What are iBuyers, and should you sell your home to one?

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• An iBuyer is a company that purchases and buys homes directly from sellers using an algorithm.
• Selling to an iBuyer can be convenient if you need to sell quickly or don’t want to have to go through the stress of a traditional sale.
• When you sell to an iBuyer, you might not earn as large a profit as you would selling your home the traditional way.

Selling a home can be a really stressful process. To attract buyers, you’ll need to work with a real estate agent, do a lot of cleaning and repairing, and be prepared to vacate your home regularly while potential buyers tour it. Once you find a buyer and have a signed purchase agreement, things can go wrong — such as a bad inspection, a low appraisal, or an inability to obtain financing — that derail the process, sending you back to square one.

For a long time, most homeowners had no choice but to go through this process if they wanted to sell their homes. But now, tech companies called iBuyers aim to make the process simpler and faster.

What is an iBuyer?

An iBuyer, or “instant” buyer, is a company that buys homes directly from homeowners. These companies are often able to make offers on a home in a matter of hours or days based on information, photos, and video provided by the homeowner. 

After purchasing a home, an iBuyer will then make any necessary preparations or repairs and list the home for sale. 

The process of working with an iBuyer

To sell your home to an iBuyer, you’ll first need to find out if your home meets the criteria iBuyers typically look for. This criteria can vary depending on the company you work with and the market you’re in.

To be eligible for purchase, homes need to be in good condition and typically can’t be located on large lots. iBuyers also aren’t available everywhere in the US, so you’ll only be able to sell your home to an iBuyer if one is available in your area.

When you request an offer on your home from an iBuyer, you’ll submit some basic information about the property and may be asked to upload pictures or video. The iBuyer will then use the information you provide to determine the market value of your home with the help of an algorithm. iBuyer algorithms use data from your local housing market to compare your home to other similar homes that have recently sold, much like how a real estate agent would use comps, or comparable sales, to price a home. 

If you’re satisfied with what the iBuyer offers you for your home, you’ll accept the offer and start preparing to close. Your iBuyer will schedule an inspection to determine if any repairs need to be made before the home can be resold. If the home needs repairs, the iBuyer may deduct the costs from its offer price or allow you to make the repairs before closing.

You’ll also need to choose when you want to close with an iBuyer. Closings can often be completed within a couple of weeks or a couple of months.

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Is selling to an iBuyer worth it?

The main benefit of selling to an iBuyer is convenience. iBuyer companies streamline the home-selling process so that all you have to do is provide them with some basic information and work with them to schedule your inspection and closing. For buyers who need to sell quickly or buy a new home while selling their current one, this can be a really valuable and time-saving service. 

Kerry Melcher, head of real estate at the iBuyer company Opendoor, says that iBuyers make what is traditionally a taxing process easier for sellers.

“We’re eliminating the need for folks to go through the process of repairs and upgrades for their homes,” Melcher says. “Eliminating the myriad of people that have to come through their homes as well, providing that certainty of an offer, giving them the ability to determine the timeline, the dates that they want to close on, and that additional uncertainty that happens where you go into contract with a traditional buyer and in many cases that will fall through.”

The trade-off is that you might not make as much money selling your home to an iBuyer as you could selling it to a traditional buyer. Though iBuyers say they make competitive offers on the homes they buy, housing market conditions still favor sellers right now. Receiving multiple offers on a home is common, which means sellers may be able to earn more on a traditional sale than what an iBuyer determines is their home’s fair market value.

When you sell the traditional way, you’ll also have the benefit of having a real estate agent who is an expert in your local market and can help you maximize your profits.

“The value proposition of a real estate agent is that I know the home, and I know the area, and I can convey what it’s like to live there,” says Marie Bromberg, a licensed real estate salesperson with Compass in New York City. 

Because real estate agents know the market they work in so well, they have an advantage when it comes to conveying the value of your home to buyers and getting you a bigger profit, Bromberg says.

If you’re considering selling your home to an iBuyer but aren’t sure if it makes sense profit-wise, you can typically get a commitment-free offer to see how much they’re willing to pay. You can also talk to a real estate agent to see what they think your house could ultimately sell for if you were to do a traditional sale. How you decide to move forward should depend on your potential profits and what your goals for your home sale are.

If your main goal is to make as much money as you can, and a local agent tells you that homes like yours are consistently selling over asking, it might make more sense for you to sell to a traditional buyer. But if your priority is a quick sale or a less stressful experience, selling to an iBuyer might be worth it to you, even if that means you could potentially be leaving money on the table.

iBuyer companies

Some of the most popular iBuyer companies include Opendoor, Offerpad, and RedfinNow. Zillow used to have an iBuying business known as Zillow Offers, but it was shut down in 2021.

Each company has its own quirks and criteria for its buying processes. If you’re considering selling to an iBuyer, compare multiple companies to determine which one best meets your needs. Be sure to look at the fees they charge, when you’ll be able to close, and whether they offer any additional perks, such as free moving assistance.