ARE iBUYERS RIGHT FOR YOU?
iBuyers Overview & Comparison
iBuyer companies use analysis of market data, seller info, and sometimes local real estate agents, to make instant cash offers on homes.
iBuying is a relatively new option when selling your home. iBuying allows a sale with no listings, walkthroughs or repairs, but a lower offer than what could expected from listing on the open market.
FLIPPER
Buying homes in need of significant repairs for bottom dollar.
FLIPPER vs iBUYER
There is often confusion on how an iBuyer is different from a house flipper. These are actually two different business models!
iBUYER
Buying homes in great condition for a closer full market value price and turn around for a quick sale.
4 Biggest Companies in iBuying by percentage of homes sold (2020)
ZILLOW (26%)
OFFERPAD (23%)
OPENDOOR (50%)
REDFIN (1%)
The Pros
& Cons
of iBuyers
iBuyers can potentially be the best option for some people where time around the sale is the most important factor. The thing to remember about iBuying is to manage your expectations.
Here is the pros and cons so you can make an informed decision on what matters the most to you.
Pros
No time required to prepare the home for sale or staging
Closings happen quickly, usually within a few weeks
Sales won't be disrupted by unforeseen circumstances
No showings or open houses
No traditional home inspection process, usually done via photos
No waiting for a buyer to get approval on a mortgage
No need to repair the property. The home is sold as is.
Cons
Higher real estate commissions – iBuyer fees (7-8%) much higher than what agents charge
Sellers have the same closing costs as a traditional sale
Automated home valuations are often inaccurate.
The iBuyer offer is very likely to be $1,000s to $10,000s below market value
iBuyers are only available in limited markets
So I don't need an Agent?
iBuyers are looking for a profit, not a great deal for you.
Their Profit Comes from
Your Offer!
Work Smart, Not Hard
iBuyers make it very easy to go through the sale of a home all by yourself. The idea of doing this yourself to make the process simpler is a reasonable thought.
However, using a skilled agent in the iBuyer sale to look out for your best interests will actually make the process smoother, and best of all, result in a
better offer.
Sellers beware!
Thankfully iBuyers are clear about their intentions, and even recommend you get representation!
From Redfin.com-
“Neither Redfin nor RedfinNow will represent your interests regarding the sale of your home. For this reason, it is recommended that you seek independent representation in the sale of your home. You may be able to sell your home on the open market for more than RedfinNow's offer price.”
Remember:
iBuyers are, in all reality, a for profit business and while they want to create a smooth, easy, and fast process for you...
They will make you pay a premium for this convenience. While you CAN do this alone, shouldn't YOU HAVE SOMEONE LOOKING OUT FOR YOUR INTERESTS?
Top 4 Instant Offer Companies
Fees
View/Inspect House?
Offertime
Availability
ZILLOW
6% Selling
1-2% Closing
2.5% Service
Yes, photos REQUIRED before estimate given
3+ days
GA, TX, NC, CO, CA, MN, TN, FL, AZ, OR
REDFIN
1-3% Repairs
1-3% Closing
6-12% Service
Yes, photos REQUIRED
2 days
CA, CO, TX
OPENDOOR
5% Selling
1% Closing
2.3% Service
Yes, video walkthrough REQUIRED
2 days
GA, TX, NC, CO, CA, MN, TN, FL, AZ, OR, UT
OFFERPAD
6-10% Service
1-3% Closing
Video walkthrough or photos OPTIONAL
1 day
AZ, AL, FL, GA, NV, NC, TX
Homes Commonly Denied by iBuyers
Before you start to consider instant offers, it is important to know the types of homes that iBuyers target. Just because an iBuyer operates in the home’s area doesn’t mean every home will be accepted.
There are many reasons an iBuyer will not buy a home through their instant offer service:
Outside min-max price range (generally $150,000-
$600,000 or so, though
higher in states like CA)
Too old (too many
possible hidden surprises
like old wiring)
Too unique (rural, artsy, or
other Non-Conforming
Neighborhoods that are
difficult to value)
Located in a gated
community (coordinating
repairs too difficult)
Condos (some iBuyers
work with them while
others don’t)
Septic and Wells (possible
repair headaches)