Opendoor Labs, an online home buying platform, agreed on Monday to pay the Federal Trade Commission $62 million to settle claims that it used deceptive marketing practices to trick people into selling their homes on the site.
The company, which claims to allow homeowners to sell their homes faster than a broker, tricked customers into offering their properties to Opendoor for less than what they would have fetched on the market, the FTC said in a news release Monday. According to the agency, Opendoor provides home sellers with a chart showing that they can make thousands of dollars more by selling their property on the platform compared to the traditional marketplace.
Opendoor said in a statement on Monday that it does not agree with the FTC’s allegations, which the company said were linked to the business from 2017 to 2019.
“While we strongly disagree with the FTC’s allegations, our decision to settle with the Commission allows us to focus on resolving the issue and helping consumers buy, sell and move more easily, confidently and quickly,” the company said in a statement.
A troubled housing market is under increasing pressure as consumers grapple with inflation, declining home values, and rising mortgage rates. The average rate on a 30-year mortgage rose to 5.3 percent in July, according to Freddie Mac, up from 2.87 percent a year earlier.
Home prices rose more than 20 percent in May, according to Zillow, but the market has slowed since mortgage rates began to rise. In June, real estate brokerages Redfin and Compass announced they were laying off workers because of declining demand and signs of a “housing recession.”
Opendoor is one of several services in the “iBuying” space, which includes companies that use algorithms to determine home prices and buy with cash. In September, iBuying accounted for 1 percent of home sales in the United States.
“Opendoor promised to change the real estate market, but it built its business on old-fashioned deception about how much money consumers could make selling their homes on the platform,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. There is nothing new about defrauding consumers.