Opendoor Labs, an online homebuying platform, agreed Monday to pay $62 million to the Federal Trade Commission to settle claims that it used misleading marketing practices to persuade people to sell their homes on the site.
The company, which claims it allows homeowners to sell their homes more quickly than through a broker, deceived customers into offering their properties to Opendoor for less than they would have made on the market, the FTC said Monday in a news release. The agency said Opendoor had presented home sellers with charts that showed they would make thousands of dollars more by selling their properties on the platform compared with in the traditional marketplace.
Opendoor said in a statement Monday that it disagreed with the FTC’s allegations, which the company said were tied to its business activities from 2017 to 2019.
“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,” the company said in the statement.
The turbulent housing market is under increasing pressure as consumers grapple with a jump in inflation, faltering home prices and soaring mortgage rates. The average rate on a 30-year mortgage climbed to 5.3% in July, according to Freddie Mac, a steep increase from 2.87% a year earlier.
Home prices rose more than 20% in May from a year earlier, according to Seattle-based Zillow, but the market has cooled since mortgage rates have begun climbing. In June, real estate brokerage firms Redfin of Seattle and Compass of New York announced that they were laying off employees because of sinking demand and signs of a “housing downturn.”
Opendoor is one of several services in the “iBuying” space, which includes companies that use algorithms to determine a home’s value and buy it for cash. In September, iBuying accounted for 1% of home sales in the United States.
“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,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “There is nothing innovative about cheating consumers.”