Compare Enkasa Homes and Opendoor
For Sellers
For Buyers
Answer: Enkasa Homes is a buyer's real estate agent that offers savings to homebuyers 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 with Enkasa
Enkasa is a tech-enabled real estate broker and a residential remodeling construction management company. Enkasa’s services are paid through a Buyer Agent Commission (BAC) concession, typically offered by the seller’s agent to the buyer’s agent when a property is advertised on the MLS.
If a home buyer is already working with another agent, Enkasa’s Construction Managers can conduct a property consultation, review disclosures, and assess feasibility of your ideas for repairs or improvements.
Enkasa Pricing
Enkasa brokerage revenue comes from Buyer Agent Commissions (BAC) amounts offered by the sellers' agents. Enkasa’s Contractor Consultation costs between $299 and $1,299. For comparison, a Buyer Agent Commission (BAC) offered at 3% for a $4 million home (not uncommon in California) is about $120,000 without a negotiated buyer rebate. Enkasa rebates consultation service fees to any client who uses Enkasa to represent them as their agent in purchasing a home.
Listing Services
- MLS Listing
- Zillow, Trulia, etc. Listing
- Accept and Deliver All Offers and Counteroffers
- Hold Open Houses
- Professional Photography
- Professional Floor Plans
- Yard Signage Installation
- Spare Key Lock-box Installation
- Schedule Inspection Services
- Schedule Private Showings
- Closing Duties
Buyer's Agent Services
- Find the Property
- Accept and Deliver All Offers and Counteroffers
- Recommend Other Professionals
- Attend Inspection Services
- Schedule Private Showings
- Negotiate Needed Repairs
- Closing Duties
Enkasa Homes Editor's Review:
Enkasa is a California brokerage that operates under a DRE license #02155340. Enkasa claims that: "Buyers don’t pay Enkasa anything. We charge sellers industry-standard brokerage commissions." First of all, buyer agents never work for free. Second of all, there are no industry-standard brokerage commissions in real estate. All commissions are eventually paid by the buyer when s/he writes a check (or takes out the new mortgage) on a newly-purchased property. Sellers lose equity due to costs of listing commissions, but buyers pay all closing costs including the costs of buy-side commissions built into the final accepted offer on a home.
Buyers in reality pay for Enkasa’s services through a Buyer Agent Commission (BAC) concession, typically offered by the seller’s agent to the buyer’s agent when a property is advertised on the MLS. In California, where Enkasa is licensed, a buyer can negotiate a rebate from this "blanket" BAC amount to reduce the cost of commissions financially. This rebate is a tax-free, fully negotiable amount is that converts an "industry-standard" BAC commission into a competitive rate.
Enkasa further claims that "because we help you buy sooner, we’re more efficient than other brokers, so we don’t charge you any extra fees for helping you plan your home improvements." Sooner than what? This is an empty statement with an unfounded claim that choosing Enkasa somehow will allow a buyer to purchase a home faster. The costs associated with "helping buyers plan for home improvements" are simply bundled by Enkasa into the Buyer Agent Commission revenue it will receive at the closing.
In the real world, the home buyer can openly negotiate tens of thousands in tax-free rebates with highly competitive agents and often use that money to not just "help plan home improvements," but to renovate a home.
According to their website, Enkasa’s Contractor Consultation costs between $299 and $1,299. For comparison, a Buyer Agent Commission (BAC) offered at 3% for a $4 million home (not uncommon in California) is about $120,000. If a buyer is able to negotiate a buyer refund at 50% of BAC from a competitive and a highly-qualified agent, that refund amount adds up to $60,000 in tax-free cash due to the buyer from their agent after the closing of the transaction.
The United States Department of Justice has made it clear in the 2020 settlement agreement with the NAR that buyer agents do not work for free and to advertise services as such is a deceptive practice. Provided that Enkasa’s services can be unbundled, the best way I can describe the financial incentive offered by Enkasa is a credit of $1,299 for the "consultation service fee waived for any client who uses Enkasa to represent them as their agent in purchasing a home." In another word, if you are a home buyer looking for a $4 home in California with Enkasa as your buyer agent, their brokerage may receive about $120,000 in Buyer Agent Commission as a fee before they credit you $1,299 as a cash incentive, an equivalent of a 1% cash rebate where the 99% of the BAC is kept by the brokerage.
Consumers should further carefully read Enkasa Terms of Service, where, for example:
…You will only be permitted to pursue claims and seek relief against Enkasa on an individual basis, not as a plaintiff or class member in any class or representative action or proceeding; and …
…You are waiving your right to pursue disputes or claims and seek relief in a court of law and to have a jury trial on your claims…
… Enkasa provides services, including the transaction assistance, on an "as is" and "as available" basis. To the fullest extent permitted by applicable law, Enkasa does not provide any express or implied warranties, conditions, or representations regarding the services, including transaction assistance, or any information provided in connection with the services and Enkasa, its parents, subsidiaries, affiliates, officers, employees, contractors, agents, partners, suppliers, and licensors (collectively, the "Enkasa parties") disclaim any and all warranties, representations, and conditions of any kind, whether express, implied, or statutory, including all warranties or conditions of merchantability, fitness for a particular purpose, title, quiet enjoyment, accuracy, or non-infringement. Enkasa makes no guarantee that the services will function without interruption or errors…
…You acknowledge and agree that the Enkasa parties are not liable, and you will not seek to hold the Enkasa parties liable, for the conduct of third parties, including operators of external sites, and that the risk of injury from such third parties rests entirely with you. Enkasa makes no warranty that the goods or services provided by third parties will meet your requirements or be available on an uninterrupted, secure, or error-free basis. Enkasa makes no warranty regarding the quality of any such goods or services, or the accuracy, timeliness, truthfulness, completeness or reliability thereof…
In conclusion, the advertised premise where "Enkasa charges industry-standard agent commissions, so buyers and sellers don’t pay anything more than they would with other agents" is plain false. There are highly competitive agents who will compete for buyers’ with buyer agents rebates; there are no industry-standard agent commissions in California. In some states, such as Oregon, buyers cannot receive rebates due to anticompetitive state-specific rebate bans, but Enkasa is not a licensed broker in any of these ten states.
Because of such blatantly false advertising methods for services offered by Enkasa brokerage, this editor cannot possibly recommend them to any home buyer. The truth has a habit of revealing itself, and the deceptive advertising notions employed by Enkasa, as described in this review, should be enough to raise a common sense alarm for a savvy consumer.
The real estate industry likes to operate on false notions that "buyer agents work for free" and that "commissions are standard" because real estate brokers do not like to compete with each other on pricing. Yet the commission buyer rebate is the single largest line item for savings when buying a home. When shopping for a buyer agent, or a contractor, there are no gimmicks and there are no substitutes for open negotiations and multiple bids with clearly defined pricing schedules. There are no standard rates in the housing industry: everything is negotiable.
As always, we encourage consumers to post unbiased feedback about this business with any sentiment. If hiring this brokerage worked for you, or if it didn’t, other California consumers need to know.
Where does Enkasa Homes 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.