CA Home Sellers 'Duped' By Opendoor Will Share $62 Million Settlement

CALIFORNIA—Opendoor Labs overcharged nearly 2,500 California home sellers, who are now owed part of a $62 million settlement, according to a recent Federal Trade Commission decision.

Each California seller who worked with Open Door Labs was owed a median refund of $1,553, according to the FTC report released this week.

Opendoor, headquartered in Tempe, Arizona, operates an online real estate business and is an iBuyer—a company that buys property directly from consumers as an alternative to them selling their homes on the open market. Once seen as "cutting-edge" technology to save sellers time and money, it opened new doors toward deceiving their clients, the Commission said.

According to the FTC investigation, Californians who sold their homes to Opendoor Labs were made to believe they would make more money selling to the online real estate company than in the open market. Clients were lured through mailers and social media, according to the complaint, and deceived into believing they would receive a competitive, fair market offer on their homes without having to go through the headaches of listing and showing their properties. Marketing materials told sellers they "deserve nothing less than what your home is worth," the complaint reads.

Instead, most consumers who sold to Opendoor lost money.

The initial complaint was filed in 2022, and it was decided that nearly $62 million would go back into the duped sellers' pockets.

"Opendoor Labs Inc. promised to revolutionize home selling by offering to buy homes for market value while reducing transaction costs," the FTC said. Indeed, the opposite happened, as in the case of client Camilla Spencer.

Spencer wrote the FTC that Opendoor Labs paid her, then "turned around and resold her home for a significant profit—more than $40,000 of what Spencer had been paid. Opendoor’s policy with sellers was to leave a TBD amount for improvements after sale, and in this case the exact costs put into the property in question were not revealed.

In the FTC's response to Spencer, they promised she would be repaid an undesignated claim amount if she was on the list.

"The FTC will obtain from Opendoor the information it needs to distribute payments to home sellers who are entitled to them," the Commission wrote in a letter to Spencer. "You do not need to do anything to make a claim if you are eligible."

When the FTC sends out the payments, it will issue another press release, they said.

Opendoor promised to provide speed and certainty to home sellers while saving them thousands compared to selling on the market or selling "traditionally," the statement reads.

Sellers were unaware that they had lost money in their sales and had been "deceived," according to the statement.

"The FTC announced it was sending nearly $62 million in refunds to sellers deceived by advertising and marketing claims made by online real estate businesses," they said.

Once your check arrives, the FTC advised all Opendoor Labs sellers to cash it right away.

"Recipients should cash their checks within 90 days, as indicated on the check," the FTC statement reads.

The FTC will monitor Opendoor for twenty years. If it ignores the FTC's order, the company will be liable for civil penalties of up to $43,792, according to the statement.

The Director of the FTC’s Bureau of Consumer Protection, Samuel Levine, discussed the landmark ruling saying:

“Opendoor promised to revolutionize the real estate market but built its business using old-fashioned deception about how much consumers could earn from selling their homes on the platform. There is nothing innovative about cheating consumers.”