Opendoor has settled with the FTC over home-price claims

Real estate iBuyer Opendoor has settled charges with the FTC, agreeing to pay $62 million and cease practices the FTC called "deceptive."

Opendoor buys homes directly from consumers as an alternative to the traditional home-selling process, using algorithms to price the homes in what it says is a faster and more convenient process. Opendoor has grown quickly in recent years, managing to avoid the pitfalls that hit rival Zillow as home prices gyrated during the pandemic.

Opendoor had said it offered "market-value" offers and lower transaction costs, and its marketing materials claimed that net proceeds of a transaction were higher with Opendoor than a traditional sale, the FTC said.

But the majority of people who sold to Opendoor "lost thousands of dollars" compared to the open market because Opendoor's offers were below the market value on average and its costs were higher than what a traditional realtor would charge, the FTC said.

"Opendoor's own internal analyses show that its offers have been, on average, below what consumers would receive on the open market," the FTC's complaint charges. "In November 2018, for example, one analysis examined properties on which Opendoor had made offers that the consumers rejected. The analysis shows that those properties sold for more on the open market than the amounts Opendoor offered."

"While we strongly disagree with the FTC’s allegations, our decision to settle with the commission will allow us to resolve the matter and focus on helping consumers buy, sell and move with simplicity, certainty and speed," Opendoor said in a statement.

Opendoor also said that the FTC charges are about activity from 2017 to 2019 and that the company has changed its marketing messages since then.

The FTC has recently taken a more aggressive stance against tech companies with the appointment of new commissioners including Chair Lina Khan.