iBuyers, or Instant Buyers, are private home buying companies that eliminate many of the hassles of the traditional home selling process. These companies can buy or sell your home, renovate it, and connect sellers with movers, home loan and title insurance providers. You can also list your home through iBuyer and work with a real estate agent.

While it may seem exciting to go through iBuyer to buy or sell your home, there are some things you need to know in order to choose the best route for you.

What is iBuyer?

iBuyers are technology-driven property companies that use automated valuation models to determine home prices and make purchase offers, often within 24 hours.

An Automated Valuation Model (AVM) is a computerized appraisal that looks at what nearby homes are worth and combines that information with your home’s listing to estimate its value. For example, if you’ve checked out a home Zestimate on Zillow, or if you’ve been able to renovate your home without hiring an appraiser, you’ve seen AVM at work. Mortgage lenders and other real estate companies use AVMs all the time.

iBuyers are repurposing these models to buy, repair and sell properties for profit. It’s very similar to what real estate investors do when they flip a property.

Although iBuyers don’t think of themselves this way. Opendoor, one of the market leaders iBuyers, says on its website that the company is not a “home flash” because it does not buy to repair and resell problematic properties. Most iBuyers prefer properties that are already in good condition.

iBuyer companies

In the year Founded in 2014, Opendoor was the market leader by the end of 2021, with four times more homes for sale than Offerpad and operating in 44 markets. Along with buying your home, the company says on its website it will help you make a cash-backed offer to buy your next home.

Founded in 2015, Offerpad is the second largest iBuyer. It aims to buy, renovate and sell homes within 100 days. The company It will operate in 21 markets by the end of 2021. Its business model is based on providing mortgage and title services and allowing homeowners to list on the platform.

Zillow’s offers were iBuyer valid from 2018 to November 2021, when the algorithm is underperforming. It struggled to accurately predict future home prices, and the company overpaid for many homes. Nor could it entice enough homeowners to sell.

RedfinNow and Keller Offers are two more players in the iBuyer market, but they have a much smaller presence.

RedfinNow buys homes in 18 markets, and its presence is strongest in California and Texas.

Keller Offers buy your home for cash in 22 major markets in the West, Midwest, South and Southwest. It also has a program to help you sell your home or renovate your home and stay put – an option that currently stands out from the competition.

Working with iBuyer

You can sell your home to iBuyer or buy a home from both.

Buying a home from iBuyer

If you are interested in buying a home from iBuyer, the first question you need to answer is whether it works in your area. For now, that means you need to live in a major metro area.

The next step is to find properties you like and visit them. iBuyers can schedule visits and eliminate any pressure or confusion that might come with having a seller’s agent or the seller themselves attend. For example, Opendoor allows buyers to tour the home daily from 9:00 AM to 6:00 PM, no appointment required. Just go home and open the door with the company app. Offerpad wants you to contact them about any home you’re looking for.

You’ll also need to decide whether to buy directly from iBuyer or work with your own agent. Working with a buyer’s agent is beneficial because they represent your interests when buying a home, but are paid out of the sales commission. Opendoor encourages buyers to use their own agents by offering a 1% upgrade if certain conditions are met.

Selling a home through iBuyer

iBuyers typically purchase single-family detached homes. Depending on the company and the market, you can buy townhouses, condominiums, and duplexes. If you are interested in selling your home through iBuyer, you may have the option of selling your home directly to the company or through the company. Here is a list of each option.

Selling your home to the company

You start the process by entering key information about your property using the company’s website or app. An algorithm calculates a tentative initial financial offer that the company can customize after you provide more detailed information about your home through photos or a virtual tour.

iBuyer will also send an in-home inspector to check on the condition of your property. The company may deduct any repair costs from the price or give you the option to hire your own contractors to do the work.

The main factors that determine how much the company will offer for your home are:

• Age
• situation
• Flooring, finishing and finishing
• Furniture
• Similar, recent sales of nearby homes
• Desire
• Projected real estate market trends

In addition to not being in the market where the company operates, iBuyer may not be interested in buying your home if:

• Not a single family home.
• It is located in a flood zone.
• It is very old.
• It sits on more than one or two hectares of land
• Worth $1 million or more
• A prefabricated or mobile home
• He was very hurt

If you don’t like a company’s offering, you’ll reconsider if you can point out the features you missed. The company’s offer is valid for a few days only. After that, you can request an updated offer based on current market conditions, meaning you may get a higher, lower, or no discount.

Selling your home through the company

Selling your home through iBuyer is like a traditional home selling process where you work with an agent to determine a listing price, put your home on the market, show buyers and negotiate a closing agreement. You can make more money this way than accepting a cash offer from iBuyer.

Using the iBuyer listing service comes with many benefits. For example, if you use Offerpad’s listing service, the company says it will offer free carpet and deep cleaning, handyman services, landscape cleaning and pool services to get your home ready to show. Offerpad also says it offers a home improvement advance—a no-interest loan that’s paid off against your future sales proceeds—like paint, new flooring and furniture, and other improvements to help sell your home.

If you can’t sell at the expected price or your moving timeline is accelerated, iBuyer can make a backup offer on your home.

Costs associated with selling to iBuyer

Selling your home to iBuyer can save you money in areas like home improvements and moving costs.

For example, sellers who contract with Offerpad are eligible for free moving services if their new home is within 50 miles, the inventory is under 13,000 pounds, and the home for sale is under 2,800 square feet.

However, with iBuyers you pay a service fee of 5% to 14% of the home’s sale price. This fee covers expenses incurred after purchasing the company’s property, such as insurance, property taxes, maintenance, utilities, and other fees.

At the end of the day, the service fee can be higher than the 4% to 6% commission that a traditional real estate agent charges.

You may be able to save money by selling and buying your home through the same iBuyer and by placing your loan through the company. But it’s best to shop around with mortgage lenders and real estate agents first to determine which options offer the greatest savings.

Is iBuyer worth it?

Whether you’re buying or selling a home, working with iBuyer can help simplify the entire process and eliminate stacked home costs.

As a seller, working with iBuyer can be beneficial if you:

• Rather than waiting for the highest possible offer, you want to sell your home quickly
• You don’t want to clean, repair, or grade your home for potential buyers.
• Do not want strangers to visit the house where you are still living
• Feel comfortable selling your home without a real estate agent

As a buyer, you may want to consider buying your home from iBuyer:

• You want a move-in ready home
• Check-in date may be flexible as the house is vacant.
• They want to close quickly
• It’s tempting to get your loan and your home from the same company.
• You are comfortable buying a house without an agent