`you'll have a better sense ot your net proceeds. see how our costs
`corrpare to a traditional sale: bit.ly/2f06dhd
`
`v
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`1, Rltaltor'• COO!tl'lmk>ot (6')
`2. ~te,glng andhom&preparation COllS{•I~)
`3. S.lftf ~ (1.S~ - 2")
`4. f,epalr cons (det8fffllned based on lnSpeetlorl!
`S. Momo own-hip •rd oo.•rltip cecu: (Hit)
`6. aos.1ng oo~ts H~)
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` Opendoor’s website similarly claimed that its purported lower cost structure allows it to
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` provide more net proceeds than what consumers would obtain from a traditional sale:
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` A common misconception is that you won’t sell your home for top-dollar because
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` our fee is higher than agent commissions. When you consider the cost savings we
` outlined above and the full range of services we provide, your net proceeds can be
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` higher with Opendoor.
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` Opendoor expressly claimed that its only source of profit is from its fee, which generally
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` ranged from six to fourteen percent of the offer price. Opendoor’s website represented that the
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`fee mostly consisted of costs that Opendoor anticipates paying to resell the home and that its
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`profit was only “1% of our total service charge,” and an “amount we collect for providing a
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`stress-free experience.” On a page titled, “How Opendoor calculates the value of your home,”
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`the website explained,
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`We don’t try to make “low ball offers” because, unlike a home flipper, our
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`business model isn’t based on buying low and selling high. The way we make
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`money is by charging a fee for our service.
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`Opendoor’s website represented that it may require that the consumer make or pay for
`17.
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`repairs Opendoor identifies after an in-person assessment of the property. However, the website
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`also claimed that Opendoor merely requests the same repairs that consumers would otherwise
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`have to make or pay for in a traditional sale. As shown in the image below, Opendoor has stated
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`that it “ask[s] for the repairs we anticipate the next buyer of the home will ask for.”
`---
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`Repair Items
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`Like most buyers, Opendoor will assess your home to identify if any
`repairs are needed. After we buy your home, we'll make repairs so
`that the home is move-in ready for the next buyers.
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`Our philosophy is to ask for repairs we anticipate the next buyer of
`the home will ask for. We look for items that are broken, in poor
`condition, or can affect the safety, structure, or functionality of the
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`home.
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`This list is not exhausuve-. but can give an OYeMew of the typeS of repa11s ~ may ask for.
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`Opendoor’s website described the repair process as designed “to make sure the house is
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`safe and functional” and not designed “to uncover every deficiency in your home to lower the
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`offer.” Opendoor further represented that consumers may even save money on repairs if they sell
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`to it because “we do our best to pass wholesale savings on to you from our partnerships with
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`local vendors.”
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`Opendoor also sent emails assuring potential consumers that the company’s “goal is not
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`to make money from repairs—in fact, we pass any discounts from our vendors directly to you.”
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`To illustrate the likely savings from selling to Opendoor, its website used its “home sale
`20.
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`calculator” and a home with a $200,000 market value to demonstrate that consumers who choose
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`Opendoor would save an estimated $4,400 over the costs of traditional sales:
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`5
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`Selling to Opendoor
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`Traditional home sale
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`6.8%
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`average service charge•
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`7-10%
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`average costs•
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`pnee (example)
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`$200,000
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`$200,000
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`Selling process
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`Average days to close transact on
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`Choose from 14·60 days
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`50 days
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`Average deys to prep and su19e home
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`0 days
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`Average num~r of show ngs
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`0 show ings
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`10 days
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`10 showings
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`Transaction costs
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`Average ()penc:loor $erve.e charge
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`6.8%
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`Estimaied real estate agent fees
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`Estimated $eUer eo~iOM
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`Est11T-.ated home owne.rsh p and overlap
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`Repa rs needed to sell home
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`TBD
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`6%
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`2%
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`1%
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`TBD
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`Estimated cash before closing
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`$186,400
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`$182,000
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` Opendoor Promised that Consumers Will Make Money Selling to It.
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` To request an offer from Opendoor, consumers enter details about their homes into an
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` online portal. Unless the homes fall into categories for which Opendoor will not make offers,
` such as homes built before 1960, Opendoor calculates a custom offer and fee amount.
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` 22.
` Opendoor emails consumers a link with a customized offer within a few days. As shown
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` in the sample email below, until at least 2019, the emails have stated that Opendoor has “just
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` finished analyzing your home’s market value, and we’re excited to make you an offer!” The
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` emails have also promised that accepting the offer allows consumers to “[g]et full value without
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` paying the many hidden costs of a traditional sale.” Some versions of the email have claimed that
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` Opendoor “strive[s] to give market value offers.”
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`6
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`HI Rober1,
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`We just hnlshed analyz.lng your homo's maiket vMJe, and we're excited 10 make you an offe11
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`I'm-
`\\000.
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`and I'm here to answer any questions about your offer and how Opendoor
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`Take e look end let me kno'N what you think:
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`i\@+11
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`You're able to:
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`, Choose when you move, 3 to 60 days from rrow.
`• Skip intrusive and inoonwnient homo shoYMO,S.
`Get fun valuo wlth0u1 paying tl)e rr.nny hoden <mt, o• ft !rt)Q t,ooot Mio.
`
`Consumers who clicked the link in the email were taken to a series ofwebpages
`23.
`presenting the offer ("seller flow"). Until at least 2019, the first page of the seller flow
`represented that Opendoor's calculation of home value was ''based on recent sales in your area,"
`and that its repair and closing costs were "similar to what you'd expect to pay traditionally."
`
`Hi Teresa, thanks for choosing us. Here's what's
`in your offer
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`Home Value
`Estimated based on recent sale~ in your area
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`Service Charge
`We'll compare this with the cost of selling traditionally
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`%
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`Repair and closing costs
`Similar to what you'd expect to pay traditionally
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`Net proceeds
`Our besL estimate of the cash you'll receive at close
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`The seller flow presented a housing-market analysis and a list of recent home sales on
`24.
`which Opendoor relied in calculating the offer. The seller flow described its estimate of "home
`value" as "based on comparable home sales and adjusting for differences like square footage,
`age, features, and location." The seller flow explained that "home value does not include costs
`associated with selling, such as repair costs."
`
`7
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` 25.
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` Finally, the seller flow revealed the offer itself within a customized cost comparison
` chart, similar to the website “home sale calculator” displayed in paragraph 20. The chart
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` projected the net proceeds each consumer would receive from accepting Opendoor’s offer versus
` selling on the market. The chart prepopulated Opendoor’s proposed purchase price and the
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` market price as identical. In some cases, the seller flow showed the repair costs in both
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` circumstances as “TBD.” In others, they showed the estimated repair costs as identical. Below is
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`a version of the comparison chart. Opendoor used this or a similar format for all its offers.
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`days to firld ■ blJ"llllef' e
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`Odays
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`Average days 10 dose transacbon •
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`Choose from 3-60 days
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`--numb«of st-lngs •
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`Oshow1ngs
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`o:le, I Contract pnoe •
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`Opendoor eer.,oe cnarve •
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`Re.al Htate agent fe=-s •
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`C.lfTIAted ,-pt11rt C6IU e
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`..... ~u-. , .~~:t,iln.nv ••
`Qc.lllr,,,IC,(Jf
`l:"9..,..,...,0l' ... ~C ' , ~•ltl"'t,_
`n.i•,ol~
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`,O.T .,...,_ .. . . .
`
`Mortgage poyo'f ♦
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`® Other c:lci,ng c:OK5
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`£stimat ed net proceeds
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`so
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`l80
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`so
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`Traditional home sale
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`5Bdays
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`30-60days
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`lO&howings
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`$0
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`$0
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`26.
`The bottom line of the chart projected the “net proceeds” that consumers should expect to
`I
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`receive from a sale to Opendoor and from a traditional sale. As of November 2019, over
`percent of these charts used in accepted offers projected that the consumer would realize more
`1111
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`net proceeds by selling to Opendoor. The average projected gain was more than
`.
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`27.
`Offers have also included information about market costs. As shown in the representative
`example below, the offers typically represented that consumers selling traditionally should
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`expect to pay six percent in agent commissions, two percent in concessions at closing, and one
`percent in “home overlap costs”:
`
`8
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`net proceeds
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`Opendoor
`$268,466
`
`\IS
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`Traditional
`$257,074
`
`X
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`Sale price
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`$284,800
`
`$284,800
`
`Selling fees O
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`5%
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`$14.240
`
`6%
`
`$17.088
`
`Closing costs o
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`0.74%
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`$2,094
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`0.74%
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`$2,094
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`Seller concessions 0
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`'Jone
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`2%
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`$5,696
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`Home ownership/overlap
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`costs
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`Repairs O
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`None
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`1%
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`$2,848
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`j
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` 28.
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` In some instances, Opendoor included two disclaimers at the end of the seller flow. Those
` disclaimers were not conspicuous and were in fine print. Moreover, they did not cure Opendoor’s
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` repeated representations that it provided market value offers and that consumers were likely to
` make more money selling to it. Rather, one merely stated that “[t]hese figures are our best
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` estimates” and the other stated, in direct contravention to Opendoor’s marketing, that the offer
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` “does not necessarily represent the ‘market value’ of your home” because it was not a formal
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`appraisal.
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` The net proceeds comparison charts have provided more information about certain line
` 29.
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` items if consumers clicked a link adjacent to those line items. For example, if a consumer clicked
`an icon next to repairs on one version of the chart, a popup graphic provided the following
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`explanation:
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`Our philosophy is to ask for repairs we anticipate the next buyer of the home will
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`ask for. We look for items that are broken, in poor condition, or can affect the
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`safety, structure, or functionality of the home. Some examples include roof,
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`foundation, flooring, electrical, plumbing, HVAC (heating, ventilation, and a/c
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`systems), and appliances. On average, a typical repair request ranges from $___ to
`$_____, but can vary depending on the condition of your home.
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`9
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`Other versions of the offer described repair costs as “[s]imilar to what you’d expect to pay
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`traditionally.” In emails, Opendoor described its repair-assessment process as an “inspection”
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`similar to post-contract inspections in market sales.
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`Most Consumers Who Sold to Opendoor Lost Money.
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`Contrary to Opendoor’s promises, consumers actually lost thousands of dollars selling to
`30.
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`it compared to what they would have received from a traditional sale. Its offers have not been
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`market value but consistently averaged thousands of dollars below market value. And the costs
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`consumers have paid when selling to Opendoor have been higher than what consumers typically
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`pay in a market sale.
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`Opendoor Offered Below Market Value for Homes.
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`The overwhelming majority of Opendoor’s offers have been significantly below what
`31.
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`consumers would have received if they sold on the open market.
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`Opendoor took various steps to reduce offers below what their internal valuation system
`32.
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`deemed to be a home’s market value.
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`In or around August 2018, Opendoor instituted a policy of lowering offers to cover
`33.
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`anticipated repair costs. The policy reduced offers without disclosing that they were less than
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`market value. If actual assessed repairs were lower than the amount withheld, Opendoor retained
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`the difference as revenue. Even before implementing this policy, Opendoor would reduce certain
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`offers to account for potential repairs, which simultaneously provided a sub-market offer and
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`concealed assessed costs from consumers.
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`Opendoor has used an automated system to generate expected market values for homes.
`34.
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`In many instances, Opendoor’s employees have manually adjusted these values before presenting
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`them to consumers as offers. Opendoor’s internal analyses showed that these manually adjusted
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`offers were several percentage points below Opendoor’s assessment of market value. Beginning
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`no later than 2019, Opendoor instituted a policy to reduce its manually adjusted offers to
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` below what Opendoor assessed as market value.
`■
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`For automated offers, Opendoor instituted a “risk-based pricing” policy in or around June
`35.
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`2019 that automatically reduced offers below Opendoor’s assessment of market value to account
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`for risks inherent in reselling the home. This was contrary to Opendoor’s marketing claims that
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`the company accounted for these risks in setting the custom fee associated with each offer. For
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`example, Opendoor’s website explained that the fee varied to cover “risks and holding costs of
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`the home.”
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`At various times, Opendoor has reduced its offer prices to enable it to understate its fees,
`36.
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`making its services appear more financially attractive compared to traditional sales or to its
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`competitors.
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`
`Consumers had no reason to know that Opendoor had reduced their offers through the
`37.
`
`means described in paragraphs 33-36. Opendoor promoted the offers as “market value,” its price
`
`
`comparison chart showed the same price for Opendoor’s offers and market offers, and Opendoor
`
`
`
`10
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`

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`did not disclose these reductions thereby masking its higher costs compared to market sales and
`competitors.
`
`Opendoor's own internal analyses show that its offers have been, on average, below what
`38.
`consumers would receive on the open market. In November 2018, for example, one analysis
`examined prope1ties on which Opendoor had made offers that the consumers rejected. The
`analysis shows that those prope1ties sold for more on the open market than the amounts
`Opendoor offered, in some cases by as much as■percent. Other internal analyses show that
`Opendoor's offers were consistently below market. One found in late 2018 shows t h a t ­
`percent of homes on which Opendoor made an offer eventually sold on the open mark~re
`than lpercent more than Opendoor' s offer price. A third-party analysis perfo1med in 2017
`concruded that Opendoor's profit from buying and selling could not be fully explained by
`Opendoor's renovation of those homes.
`
`Opendoor claimed that it did not make money from "buying low and selling high," but
`39.
`from "charging a fee for [its] service." But gains from selling homes for more than its offer price
`are a key contributor to its revenue. A 2019 financial analysis broke down revenue from
`Opendoor's fee and from "net resale gain" and repo1ted o v e r - in resale gains in 2018
`a n d - in projected resale gains in 2019. Presentations to investors touted "resale gain"
`as a significant contributor to Opendoor's revenue per home.
`
`The company also understood more generally that its offers were below market. A
`40.
`presentation in 2016 noted that "[s]ellers that [sic] reject OD offers make more on the open
`market than their OD offer." In 2019, another internal communication stated bluntly, "We don't
`offer a fair market value to our customers."
`
`Data from Opendoor' s real estate transactions confnm that Opendoor makes money not
`41.
`just from its fees, but also from buying homes low and selling them high. After purchasing
`homes it lists them on the open market for resale. From 2016 through Febmary 2020, Opendoor
`
`soldI percent of its homes for more than what it offered consumers. T h~ e gain on these
`
`homes w a s _, or■ percent of the homes' average offer price o f - .
`
`Opendoor's' Costs Were Higher than What Consumers Would Have Paid in Traditional Sales.
`
`Contra1y to Opendoor's claims that its home-buying service would save consumers
`42.
`money, Opendoor's costs were higher because it required consumers to pay for repairs that they
`would not have had to make in a traditional sale. In addition, Opendoor overstated the costs
`associated with traditional sales.
`
`Opendoor Demanded Repairs for Which Consumers Would Not Pay in Traditional Sales.
`
`After the offer, Opendoor has required an in-person "home assessment" to reassess its
`43.
`estimation of value and to dete1mine whether repairs are necessaiy. If Opendoor concluded that
`the initial offer was too high, it often rescinded the offer and re-offered a lower amount.
`
`Opendoor has almost always demanded consumers make or pay for repairs. Although its
`44.
`marketing has suggested that the com,ny may not require any repairs, as ofFebma1y 2020,
`Opendoor had demanded repairs for
`percent of homes on which Opendoor had made an offer.
`
`11
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`

`

`Opendoor's internal study of sellers who withdrew after receiving repair demands showed that
`those who sold on the market did so without making all the repairs that Opendoor demanded.
`
`As prut of the repair process, Open door has sent consumers a list of required repairs with
`45.
`the cost it would charge consumers if they agree to deduct the costs from their sales proceeds.
`The list of repairs has been typically well beyond what consumers would be responsible for in a
`market sale. Opendoor has routinely requested upgrades to, or replacement of, fimctional heating
`and cooling systems, flooring, and roofs. It has also frequently demanded cosmetic changes such
`as repainting and replacement of items that could be repaired at far lower cost.
`
`According to Opendoor's own internal study, as of March 2019, Opendoor demanded
`46.
`repairs that cost, on average
`. The same study concluded that, in a traditional sale,
`consumers spend less than
`, with ru1 average of-
`or less than -
`percent of the
`average purchase price. A separate internal study found that Opendoor's "repair ask" is■
`percent of the purchase price. Another internal survey examining consmners who cancelled after
`leruning of Opendoor's repair assessment found that ove■ percent of them sold their homes
`without paying for any repairs and concluded that Opendoor's "repair asks are NOT in line with
`market."
`
`Unlike traditional sales, Opendoor demanded that consumers make or pay for all
`47.
`demanded repairs, even though Opendoor's own studies indicate that the pruties to a mru·ket sale
`typically share these costs. The repair demands were not subject to negotiation.
`
`Opendoor at times has taken up to 18 days after consumers agree to the initial offer to
`48.
`provide them with the list of repairs. By that time, many consumers had ah-eady placed deposits
`on new homes and could not walk away from the new home purchase without incmTing a
`financial penalty. Opendoor's internal communications have described the lag between the initial
`offer and the later, significantly lower offer as a '"bait-and-switch' operation."
`
`In or around August 2018, Opendoor implemented an "Estimated Repair Credit," which
`49.
`smTeptitiously reduced offer prices to cover some of the repair costs. Opendoor never disclosed
`this "credit," and continued to describe its offers as representing the company's best estimate of
`market value without any adjustment.
`
`Opendoor encourages consumers to authorize it to perfo1m the repairs and to deduct the
`50.
`costs from the net proceeds of the sale rather than an-ange for the repairs themselves. The
`company has emphasized the convenience of deducting the repair costs ru1d, as described above,
`suggested that the proposed repair costs are discounted and therefore less than what the
`consumer would pay on the open market.
`
`If the consumer decides to authorize Opendoor to complete the repairs and deduct the
`51.
`estimated costs from the sale proceeds, Opendoor completes the repairs after it acquires the
`property. Ifthe repairs cost less than the amount deducted, Opendoor retains the excess as profit,
`including the undisclosed Estimated R e~ t that Opendoor deducted from its original
`offer. One internal study fOlmd that for -
`of Opendoor's purchases, its deductions for
`repair costs were greater than Opendoor's actual costs, thereby "taking away -
`of seller
`equity" in each of those sales.
`
`12
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`

`

`
`
`
`Opendoor Overstated the Costs of Traditional Sales.
`
`
`
`
`
`To make Opendoor’s offers appear more financially beneficial than they actually were, it
`52.
`
`
`
`
`
`
`
`misrepresented the amounts sellers should expect to pay for certain costs of traditional sales. The
`
`
`
`net proceeds calculator stated that consumers should expect to pay nine percent in real estate
`
`
`
`
`agent commissions, “seller concessions,” and home overlap costs. In fact, Opendoor’s data
`
`showed that sellers were likely to pay much less, and the company had no other data supporting
`
`
`
`
`its representations about traditional costs. Its marketing also claimed that consumers would likely
`
`
`pay one percent of their sales price, i.e., thousands of dollars, for “staging and prep work.”
`
`
`However, in traditional sales, many consumers do not pay to stage their homes prior to sale.
`
`
`
`
`
`
`
`
`During the time Opendoor made inflated claims about the costs of traditional sales, it
`53.
`
`
`
`
`possessed data suggesting that those claims were false. For example, it claimed that sellers
`I
`
`
`
`should expect to pay two percent in “concessions” when selling on the market, but it only paid
`
`percent in concessions when it resold homes.
`
`Consumers Typically Lost Thousands Selling to Opendoor.
`I
`
`
`
`
`
`percent of consumers from
`As of November 2019, Opendoor had promised more than
`54.
`whom they purchased homes that they would save significant money selling to it, with an
`
`
`
`average projected savings of over
`. In fact, as it was aware, consumers were likely to lose
`
`money selling to Opendoor.
`
`-
`
`
`
`
`
`Its own internal analyses show that consumers lost money selling to Opendoor. For
`55.
`
`example, a March 2019 analysis of consumers who had accepted an Opendoor offer, but
`
`
` percent made more money
`withdrew after receiving Opendoor’s repair demand, found that
`
`
`selling on the open market, with an average gain of
` compared to what they would have
`
`
`
`received from Opendoor. Other internal analyses have found similar results.
`
`-■
`-
`
`-
`
`-
`
`
`
`Opendoor transaction data confirms that consumers who sold to Opendoor have lost
`56.
`
`
`money compared to what they would have received through a traditional sale. Opendoor’s data
`
`
`shows that as of February 2020, the average resale price of its homes was
`. However,
`
`
` on average due to Opendoor’s lower offer prices, deductions
`consumers received only
`
`
`
`
`for repairs, and fees. If those consumers had instead sold on the market for the price Opendoor
`
`
`received on resale, they would have thousands more in net proceeds, even if they had paid the
`
`
`nine percent Opendoor claimed they would pay in agent fees, seller concessions, and overlap
`
`
`
`
`costs, and paid
`for repairs.
`
`
`Count I
`
`
`False or Unsubstantiated Claims
`
`
`In connection with the advertising, promotion, offering for sale, or sale of its home-
`57.
`
`
`buying business, Respondent has represented, directly or indirectly, expressly or by implication,
`
`
`
`
`that consumers are likely to realize more money selling their homes to Respondent than they
`
`
`would realize if they sell their homes in traditional sales, such as representing that:
`
`
`
`
`
`
`a. Respondent’s offers represent its projections of the market value price of consumers’
`
`homes without any downward adjustments;
`13
`
`
`
`

`

`b. Respondent makes money from disclosed fees rather than from “buying low and
`
`
`
`selling high”;
`
`
`c. Consumers will likely pay the same amount in repair costs whether they sell their
`
`
`
`homes to Respondent or sell their homes in traditional sales; and
`
`
`
`
`d. Consumers will likely pay less in costs by selling to Respondent than they would pay
`
`
`
`in traditional sales:
`
`
`The representations set forth in Paragraph 57 are false or misleading, or were not
`58.
`
`substantiated at the time the representations were made.
`
`
`Violations of Section 5
`
`
`The acts and practices of Respondent as alleged in this