FTC fines Opendoor $62 million for ‘misleading claims’

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On Monday, Aug. 1, the Federal Trade Commission fined online home-buying firm Opendoor Labs $62 million, saying it must stop misleading potential home sellers into thinking they could make more money selling their homes to Opendoor, according to an FTC. Press release.

Opendoor allegedly presented potential sellers using misleading and misleading information, and most customers who sold to Opendoor earned thousands less than they would have had using a more traditional approach, the press release says. .

“Opendoor promised to revolutionize the real estate market, but built its business using an old-fashioned deception about how much consumers could earn selling their homes on the platform,” said the director of the Office of the FTC Consumer Protection, Samuel Levine, in the press release. “There is nothing innovative about misleading consumers.”

Opendoor, which buys homes directly from buyers, said it uses state-of-the-art technology to create “market value” offers and lower transaction costs compared to the traditional home-selling process, including charts showing that consumers would almost always make more money from the Opendoor service. .

Opendoor also broke the law by misrepresenting its use of projected market value pricing in offers to buy homes, saying it made money through fees rather than buying low and selling high. high price tag and incorrectly reporting savings from repair costs and the sale of their homes, according to the FTC release.

Related: Real estate platform Opendoor launches mortgage financing app

In June, Opendoor launched a financing app that the company says allows consumers to get pre-approved for a mortgage in less than two minutes. The app is part of the company’s product suite, which includes Buy with Opendoor, Opendoor Backed Offers and Opendoor Complete.

The company said its technology identifies loan options based on customer needs and criteria, including mortgage rate, guidelines and terms, and required down payment.

Opendoor said the app processes more than 10,000 data points in seconds to determine the maximum purchase price of a home a buyer can afford based on their qualifications and minimum down payment for buyers. loan options available.

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