Home News Federal Trade Commission Hits Real Estate Company Opendoor with $62M Penalty

Federal Trade Commission Hits Real Estate Company Opendoor with $62M Penalty

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Tuesday, August 2, 2022

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FTC

Federal Trade Commission took action against online homebuyers on Monday Open Door Lab Co., Ltd. By tricking potential home sellers into thinking they can make more money selling their homes on Opendoor than they would on the open market using traditional sales processes.

The FTC alleges that Opendoor used misleading and false information to pitch potential sellers, and in fact, most people who sold to Opendoor used the traditional process to sell their homes. Thousands of dollars less than it would have been. Under the proposed executive order, Opendoor would have to pay her $62 million and stop its deceptive tactics.

“Opendoor promised to revolutionize the real estate market, but they built their business using the old-fashioned deception about how much consumers could make selling their homes on the platform,” said an FTC consumer. Samuel Levine, director of the Department of Conservation, said. “There is nothing revolutionary about deceiving consumers.”

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In its marketing, the company claims that “9 out of 10 customers who sell to Opendoor recommend us.”

Headquartered in Tempe, Arizona, Opendoor operates an online real estate business where consumers buy homes directly from consumers instead of selling them on the open market. Advertised as “iBuyer,” Opendoor uses cutting-edge technology to deliver “market value” offers, reducing transaction costs compared to the traditional home sales process, saving consumers money. claimed to save

The company now claims to operate in over 50 markets, including New England. .”

According to the FTC, Opendoor’s marketing materials included a chart comparing consumers’ net profits from selling to Opendoor and selling in the marketplace. These charts mostly showed that consumers could make thousands of dollars more by selling on his Opendoor. In fact, according to the complaint, the majority of consumers who sold to Opendoor actually lost thousands of dollars compared to selling in traditional markets. This was because the company’s offers were on average below market value and its costs were higher than consumers’ normal prices. Pay if you use a traditional real estate agent.

In a statement to GoLocal, Opendoor said:

“Since its founding in 2014, Opendoor has aimed to greatly simplify the real estate transaction, redefining the housing market and making buying and selling a home as easy as tapping a button. , brings transparency, competitiveness and convenience to the outdated offline people.Data also shows that our customers highly rate and adopt Opendoor.In fact, we have well over 80 NPS We maintain and maintain a real seller conversion rate of over 35%.While we strongly disagree with the FTC’s claims, we have settled with the Commission to resolve the issue and make it easier, more reliable and faster for consumers. so you can focus on helping people buy, sell, and move to

Significantly, the allegations brought by the FTC relate to activity that occurred between 2017 and 2019, as well as targeted marketing messages that the company changed years ago. We are happy to solve this problem and look forward to continuing to provide consumers with a modern real estate experience. “

An FTC investigation found that Opendoor also violated the law by making false statements such as:

– Opendoor used projected market prices in making home purchase offers, but those prices actually included downward market price adjustments.

– Opendoor made money from disclosed fees, but in reality it made money by buying low and selling high.

Consumers may have paid the same amount for repairs whether they sold their homes through Opendoor or through traditional sales methods.When

Consumers may pay less by selling to Opendoor than they would pay through traditional sales.

Enforcement measures

Opendoor has agreed to a draft order requiring the company to:

– Payment of $62 million: The order requires Opendoor to pay the FTC $62 million, which will be used to help consumers.

– Stop deceiving potential home sellers: This order will stop Opendoor from deceiving consumers about how much they will receive and how much they will have to pay to use their services. We prohibit making false and unsubstantiated claims.

– End Unsubstantiated Claims: Under this order, Open Door will back up claims made about costs, savings, or economic benefits associated with using its services, and claims about costs associated with traditional home sales. , must provide competent and credible evidence.

The vote of the committee accepting the Consent Agreement was 5 to 0. The FTC will soon publish a description of the consent agreement package in the Federal Register. The agreement will be subject to public comment for 30 days, after which the European Commission will decide whether to finalize the proposed consent order. Instructions for submitting comments are provided in the published notice.A comment will be posted once the process is complete regulation.gov.

Updated: Aug 02, 2022 12:15

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