San Francisco-based startup Opendoor will expand to the Kansas City residential real estate market, the company announced Tuesday.
Opendoor allows customers to sell a home online — for a fee. When a seller requests a quote, Opendoor makes an offer after analyzing market data. Then the company does any necessary repair work and deducts service, repair and closing costs from the customer's proceeds.
The service eliminates listings and showings, speeding up the time it takes to sell a home. The company's process happens in a matter of days, and sellers receive cash from Opendoor, which then resells the house.
"By selling directly to Opendoor, homeowners in Kansas City can close three times faster than when taking the traditional route, which is incredibly important in today’s fast-moving market," the company said in a release.
On Tuesday, Opendoor also announced an expansion to Northern Colorado and Colorado Springs. It expanded to St. Louis earlier in May, which means the company now operates in more than 30 U.S. markets.
Opendoor Regional General Manager Chris Westrom told the Kansas City Business Journal that customers value the convenience of allowing a third party to handle most of the selling details. Sellers don't have to deal with repairs, prepping, cleaning, staging and getting ready for showings.
A lot of customers are buying another home, and the process helps sellers avoid having two mortgages.
"Even in a strong market, there's always the risk of financing fall through, and that's something that we just don't have. You get to choose your timeline," he said.
The company reached a $3.7 billion valuation in 2019 that was supported by investors like then-Sprint Corp. majority owner SoftBank. It first prompted speculation that it would expand to Kansas City around the same time.
Westrom, who is based in San Antonio, said Opendoor plans to employ a team in Kansas City. It already has hired one person, a homes project manager, who will oversee repairs and renovations at homes sold through the service.
Sellers should be cautious about using online home-selling services, said Eric Craig, team leader for Eric Craig Real Estate, which operates under Keller Williams Kansas City North. Craig said he has been working harder than ever to represent sellers, given that the market is so hot. With an online service, sellers are locked into one offer, so they may not get the best deal, he said.
Westrom noted that Opendoor customers frequently work with a real estate agent to sell their home through the service. Agents can make commission through Opendoor.
In 2019, Katie Yeager, CEO of Overland Park-based residential real estate firm Your Future Address, said that despite Opendoor's convenience, she thinks most people prefer to buy and sell a home on the open market. Public listings and house showings boost competition and help sellers net a higher price for their home, she said. Yeager's company offers flat-fee, full-service listings.
"I don't think most people can afford to leave a bunch of equity on the table," she said at the time.
