As Chattanooga recovers from the coronavirus pandemic with record-high home sales and housing prices, one of the nation's biggest iBuyer companies is expanding into the Chattanooga market with plans for simplified online home purchases and sales.
Opendoor, which announced Tuesday it has completed 100,000 transactions since the San Francisco-based digital real estate platform was started in 2014, is expanding into a half dozen more markets, including Chattanooga and Knoxville. Opendoor will be the first iBuyer to launch in Chattanooga and will offer an alternative to traditional real estate sales.
Opendoor makes instant cash offers on homes through an online process, makes repairs on the properties it purchases and relists them for sale. The company also provides mobile application-based home buying services along with financing.
Opendoor purchases the property as-is, charging a fee comparable to the commissions real estate agents collect - usually 5% to 8% - in return for the convenience of closing a sale quickly without home showings.
"With our all-cash offer, you don't have to worry about a buyer's financing falling through and you can skip the stress and stay in control," said Megan Meyer Toolson, chief customer officer at Opendoor. "Homeowners can go to Opendoor.com and determine their eligibility by entering their home address and answering a few questions about their home's attributes and any upgrades they've made. Next, homeowners will receive a preliminary offer on their home, to be finalized after we virtually assess the home."
"You have the opportunity to choose your closing date- minimizing the possibility of double mortgages or double moving costs," she said. "And you can cancel anytime before close, at no cost, for any reason."
But in today's tight market for inventory, selling most homes is already a fairly rapid and robust process, often with multiple offers to buy within days of when a property is put on the market. In May, the Greater Chattanooga Realtors association said the typical home sold in only 22 days, or half the time it took to sell the typical home a year earlier.
In May, only 934 homes were listed for sale in Chattanooga, down 58.4% from a year earlier. Despite the limited inventory, local Realtors still sold 26.4% more homes last month than a year earlier with 1,059 completed sales. With more sales and fewer listings, median home prices in May jumped 17.6% to $260,000.
"Robust buyer demand, fueled by low mortgage rates, continues to outpace supply, which remains near historic lows," said Robert Backer, a Realtor for Coldwell Banker Pryor Realty who is president of the Greater Chattanooga Realtors association. "Inventory remains much lower than it was at this time last year, and sales prices are surging as a result."
Tennessee also is benefiting from more businesses and individuals relocating to the Volunteer State from other parts of the country.
"The recent work-from-home movement has only accelerated this growth as newcomers are attracted to Tennessee for its southern hospitality and notable absence of state income taxes," said Jay Cherry, Opendoor's regional manager.
Cherry said Opendoor is in the process of building business relations in its new East Tennessee markets, although the company will not open a Chattanooga office.
"Currently, we have hired a local Homes Project Manager (HPM) who will be on the ground in Chattanooga and are working with local contractors while we're in the process of building out the supporting team," he said.
In such a market, Backer said working with an experienced Realtor who can help navigate a rapidly changing market is more critical than ever.
"A Realtor is a local expert who knows the market and will help you get more money if you are a seller or a better deal if you are a buyer than some iBuyer online that doesn't know as much about the local market," he said. "A Realtor helps you make more money than a third party buyer that turns around and sell syour house will likely give you."
But Opendoor contends that there is still uncertainty about financing, timing and other contingencies in traditonal real estate sales.
"Even in a booming market, there's a level of uncertainty with financing, inspection and appraisal contingencies that could get in the way," Cherry said.
Toolson said the iBuyer method avoids having to manage repairs, cleanings and showings of properties and the seller can control the timeline for any sale.
Although the stock-traded Opendoor Technologies has yet to turn a consistent profit, the company enjoys a market capitalization of more than $9 billion. With the six new markets added this week, Opendoor will be buying and selling homes in 39 U.S. markets.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.