Zillow recently announced that they are forming a multi-year partnership with Opendoor that will enable home sellers on the Zillow platform to seamlessly request an Opendoor offer to sell their home. The Partnership will bring together the companies’ market-leading audience and e-commerce platform but at what cost to consumers?
In a 2020 SEC filing, the company disclosed that the Federal Trade Commission was investigating its marketing practices. The FTC has hit the home buying company and seller Opendoor with a $62 million dollar fine for cheating home sellers. The proposed FTC order FTC they expect the $62 million fine to use to pay back Opendoor customers who the company scammed and stole from. The FTC also ordered the company to cease its deceptive practices against potential home sellers and to stop making false and baseless claims.
The FTC said, in its complaint, that Opendoor misled sellers by telling them they would make more money by selling their house to them vs selling through more traditional means, ie, real estate agents and local home buying companies. The FTC also challenged the company’s claim that it purchased homes at market prices and said that the company’s offers are, on average, below market value.
The FTC in its complaint also detailed, in a 14 page report, why Opendoor’s marketing materials were deceptive and misleading and it included screenshots of Facebook ads and website charts of costs shown to its customers. The FTC stated that this evidence seemed to promise consumers they would make more money by selling to Opendoor because all fees were bundled together into one amount. In reality however, their customers often paid much more than they would have selling their homes via a real estate agent or even selling to a local, reputable home buying company.
When Opendoor was opened its doors in 2014 it promised to revolutionize the real estate market. In reality, it built its business using old fashioned deception and lies about how much consumers could make by selling their homes on their platform. There is nothing innovative or revolutionary about cheating and scamming consumers.
Are these mega companies so naïve to think that the American consumer will allow Zillow, if they use the same business model that Opendoor did, to lie and steal from them like Opendoor did? It’s very unlikely that they will not fall for this Zillow/Opendoor smoke and mirrors thing.