Compare Opendoor and ReferralExchange
For Sellers
For Sellers
For Buyers
Answer: Opendoor is a direct home cash buyer that buys select homes off-market with cash offers and resells them at a profit to homebuyers while ReferralExchange is a referral fee network that enables broker-to-broker collusion with use of blanket referral agreements
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.
Where does Opendoor operate?
Buying and Selling with ReferralExchange
WARNING: Unlawful Kickbacks, Broker-to-Broker Collusion, False Marketing, Wire Fraud, Price Fixing.
ReferralExchange) 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.
ReferralExchange is a broker-to-broker collusion scheme that allocates home buyers and sellers to a network of colluding Realtors through a "shell" real estate entity. When consumers submit information on the ReferralExchange website, this information is sold in exchange for an undisclosed fee with real estate agents in a process known as a pay-to-play steering and a "blind match." ReferralExchange, a California state brokerage, unlawfully allocates consumers with various Realtors as a hub-and-spoke conspiracy that inflates real estate commissions.
ReferralExchange Pricing
ReferralExchange fees come from hidden kickbacks, likely set between 25% and 40% of the gross commissions received by colluding Realtors.
Listing Services
- This Service Does Not Represent Sellers
Buyer's Agent Services
- This Service Does Not Represent Buyers
ReferralExchange Editor's Review:
ReferralExchange, Inc. (dba TopAgentsRanked, AgentMachine, TopAgentsRanked.com AgentMachine.com) is a licensed real estate firm in the State of California License No. 01426453 operates as a "shell" broker to collect an undisclosed referral fee, set at 25% to 40% from the gross commissions, paid by all colluding Realtors in the network, aka ReferralExchange Partner Agents. This fee is inevitably passed down to consumers in a form of inflated real estate commissions when selling or buying any home.
More importantly, ReferralExchange is an active licensed real estate entity that does not engage in actual real estate broker services. ReferralExchange systematically applies pay-to-play bias towards all Realtor matching results, meaning, only Realtors that have agreed to collude and pay a referral fee are matched with consumers.
Realtors only sign-up with ReferralExchange because the price of the referral fee can be easily incorporated into their client's agreement with excessive commissions.
ReferralExchange receives a low Editor's rating because this service is a biased hub-and-spoke broker-to-broker collusion scam, that falsely claims to provide an independent and unbiased service of matching consumers with agents.
ReferralExchange operates on a pay-to-play methodology to collect junk fees that needlessly make home buying and selling more expensive. In this scheme, consumers are no longer in the driver's seat, but instead, are traded as a commodity between licensed brokers.
ReferralExchange plays junk fees down on all of thier consumer-facing channels including TopAgentsRanked.com AgentMachine.com, claiming that the service is "free" "unbiased" and "no obligation" to consumers, but it rigidly locks every participating Realtor into a kickback attached to the back-end of every agreement that restrains free trade. As a licensed real estate entity that doesn’t perform any real estate services or take any responsibility for the transaction, this scheme operates to unlawfully allocate consumers and bypass RESPA anti-kickback regulations through a "shell" entity. ReferralExchange scheme operates on a false notion that all buyer agent and listing agents commissions are the same, where no Realtor in the ReferralExchange scheme competes for consumers on pricing.
Consumer brokering is an act of selling information of potential home buyers and home sellers (paid referrals) between real estate brokers, in exchange for a cut of a broker’s commission. Brokers on each side of the adopted scheme, cause direct damage to the real estate representation market with reverse competition, anticompetitive market allocation, price-fixing, lack of competition, limited choices to consumers, unnecessary high commissions, and improperly negotiated fees. A referring broker in this scheme does not compete with referred brokers, instead, ReferralExchange administers a series of agreements that restrain free trade, disguised as Realtor matching services.
12 C.F.R. § 1024.14(g)(1)(v) (Regulation X) and RESPA 12 U.S.C. § 2607(c)(3) narrowly allow payments pursuant to cooperative brokerage and referral arrangements between real estate agents and real estate brokers. This limited exemption on kickbacks only applies to fee divisions within real estate brokerage arrangements when all parties are acting in a real estate brokerage capacity. ReferralExchange shell entity does not act in a brokerage capacity, in fact, this entity willfully chooses to disengage from offering real estate representation services to consumers, as the core premise to create successful collusion through interstate wire communication to further the scheme. Wire fraud is financial fraud involving the use of any telecommunications or information technology.
Real estate transaction is a rare, high-value, and high-risk-aversion experience that is easily subjected to unlawful kickbacks, especially with the use of the Internet. Consumers are often subjected to high commissions and hidden referral fees without a full understanding that these fees increase their commissions and result in a lower quality of service. Whenever any double-dealing Realtor agrees to pay these massive kickbacks, he or she is unable to offer full and competitive representation services to anyone. ReferralExchange does not cater to honest Realtors, it only caters to Realtors willing to cheat their clients out of full services, and willing to share private information about their clients' transactions with the scheme.
ReferralExchange antitrust and consumer protection violations are not harmless. Realtors who attempt to compete for consumers on fair terms and competitive pricing are at a massive disadvantage in this environment. As a result of broker-to-broker collusion, consumers end up getting steered toward a limited pool of dishonest Realtors and overpay for commissions. Consumers’ private transaction information is always shared with a referring broker that requires it to be disclosed to calculate the referral fees to be paid at the close of each transaction.
Consumers, of course, pay for this abuse with higher costs of commissions that, eventually, make it directly into their new mortgages and cause significant losses of net equity from a home sale.
In reality, ReferralExchange is a 100% biased, pay-to-play collusion steering mechanism between licensed brokers, that costs consumers tens of thousands compared in inflated commissions compared to open market savings. ReferralExchange specifically steers consumers into the network in exchange for massive kickbacks pre-negotiated in advance. ReferralExchange operates on false notions that "buyer agents work for free" and that all commissions are" standard" to justify a "standard" referral fee.
There are numerous reasons why consumers are wise to avoid the ReferralExchange scheme, but probably the most important reason is that the lack of transparency and honesty is contagious. ReferralExchange scheme attracts ONLY double-dealing Realtors who are willing to break a host of federal antitrust laws, and unwilling to compete for consumers with transparency. An unethical Realtor will always find a way to turn the most important transaction into a self-dealing proposition - to collect a bigger commission check faster without any regard for what is truly a good deal for their clients.
Why Does ReferralExchange Engage in Collusion?
ReferralExchange engages in consumer allocation because it is an active real estate entity that refuses to compete with other real estate agents who patriciate in the scheme. This dynamic is better known as a hub-and-spoke conspiracy. In a hub-and-spoke type conspiracy, all Realtor commissions are set at the same amount for all Realtors, where none of the "partner agents" compete with one another on pricing at all. ReferralExchange scheme produces absolutely no tangible service as a licensed broker to anyone and instead delivers inflated prices and lower quality of service. The scheme originates as a conspiracy to restrain trade and to funnel consumers toward the scheme and away from the open market. There are hundreds of thousands of highly competitive Realtors who offer great savings and great service, and they refuse to pay kickbacks or collude with ReferralExchange shell brokerage.
The illicit kickback is the reason why ReferralExchange colludes with Realtors outside their firm. ALL consumers and ALL legitimate Realtors are scammed by ReferralExchange, even if the experience may seem "good enough" because collusion is a faulty shortcut to genuine open competition between Realtors. Federal laws require all Realtors to compete for consumers and to deliver a tangible service, a simple test ReferralExchange brokerage entity decisively fails. Open competition is at the core of our free and independent society everywhere in America.
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." ReferralExchange is a direct extension of these uncompetitive, unethical, and unlawful notions. ALL Realtors who participate in the ReferralExchange scheme are engaged in plain collusion, where each Realtor knows that ReferralExchange shell brokerage will not compete at all, in exchange for a blanket kickback from the home sale or a home purchase. 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 for each count. Persons found guilty of wire fraud under federal law face fines up to $250,000 for individuals and up to $500,000 for organizations, subject to imprisonment of not more than 20 years. There are additional penalties of 30 years imprisonment and a million-dollar fine if the wire fraud involves a financial institution. These penalties are per count, which means that each electronic communication can be considered as a separate count. 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 collusion because it is a felony that carries massive penalties. The best Realtors can recognize collusion as wrong because they respect the true value of honest negotiations.
When ReferralExchange refuses to compete with these brokers and instead organizes "partner agents" into a network, it breaks an entire host of basic open commerce principles that guide our open and fair markets. Moreover, ReferralExchange extends this conspiracy all across the United States via its website, making the scheme highly damaging due to the scaled use of the Internet to transmit collusion. The Internet, like any other scaled telecommunications medium, can be used to transmit open competition just as easily as pay-to-play fraud.
Most consumers do not know that ReferralExchange is a licensed real estate brokerage because the nature of the scam requires this information to be deliberately hidden. ReferralExchange scam is built entirely on false advertising to deliberately deceive consumers. This shell broker presents itself as an unbiased marketplace, but it is a real estate broker that engages in unlawful activities under federal laws. The short answer is: ReferralExchange's intent to allocate consumers as a secret real estate shell entity is directly tied into the kickbacks it receives from the "partner agents." This dynamic is a product of 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.