Opendoor Settles Legal Battle Over Pricing Algorithm Claims

The settlement, which still requires approval from U.S. District Judge Michael Liburdi, would resolve allegations brought in 2022 by shareholders who claimed the San Francisco-based company overstated the capabilities of its algorithm-based pricing system used to purchase and sell homes. Per Reuters, the lawsuit was filed in Arizona federal court by attorneys representing the investor group.

Founded in 2014, Opendoor promotes itself as a tech-forward solution to streamline the residential real estate process. However, according to Reuters, investors alleged that behind its marketing as a tech disruptor, Opendoor was actually relying on a largely manual approach to pricing homes—making the company vulnerable to market fluctuations like any traditional real estate firm.

Though the company denied any wrongdoing, it agreed to the settlement in order to avoid the expense and uncertainty of prolonged litigation, per court filings. As of now, neither Opendoor nor its legal team at A&O Shearman have publicly commented on the resolution, and attorneys for the plaintiffs have also declined to respond to requests for comment.

The investor complaint claimed that Opendoor’s pricing models failed to adjust effectively to the volatile housing market conditions, contributing to a dramatic decline in the company’s stock price—down over 94% from its December 2020 public debut to November 2022.

In a recent financial update, Opendoor reported $1.2 billion in revenue for the first quarter of 2025 and disclosed the sale of 2,946 homes during that period.

The plaintiffs described the $39 million agreement as a “prompt and substantial tangible recovery” in their filing. They are also seeking legal fees amounting to 30% of the total settlement—approximately $11.7 million—subject to the court’s approval.

Source: Reuters