Compare Better Real Estate and Opendoor
For Sellers
For Buyers
For Buyers
Answer: Better Real Estate is a referral fee network that enables broker-to-broker collusion with use of blanket referral agreements while Opendoor is a direct home cash buyer that buys select homes off-market with cash offers and resells them at a profit to homebuyers
Buying and Selling with Better Real Estate
WARNING: Unlawful Kickbacks, Broker-to-Broker Collusion, False Marketing, Wire Fraud, Price Fixing.
Better Real Estate) is a broker-to-broker collusion scheme, where "partner agents" unlawfully agree to pay massive kickbacks to receive your information and engage in market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices in violation of, inter alia, 18 U.S.C. § 1346, 18 U.S.C. § 1343, 15 U.S.C. § 1, 15 U.S.C. § 45, 12 U.S.C. § 2607, 12 C.F.R. § 1024.14. As a consumer, you will always significantly overpay for Realtor commissions subject to hidden kickbacks and pay-to-play steering promoted in this scheme.
United States federal antitrust laws prohibit consumer allocation and blanket referral agreements between real estate companies.
Be smart; do not allow your information to be "sold as a lead" to a double-dealing Realtor in exchange for massive commission kickbacks paid from your future home sale, or your future home purchase.
Better Real Estate is a real estate broker and broker-to-broker collusion scheme designed to collect fees by matching consumers with local Realtors. Better Real Estate operates as a licensed real estate brokerage in a number of states, primarily in New York as BRE Services, LLC License #10991232130
When consumers submit information to Better Mortgage or Better Real Estate, this information is shared in exchange for an undisclosed fee with random real estate agents in a process known as a "blind match." In some instances Better Real Estate acts as an affiliate of Better Mortgage and may represent consumers directly, however, Better Mortgage and Better Real Estate services are unlawfully tied.
Better Real Estate Pricing
Better Real Estate revenue comes from buyer agent commissions and undisclosed referral fees from competing Realtors. Referral fees set by such networks range anywhere between 25%-40% of the entire agent’s commission.
Better Real Estate pricing for buyer and seller representation is impossible to determine because broker services are unlawfully bundled with mortgage services where company's offers are available "to conforming loan product customers who have (a) entered a purchase contract on a home using the Better Real Estate Agent or Better Real estate Partner Agent; and (b) closed a mortgage loan on said home with Better Mortgage Corporation."
Listing Services
- This Service Does Not Represent Sellers
Buyer's Agent Services
- Find the Property
- Recommend Other Professionals
- Attend Inspection Services
- Schedule Private Showings
- Negotiate Needed Repairs
- Closing Duties
- Accept and Deliver All Offers and Counteroffers
Better Real Estate Editor's Review:
Better Real Estate is a licensed real estate broker and a broker collusion scheme that organizes and price-fixes services of competitors in exchange for hidden kickbacks it receives from the "partner agent" commissions.
Using its website, Better Real Estate engages in a process known as price fixing because it sets buyer rebates for independent real estate professionals (Better Real Estate Partner Agents) that have agreed to participate in the scheme. According to the Better.com website, "Purchase borrowers matched with a Better Real Estate Agent may receive $2,000 in lender credits and purchase borrowers matched with a Better Real Estate Partner Agent may receive up to 1% of the home sales price in lender credits." For purposes of the present discussion, brokerage fees are always negotiable and no broker should set rates and rebates for other brokers. Each firm should establish its own policy as to its fee structure and charges, amount of commissions, and rebates. Price fixing is prohibited by federal antitrust legislation. Individual agents must never discuss, or set rates with brokers outside of their own company.
By setting rates and rebates for a network of competing brokers across the United States, Better Real Estate operates with a sole purpose to collect referral fees, where such service effectively results in lower quality of service, pay-to-play bias, and a "blind match" with agents willing to participate.
The price fixed rates established by Better Real Estate scheme are severely inflated (for buyers, the buyer rebate is severely reduced) due to hidden kickbacks. Further, these same exact "partner agents" are in collusion with Better Real Estate, therefore, they are unethical and unlikely to provide any form of honest representation to homebuyers. Consumers using Better Real Estate "partner network" have zero control over what agents the company shares their information with. Instead of being "sold as leads" consumers looking for a competitive and fair representation can consider negotiating directly with real estate agents, or with help from unbiased consumer-focused online services that do not collect kickbacks.
Better.com Price-Fixing Harms Homebuyers
Better Real Estate offers a “discount” to consumers from a blanket referral fee earned, not from a commission earned. This is a form of price-fixing and is, effectively, a kickback derived from another kickback, instead of a legal buyer's rebate mechanism.
The true intention of Better Real Estate is to motivate the consumer to use the network with a “discount” tangled as a carrot, despite the massive disadvantages of a hidden referral fee. In such a scenario, the consumer ends up grossly overpaying for their buyer's agent commission due to the hidden kickbacks between the mortgage company and the brokerage in their referral network.
Better Real Estate Partner Agents do not compete with each other in the scheme on price and level of service – they are simply farmed out to consumers. In this price-fixing scheme, Better Real Estate is not involved in a transaction of the actual home purchase. Better Real Estate LLC does not produce any tangible service to the purchaser of a home, but it merely sets up a network of brokers for its own benefit – to siphon off a cut of the buyer’s agent commission.
More importantly, price-fixing is an unlawful practice, and every agent who participates with Better Real Estate is a participant in the scheme. Saving consumers from having to pay excessive brokerage fees can never be justified with price-fixing, especially in exchange for a financial gain between brokers.
Several laws combine to form the core of federal antitrust laws, but the Sherman Act is the primary piece of these regulations. Section 1 of the Sherman Act states: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce … is declared to be illegal.” This means that (1) there must at least two parties agreeing to take action, and (2) the agreed-upon action must restrain free trade.
The parties in this case are Better Real Estate and any broker they refer a buyer to. These two independent parties are carrying out a common course of action by setting fixed commissions with the use of blanket referral agreements for mutual financial gain.
While Better Real Estate price fixes an arbitrary rate for all agents, such proposition becomes absurd when comparing home transactions worth $15 Million to home transactions worth $150,000 in different states, rural, or urban areas, variable market conditions, etc. Obviously, in some situations, consumers' interest maybe with the lowest fees, in other cases, consumers are looking for the most experienced agents, etc. Better Real Estate cannot account for these differences because the collusion scheme is not designed to deliver value, it is designed to lure consumers under a false premise for savings.
Better.com Kickbacks and Unearned Fees
Further, it is a per se violation of antitrust laws for brokers to set “standard” compensation that will be paid to other brokers. Referral fees amount paid to Better Real Estate are "blanket" fee agreements that do not comply with RESPA.
Real estate agents (only when they act in full brokerage capacity) may discuss or negotiate the referral fees concerning an individual transaction, but real estate professionals are not allowed to enter into “uniform” or “blanket” agreement on how a commission will be split, or a “standard” referral fee paid. The reason for this is exactly the premise behind the Better Real Estate scheme, where an organizer of a hub-and-spoke conspiracy steers consumers toward other brokers in exchange for a pre-arranged referral fees.
From this discussion, it becomes clear that quality and honest real estate professionals establish pricing for their services independently, and without any kickbacks. The truth is, every single agent is different, and every single agent has an individual commission structure.
The entire RESPA prohibition against kickbacks was enacted specifically to stop mortgage companies from entering into symbiotic relationships with real estate brokers. Better.com may seem like a clever by-pass of RESPA’s prohibition against kickbacks, but this loophole is built entirely on the use of blanket referral agreements between brokers designed to restrain free trade.
Better.com Tying of Services
Better Real Estate does offer brokerage services directly to consumers in some instances, but even then, these services are unlawfully tied into Better.com mortgage offerings. Better.com "savings offers" are "open to real estate agent referral customers who have (a) entered a purchase contract on a home using a real estate agent referred by Finche, LLC, dba BRE, Better Home Services and Better Real Estate; and (b) closed a mortgage loan on said home with Better Real Estate’s affiliated mortgage lender, Better Mortgage Corporation."
In this tying scheme, consumers are harmed by being forced to buy a fairly common service (mortgage origination service) to purchase a much more valuable service they want (buyer agent savings from a real estate brokerage transaction.) Consumers must be able to shop for mortgage origination services and real estate representation services independently. This tying agreement is further complicated with an unlawful price-fixing of services offered by competitors - Better Real Estate Partner Agents.
Why Better.com Colludes with Realtors?
The Realtor® commissions in the United States have long suffered from the "standard" 6% myth and the false notion that "buyer agents work for free." However, these myths cannot be resolved with price-fixing of commissions to some other level, in exchange for kickbacks. The Sherman Act imposes criminal penalties of up to $100 million for a corporation and $1 million for an individual, along with up to 10 years in prison. The actual damages are further trebled. No legitimate Realtor® will ever willingly allow themselves to be exposed to such massive liability.
The best, highly-experienced, well-educated, law-abiding, honest, and ethical Realtors® will never participate in price-fixing because it is a felony that carries massive penalties. The best Realtors® are able to recognize price fixing as wrong because they respect the true value of honest negotiations.
Better Real Estate buyer agent services and Better.com mortgage origination services are unlawfully tied. Better Real Estate engages in price fixing and consumer allocation with competitors. Why does this company do all this? This trend is a brazen new strategy used by a handful of VC-backed real estate companies, including Better.com, that are forced to deliver unreasonably high returns on billions of investments poured into them.
As of September 2021, Better.com has taken about $905 million in funding and suffers from a sky-high burn rate. To make up for this poor allocation of capital, commonly known as mega-rounds, Better.com uses a set of unlawful strategies to increase the gross revenue from mortgage origination services and real estate services by unlawfully bundling them.
The short answer is: Better Real Estate's intent to fix prices is directly tied into the massive kickbacks it receives from the "partner agents." This dynamic is archived by allocation of consumers to competitors and by the restraint of genuine competition. The "standard commissions" problem in the residential real estate sector can only be fixed legally by encouraging Realtors® to set and advertise competitive prices to consumers at scale without paying any kickbacks. All kickbacks taken by Better Real Estate are savings lost to consumers, funneled into the wrong bank account.
Where does Better Real Estate operate?
Buying and Selling with Opendoor
Opendoor is a multi-state VC-backed real estate investor that operates across highly specific locations. Where available Opendoor mainly focuses on homogenous homes built after 1960 with a value between $125,000 and $500,000.
In determining the offer, Opendoor discounts from the estimated retail value after home is fully renovated.
Opendoor Pricing
Opendoor makes money with a difference between buying and selling each home. This difference is a combination of fees and home value appreciation between what Opendoor buys and seller each home for. Sellers can expect to receive 80%-85% of their home value from this type of sale after any fees, cost of the minor repairs, and resale.
Listing Services
- This Service Does Not Represent Sellers
Buyer's Agent Services
- This Service Does Not Represent Buyers
Opendoor Editor's Review:
Opendoor will buy a home at a price that is below market value due to necessary repairs, renovation, and other factors. After Opendoor buys the home, it renovates and resells it for a profit to other buyers or companies that rent homes to qualified tenants. With low offer price, comes a convenience of an all-cash closing when selling a home. Opendoor claims to provide convenience, speed, and certainty of a fast sale. Dubbed as an iBuyer, Opendoor makes an offer on a house within days or hours, but this offer is highly conditional. Each offer Opendoor makes is just an estimate until it makes a home inspection.
At the inspection, Opendoor will often find reasons to lower its original offer when it finds items that need repair or if it has made a mistake in its original valuation. When the company is unable to make an offer, it simply redirects consumers to a random real estate agent in exchange for an undisclosed referral fee. Opendoor offers fast home sales, but these are typically accompanied by higher fees (starting at 6% and rising to 12% for more risky properties.)
Opendoor only makes offers to select homes in select regions. Opendoor claims that it provides market offers, but we find this not be true. Search for past Opendoor transactions makes it clear that company also makes money with home appreciation difference (typical appreciation of 5.5% to 12.5%) between what it buys houses for and what it sells them for in addition to service fees. The main disadvantage of using Opendoor is high losses in homeowners' equity.
Opendoor is a "heavy" model, backed by a large amount of VC capital ready to buy homes in all-cash transactions. As any real estate investor, Opendoor is susceptible to losing money in any given transaction. This model is susceptible to a number of risk factors, high operational costs and a continued need for higher-than-average Return on Investment (ROI) with each flip. Opendoor is not legally bound to represent consumers, its main legal obligation is to its shareholders.
Opendoor's fast transaction and easy move-out experience typically come at an extremely high price because this model incurs "double" transaction costs during the purchase, holding period, rehab work and final sale that includes real estate agent fees. Opendoor pays real estate agent commissions like any other buyer and seller of real estate, so these costs must be accounted for in the company's fee structure. The facts continue to point against Opendoor’s claims that it offers fair value for the houses it buys.
Moreover, because most homes in the United States are financed, homeowners own only partial net equity in their home. Banks receive the same amount of the remaining mortgage sum regardless of how any given home is sold, whereas only homeowners' net equity is lost in transaction fees paid to Opendoor.
Typically Opendoor uses the following factors when determining the offer: existing condition of the home including repairs needed, time it will take to finish needed repairs, value of a home compared to other comparable homes in the area, real estate commission required to resell, costs associated with maintaining a home during repairs, including taxes, payments, insurance, utilities and homeowner dues.
Today, there are a number of highly qualified real estate agents who offer competitive listing rates and flat fee listings across the United States. Unless a situation absolutely requires a quick sale, Geodoma recommends that consumers first consider using a licensed real estate agent working on competitive terms to properly list their homes on the open market before turning to Opendoor option.
Some real estate agents are now offering Concierge services that include painting, landscaping, and other services that help consumers place their home on the open market without upfront costs and high loss to home equity.
Conflicting Incentives for Consumers
Opendoor, when it acts as a real estate investor, further offers 1% of the purchase price back at closing to work with an Opendoor Home Advisor to buy an Opendoor home. According to the company, Opendoor must not be obligated to pay any buyer's agent commissions for this promotion to apply. Having to require such terms limits consumer's ability to use an independent buyer's agent in a transaction. In effect, Opendoor offers a buyer an incentive to forgo independent representation in exchange for a 1% discount. Consumers should never be financially incentivized by a real estate investor to limit their representation when buying real estate from them.
In contradiction to this incentive, Opendoor Terms of Service directly state that: "in making you an Opendoor Offer, Opendoor is not acting as your real estate agent or broker. Opendoor is merely acting as, or on behalf of, a purchaser of real estate. As a seller, you have the right, and it is your responsibility, to independently evaluate and decide whether to accept the Opendoor Offer."
Company further states: "Buyer represents that she has had ample opportunity to obtain legal and other professional counsel of its choosing and that it is relying solely on its own independent judgment and that of its own professional consultants, if any, in entering into the purchase contract and purchasing the property."
From one side, Opendoor offers consumers an incentive in an exchange for "not being obligated to pay any buyer's agent commissions," but from another, requires buyers to "represent that they have had an ample opportunity to obtain legal and other professional counsel." These two propositions contradict each other.
Conflicting Incentives for Listing Agents
Further, Opendoor improperly offers financial incentives to listing agents to help convince consumers to take lower-priced offers from the company, instead of listing homes on the open market. iBuyer offers, accounting for fees and reduced market value, are systematically the most expensive way to transfer ownership.
In this scheme, a listing agent is offered a financial incentive from Opendoor to bring their client to the company for a pre-market offer. No real estate investor (iBuyer) should be able to offer any financial incentive to a third-party representative to persuade consumers to accept their low offers. By offering a fixed financial incentive (currently set as 1% fee of the whole transaction) to listing agents upon acceptance of an Opendoor offer, the company acts to create a conflict of interest between a listing agent and their (present, or potential) client.
A listing agent, in this case, has to choose between having to properly represent a consumer to sell thier home in the open market subject to a competitively negotiated commission, or getting a quick pre-fixed "incentive cash" for handing them off to Opendoor.
Opendoor can change this incentive amount at any time. Today, the company offers 1% incentive of the entire home sale to the listing agent, tomorrow, the company decides to set this incentive at 2%, 3%, 4%, 5% or some other pre-fixed amount, as it likes.
Such incentives are a form of price-fixing and directly affect listing agents' ability to work with their clients on fair terms. Further, these incentives remove listing agents' and consumers' abilities to negotiate home sale representation fees (listing commissions) in a competitive setting.
Opendoor Brokerage
Opendoor is a parent company of Opendoor Brokerage, but they are two distinctly different legal propositions. Opendoor is a real estate investor (iBuyer) and Opendoor Brokerage is a licensed real estate broker. For this reason, Geodoma maintains two separate reviews for these entities. All user reviews and the editor's review for Opendoor Brokerage are located here.