Compare Landis and Opendoor Brokerage
For Sellers
For Buyers
For Buyers
Answer: Landis is a rent-to-own program that does not provide real estate services while Opendoor Brokerage is a referral fee network that enables broker-to-broker collusion with use of blanket referral agreements
Buying with Landis
Landis is a rent-to-own program that purchases the home and then rents it out to you as a tenant. Landis claims to operate a one-year program for the tenants to buy the property once they can afford a down payment. A common complaint with all rent-to-own programs is an inability of the tenant to secure a loan in time to purchase the property, at which point the tenant is either forced to walk away with a loss or continues to rent.
Landis may sometimes suggest that a customer reach out to someone (e.g. a lender) who can help them, but the company doesn’t make money from it, and only gives the info to the customer, not the customer's info to anyone else. Landis does not receive any referral fees from third parties (such as lenders, real estate brokers, etc.) and keenly guards customers' information. This is a refreshing approach that adds value to consumers. Landis states that: "companies at our stage don't have any incentive to charge hidden fees: growth and customer experience simply matter much more than revenue."
Landis Pricing
Landis revenue comes from the price of rent and a 3% increase between the price of the home when Landis buys it and the price it sells it to the tenant after a year.
Landis is silent on what happens in a situation when the price of the home drops before the tenant can buy it, or if the mortgage rates increase during the tenancy period. When consumers use Landis, they are unable to take advantage of a buyer’s commission rebate from a real estate agent because the company is the one actually buying the home.
Landis states that it receives "no rebates or commissions from agents, we pay agents their full commission, as though they were working with the customer."
When it comes to the cost of rent Landis says that "we're very upfront with our users that during the 12 months of the program, we are more expensive than owning, or even renting. That's because we need our customers to put money to the side for their down payment … our only revenue is market rent and 3% appreciation at the end of the year. The economics work out because we're in areas where average rents are high."
Listing Services
- This Service Does Not Represent Sellers
Buyer's Agent Services
- This Service Does Not Represent Buyers
Landis Editor's Review:
Landis program purchases the home and rents it to the tenant with an option to buy. Landis reviews full financial, credit, and work history of each potential tenant. Those few applicants who pass the screening may select a home within the allowed amount Landis sets. A tenant pays rent, a portion of which becomes a down payment to eventually buy the home. After a year, if the tenant decides to move out, Landis deducts half of the down payment amount saved, as an added fee. When purchasing a house from Landis, a tenant must and pay closing costs of the sale.
Landis has only enough cash on hand (structured as debt) to place offers against a handful of properties. This is why the company likely rejects the majority of applications as a way to reduce risk. It is safe to assume that only a very small number of applications with Landis are approved.
According to the company, "lenders send us customers that want to buy a home but can't close on a loan. It could be due to a low credit score, insufficient down payment, a recent bankruptcy, self-employment, or some other reason."
To secure a mortgage on competitive terms is a primary and the best option to buy a home. Yes, the down payment is difficult, but adding Landis to the mix doesn't solve the overall affordability. Landis claims that owning a home is always cheaper than renting it, but Landis is a landlord.
There is nothing to substantiate that renting a home from Landis is less expensive to own it during that same time frame. There is also nothing to suggest that Landis is offering reduced rent to the tenant at any given time. Buying a property is a risk, and Landis must account for this risk with added fees. The true costs of this rent-to-buy program are incredibly difficult to estimate by anyone other than Landis, and these costs are absolutely real.
Buyers are unlikely to receive a buyer's rebate from a real estate agent when buying with Landis program.
Buying a home is one of the most important transactions in people's lives, especially the first home. By adding Landis rent-to-own proposition, buyers are subjecting their transaction to the additional 3% appreciation fees, paying rent, and a possible loss of half of the down payment amount if moving out.
Landis receives a neutral editor's score because of several factors. When asked, the company declined to disclose its application volume and applicant success rates. Lack of this information makes it difficult to estimate the “weight” of overall operations and the returns the company is required to make against the total number of participants.
An undisputed positive is that the company doesn’t make money from referrals, making their claims to hold consumers’ best interest viable.
Landis claims that owning in the long term is cheaper than renting, especially in the markets where it operates. However, there is no clear evidence money is saved and there is no evidence that consumers who choose the Landis model end up with a higher chance of purchasing the home.
Landis states: “We completely agree that a mortgage is better. That's why we coach all our customers to do what they need to get a mortgage. It's the whole point of the company. We work with those who simply can't get a mortgage (because of credit score, down payment, etc.) and we coach them to fix what prevents them from getting one. As soon as they can get one, they graduate from the program.”
We find no solid evidence that Landis offers home buyers tangible savings as part of their rent-to-own program, but at the same time, some home buyers may decide for themselves that the program is worth the added fees.
Geodoma editorial staff remains overall neutral on the subject: we can neither recommend Landis nor suggest that buyers refrain from using the program.
Where does Landis operate?
Buying and Selling with Opendoor Brokerage
WARNING: Unlawful Kickbacks, Broker-to-Broker Collusion, False Marketing, Wire Fraud, Price Fixing.
Opendoor Brokerage) 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.
Opendoor is a multi-state VC-backed real estate investor that operates across highly specific locations. Where available, Opendoor offers cash to sellers for homogeneous homes built after 1960 with a value between $125,000 and $500,000. Opendoor is the parent company of several real estate brokerages, including Opendoor Brokerage Inc., Opendoor Brokerage LLC, and Opendoor Texas Brokerage LLC (the “Opendoor Brokerages”).
Opendoor Brokerage is a referral fee network designed to collect fees by matching consumers with local real estate agents willing to pay it. Opendoor Brokerage operates as a licensed real estate brokerage in California under BRE License 02061130, and Texas under TREC License 9008105, but neither broker produce any services that are typically offered by real estate agents and does not represent consumers when buying or selling real estate in any State.
When consumers submit information to Opendoor Brokerage, this information is simply sold in exchange for an undisclosed fee with real estate agents in a process known as a “blind match.”
Opendoor Brokerage Pricing
Opendoor Brokerage revenue comes from undisclosed referral fees. Referral fees set by such networks range anywhere between 30%-40% of the entire agent’s commission. According to the company, "Opendoor Agent Partners only pay a referral fee to our brokerage if they close on a transaction with a referred seller or buyer. The fee is a percentage of the agent's commission, and averages 1% of property sale price unless otherwise noted in agent partner agreement."
Listing Services
- This Service Does Not Represent Sellers
Buyer's Agent Services
- This Service Does Not Represent Buyers
Opendoor Brokerage Editor's Review:
Using its website, Opendoor Brokerage engages in a process known as price fixing because it sets rebates for independent real estate professionals using the network.
Opendoor Brokerage refers consumers to third-party agents that can represent them in home purchase or sale (“Opendoor Partner Agent”) and requires buyer’s agents to offer certain discounts or promotions contingent upon working with the referred consumers.
Opendoor Brokerage receives a referral fee, around 1% of the home price, likely 30%-40% of Partner Agent's entire commission when referring consumers to list or buy a home with an Opendoor Partner Agent. Opendoor Brokerage requires Opendoor Partner Agents to offer 1% of the purchase price to buyers at closing in the form of a commission rebate. The amount is subject to a minimum buyer’s agent commission to Opendoor Partner Agents of $3,000, which means it is calculated as the lesser of either 1% of the price of the property consumer buys, or Opendoor Partner Agent’s commission minus $3,000. According to Opendoor Brokerage, this amount may be prohibited or reduced on the basis of the purchase type (e.g., short sale), lender requirements, loan type (e.g. FHA, VA), or the law.
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.
"Agent Partners only pay a referral fee to our brokerage if they close on a transaction with a referred seller or buyer. The fee is a percentage of the agent’s commission, and averages 1% of property sale price unless otherwise noted in agent partner agreement. Opendoor Agent Partners are eligible to receive both buyer and seller referrals. Actual volume by referral type may vary over time. The Opendoor Agent Partner program is a broker-to-broker client referral partnership and is supplemental to your existing brokerage affiliation." Source: Opendoor Brokerage website.
By setting buyer's rebates for other brokers across many regions in the United States, Opendoor Brokerage 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.
With Opendoor Brokerage consumers have zero control over what agents the company shares their information with. Opendoor Brokerage simply subjects a real estate transaction with an additional referral fee that is equal to 1% of the home price. This fee is paid directly by the Opendoor Agent Partner to Opendoor Brokerage for failing to deliver a seamless consumer selling experience. Remember, Opendoor claims to offer consumers to buy homes directly as a revolutionary approach to home selling, instead, it systematically sells inquiries that it is unable to meet to random Opendoor Agent Partners for a fee.
Consumers can expect to significantly overpay for the transaction in the form of a higher commission with Opendoor Agent Partners. Even after consumers take into account a price-fixed amount in commission rebate, Opendoor Agent Partner is still required to pay a sizable referral fee, which means that same agent is able to offer a much better rate when approached directly.
For sellers, Opendoor Brokerage does not currently price fix listing rates, so consumers are likely to be referred to an agent who charges the highest commission possible - a "standard" 6% listing rate. There is little incentive for Opendoor Brokerage to connect consumers with the best and most competitive listing agents. Instead, Opendoor Brokerage aims to receive the highest referral fee possible by steering consumers toward a very limited set of agents who have a signed Referral Fee Agreement with Opendoor Brokerage.
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 referral fees.