Opendoor bought this 4,100-square-foot home in Chester last month for $612,000 and is now looking to flip it for $645,000. (Courtesy Opendoor)
For the past year, the Richmond region’s hyper-competitive housing market has been quietly fueled in part by a competitor out of Silicon Valley: Opendoor.
Founded in San Francisco in 2014, Opendoor is a digital house-flipping company. It touts itself as an easy option for sellers as it makes exclusively cash offers, allows sellers to pick their closing date, performs a digital walk-through in lieu of an inspection, and charges a 5 percent service fee without the need for agents.
Since expanding into the Richmond region last October, the company has purchased 14 homes in Chesterfield, Henrico and the city, according to a BizSense review of property records.
The median purchase price on those local deals is $427,500, from a range of $612,000 (a 5-bedroom, 4.5-bath home on Anchor Landing Drive in Chester) to $240,00 (a 1,600-square-foot ranch near the Iron Bridge Road-Chippenham Parkway interchange). It has spent a total of $5.9 million across those 14 local deals.
The company has been most active in Chesterfield, where it has bought 10 of those 14 homes. Its other deals consist of three in Henrico and its first within the city limits in September: a nearly $400,000 deal for a 2,300-square-foot four-bedroom in the Southampton neighborhood.
On the sell-side, Opendoor has found buyers for seven of the 14 for a total profit of $553,000, equating to an average profit of $79,000 per home.
Its largest windfall came in April when it sold a home on Monmouth Court in western Henrico for $551,000 – $118,000 more than what it paid for the 2,900-square-foot colonial in January.
Its highest priced current local listing is the Anchor Landing Drive home at $645,000.
The company has yet to lose money on a flip in the Richmond region, but it has been on roller coaster rides in other cities. Opendoor kicked off 2022 making similar profits on its flips in Denver, Colorado, but by last fall it was losing money on about half of its deals, according to a report from BizSense sister publication BusinessDen.com.
Steve Balik, Opendoor’s general manager for Richmond, said flexibility is a big part of what attracts sellers to use the company for deals.
“There’s no showings, lengthy inspections, repairs, nothing like that,” Balik said. “Depending on the age of the home, we might send someone out to do a 10-minute walk-through, but we’re not ordering an inspection that takes three hours.”
Balik said Opendoor doesn’t do total gut renovations on the homes it buys, but rather performs small repairs like touching up paint and fixing flooring.
“We do a lot of what folks would do anyway if a person was to list a home,” he said. “Just making sure everything works.”
He added that Opendoor makes offers only on homes that sellers bring to it via its website, rather than checking listing services or making offers on what hits the market on a given day. Opendoor does, however, market its properties for sale on MLS services as well as through its website.
The company has an undisclosed number of staff in the area, working in its operations, finance, engineering and HR departments.
Opendoor’s policy of only making cash offers gives it some degree of immunity from rapidly rising interest rates on the buy-side, though Balik said their knock-on effects have reached it nonetheless.
“Folks who have 3 percent interest rates (on their mortgages), who would otherwise be interested in trading up and selling their home and moving into a new one, are not going to (want to) be slapped with a 7-percent-plus interest rate…that limits the inventory, whereas demand is still generating,” Balik said.
He said Richmond, like the other 50 markets Opendoor operates in, is not immune to those effects.
“In Richmond specifically, it’s the same kind of dynamic where inventories are pretty low historically, and the demand is still high relative to that supply,” he said.
Opendoor bought this 4,100-square-foot home in Chester last month for $612,000 and is now looking to flip it for $645,000. (Courtesy Opendoor)
For the past year, the Richmond region’s hyper-competitive housing market has been quietly fueled in part by a competitor out of Silicon Valley: Opendoor.
Founded in San Francisco in 2014, Opendoor is a digital house-flipping company. It touts itself as an easy option for sellers as it makes exclusively cash offers, allows sellers to pick their closing date, performs a digital walk-through in lieu of an inspection, and charges a 5 percent service fee without the need for agents.
Since expanding into the Richmond region last October, the company has purchased 14 homes in Chesterfield, Henrico and the city, according to a BizSense review of property records.
The median purchase price on those local deals is $427,500, from a range of $612,000 (a 5-bedroom, 4.5-bath home on Anchor Landing Drive in Chester) to $240,00 (a 1,600-square-foot ranch near the Iron Bridge Road-Chippenham Parkway interchange). It has spent a total of $5.9 million across those 14 local deals.
The company has been most active in Chesterfield, where it has bought 10 of those 14 homes. Its other deals consist of three in Henrico and its first within the city limits in September: a nearly $400,000 deal for a 2,300-square-foot four-bedroom in the Southampton neighborhood.
On the sell-side, Opendoor has found buyers for seven of the 14 for a total profit of $553,000, equating to an average profit of $79,000 per home.
Its largest windfall came in April when it sold a home on Monmouth Court in western Henrico for $551,000 – $118,000 more than what it paid for the 2,900-square-foot colonial in January.
Its highest priced current local listing is the Anchor Landing Drive home at $645,000.
The company has yet to lose money on a flip in the Richmond region, but it has been on roller coaster rides in other cities. Opendoor kicked off 2022 making similar profits on its flips in Denver, Colorado, but by last fall it was losing money on about half of its deals, according to a report from BizSense sister publication BusinessDen.com.
Steve Balik, Opendoor’s general manager for Richmond, said flexibility is a big part of what attracts sellers to use the company for deals.
“There’s no showings, lengthy inspections, repairs, nothing like that,” Balik said. “Depending on the age of the home, we might send someone out to do a 10-minute walk-through, but we’re not ordering an inspection that takes three hours.”
Balik said Opendoor doesn’t do total gut renovations on the homes it buys, but rather performs small repairs like touching up paint and fixing flooring.
“We do a lot of what folks would do anyway if a person was to list a home,” he said. “Just making sure everything works.”
He added that Opendoor makes offers only on homes that sellers bring to it via its website, rather than checking listing services or making offers on what hits the market on a given day. Opendoor does, however, market its properties for sale on MLS services as well as through its website.
The company has an undisclosed number of staff in the area, working in its operations, finance, engineering and HR departments.
Opendoor’s policy of only making cash offers gives it some degree of immunity from rapidly rising interest rates on the buy-side, though Balik said their knock-on effects have reached it nonetheless.
“Folks who have 3 percent interest rates (on their mortgages), who would otherwise be interested in trading up and selling their home and moving into a new one, are not going to (want to) be slapped with a 7-percent-plus interest rate…that limits the inventory, whereas demand is still generating,” Balik said.
He said Richmond, like the other 50 markets Opendoor operates in, is not immune to those effects.
“In Richmond specifically, it’s the same kind of dynamic where inventories are pretty low historically, and the demand is still high relative to that supply,” he said.
The profit of 553k is gross, before expenses, it would appear? In that case they are making very little money, as they have to pay for renovations, salaries etc.
taking a house in Chester and selling it for 5.3% more than they paid is unlikely to actually make any profit. Even though they don’t have to pay the usual 6% commission, which would immediately put them in the hole, they still have to pay people to sell it. And a 3% buyers copay would leave very little left
All they are proving in the flip is that sellers are leaving money on the table. Agents earn their commissions by driving house prices up and assisting the seller in setting up their house properly to earn the highest return. They can also help the buyer in finding a mortgage. If you own a house as nice looking as the one pictured, you’d be crazy to sell to a house flipper and pay them the 5% fee. Get a realtor who knows your market and how to get the best deal for you.
I view this on the same level as finding a mouse in the house in that now home Prices will skyrocket again with spectators in the roost.
We badly need to regulate this industry, It seems every week we either are hearing about a scammer who rips people off then leaves town, or a huge oligarchical operation jacking up prices and returning no value to our economy.
They also destroy the character of neighborhoods.
just what we need more government regulation…..
Not enough regulation is precisely how we ended up with the Great Recession but please tell us why less government regulation is the way to go with something as necessary as housing…
Sounds to me you need the government for everything you do.You don’t like freedom?
This site’s comments DO often read a bit like The Nation or Mother Jones…
I think a good start would be enforcing the regulations that are already in place. At least 50% of my business is repairing roofs on homes that were “flipped”. 3 service calls in the last 2 days from the past weekend’s rain on flipped houses. The home I visited this evening in Goochland was purchased in 2022 for $525k and resold 2 weeks ago for $1.1m. On the outside it had a completely new porch on the front and a new deck on the back. I didn’t take a tour of the home, but while investigating the leak from the… Read more »
Buyers should get Home Inspections and make sure Repairs are done and done correctly prior to closing. Not everyone is like that, it’s unethical especially for anyone flipping homes for any period of time.
Homeowners do shoddy work too so get a home inspection, if it’s questionable, have a trade specific professional look during the inspection period.
Yes, Thank You. We need regulation and we have regulation, and it should be enforced until it something is deemed not necessary.
Yet we do have a bit too much regulation in the home BUILDING markets, and that is one of many reasons why housing is now so unaffordable to many and expensive to many more.
Parasites.