✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home sellers.
iBuyers make a cash offer and close on the house within 2 weeks. They use digital tools to quicken the process. iBuyers are usually investors who want to make a quick purchase of your house.
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Pros
- Close on the house within 2 weeks.
- Extend no-obligation offers.
- Typically don't withdraw their offers.
Cons
- 5% to 6% convenience fees.
- Strict eligibility criteria.
- Limited coverage areas.
iBuyers, or instant Buyers, make an all-cash offer on the house. They purchase properties as-is and are known for their quick closing time. iBuyers use technology to evaluate your home’s worth without a physical inspection. This quickens the process.
With iBuyers, you’ll likely get less than the fair market value for your house. They also have stringent eligibility criteria for the homes they purchase. But that doesn’t mean you shouldn’t consider iBuyers for selling a home.
If you need cash ASAP or want to sell your house as is, iBuyers can be a great option. But, if getting a top dollar for your property is your priority, you should consider alternative ways.
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✍️ Editor’s Take: To get the most out of your home’s worth, you should get an offer from multiple iBuyers and cash buyers and select the best one. You can do it by listing your property on a cash buyer marketplace like Houzeo.
Top iBuyer Reviews Comparison Chart 2024
There have been other companies like Zillow and Redfin that used to provide iBuying services. But, they have since shut down their iBuying business. The 2 top iBuyers in the business today are Offerpad and Opendoor.
| Parameter | Opendoor | Offerpad |
|---|---|---|
| Service Fees | 5% of Offer Price | 5% of Offer Price |
| Coverage | 22 cities | |
| Customer Rating | 4.4 stars | |
| Flexible Closing Date | ✅ | ✅ |
| Late Checkout Option | ✅ | ✅ |
| Trade-in Program | ✅ | ✅ |
| Mobile App | ✅ | ✅ |
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✍️ Offerpad vs. Opendoor: Both companies have similar business models, offer price, and service charges. The only difference is, that Opendoor has a better coverage area than offerpad.
Are iBuyer Companies Legit?
Yes, iBuyer companies are legitimate real estate investors. iBuyers outperformed cash buyers as they used to offer great deals for your home. But lately, the price they offer has been steadily declining. Many feel iBuyers these days “lowball” their customers.
Most home iBuyers operate in metropolitan areas only. If you live outside their coverage area, you can consider a cash buyer near you.
How Do iBuyers Work?
Sellers
iBuyers are known for their instant offers. To make this possible, they use an algorithm that helps them evaluate a property’s value. iBuyers’ instant offers are not final. Many iBuyer reviews highlight that their offer value reduces after inspection. Here is how the entire process goes:
- Register on Their Website: You can visit iBuyer’s website and submit the required details to get a preliminary offer. The iBuyer company’s platform runs the algorithm to calculate the offer value.
- iBuyer Extends the Offer: Based on the valuation of your home, the iBuyer company extends an offer. They provide this offer without a sight visit.
- iBuyer Performs a Home Inspection: If you accept the initial offer, the iBuyer company will schedule an onsite inspection. This is performed by a third-party home inspector or a local representative from the company.
- iBuyer Extends Final Offer: You get a final offer based on the inspection. If this offer meets your requirements, you sign a purchase agreement and schedule the closing.
- Close on the House: iBuyers typically close on the house in as little as 2 weeks. They usually give a 90-day window for the seller to move.
Buyers
iBuyers repair the houses they purchase and sell them for a profit. So as a home buyer, you can purchase the house from an iBuyer without an agent. Let’s see how it works:
- Take a Tour: Once you select the property you like, you can take a tour.
- Submit an Offer: You can submit the offer through your real estate agent or by filling out a simple form on their website.
- Draft a Purchase Agreement: Once iBuyer has responded to your offer, you need to draft a purchase agreement with the help of a real estate attorney.
- Schedule an Inspection: A third-party inspector or a local representative from the iBuying company will accompany you while you complete the onsite home inspection.
- Negotiate the Offer: You can negotiate the repairs and closing costs based on the home inspection.
- Close the Deal: After negotiation, you can close the deal within 2 weeks.
iBuyer Fees and Offers
Most iBuyers charge a service fee of 5% of your home’s value. They may also charge you a repair cost between 1% and 2%. This is the cost you bear in addition to the typical closing costs of the real estate transaction, like escrow fees and title insurance.
Regarding offers, iBuyers generally offers around 80% of the house’s Fair Market Value. So, for a house with a potential sale price of $400,000, you’ll get $320,000. Out of this, you have to pay 6% to 7%. That is $24,000 to $28,000. You will only get $292,000 to $296,000.
Let’s see how iBuyers compare to cash buyers and cash buyer marketplace.
» What’s My Home’s Value: You can know your home’s market value with Houzeo’s free Home Worth Estimator. It helps you estimate the amount you will get upon sale.
| Parameters | iBuyers | Cash Buyers | Cash Buyers Marketplace |
|---|---|---|---|
| Service Charge | 5% to 6% | No Charge | $200 to $400 flat fee |
| Offer Price | 80% | 50% to 70% | Up to 100% |
| Closing Time | 7 to 14 days | 14 to 21 days | 30 to 45 days |
| No. of Offers | 1 offer | 1 offer | Multiple Offers |
| Scope of Negotiation | No | No | Yes |
| Top Company | Opendoor | HomeVestors | Houzeo |
Which Homes Qualify for Most iBuyer Companies?
Generally, the purchase criteria for the best iBuyer companies are similar. They purchase owner-occupied homes to ensure that homes are in good condition and need minimum repairs.
| Criteria | Eligibility |
|---|---|
| Home Types | Single-family homes, townhouses, duplexes, condominiums |
| Year Built | After 1930 |
| Lot Size | Maximum lot size of 1–2 acres (depends upon market) |
| Value | Between $100,000 and $600,000 |
| Occupancy | Owner-occupied |
Certain iBuyers can make exceptions in some markets. So, it’s best to research and find, if they can make an exception for your home.
iBuyer Reviews: Pros and Cons
Consider the pros and cons of iBuyers real estate companies before coming to a decision.
👍 Pros
- Quick Sale: As per iBuyer reviews, they extend instant offers and close on the house in as little as 2 weeks.
- Hassle-free Process: iBuyers don’t require listing agreements, paperwork, or mortgage pre-approvals.
- Certainty of Sale: The likelihood of your offer getting less after inspection. They usually reduce the offer price if the house needs any major repairs.
- No-obligation Offer: If you don’t like the offer, you can walk away without incurring any charges.
👎 Cons
- High Service Fees: iBuyers typically charge 5% to 6% of your home’s offer price as convenience fees.
- Non-Negotiable Cash Offers: iBuyers extend a take-it-or-leave-it deal. Most iBuyers don’t budge on their final offer.
- Lower Sale Prices: According to multiple iBuyer reviews, they generally offer 80% of your home’s value. While setting the offer, they deduct all repair, utility, and re-selling expenses.
- Strict Purchase Criteria: iBuyers have stringent criteria for the house they purchase.
- Limited Coverage: Top iBuyers, like Offerpad, operate in select markets in the US. Thus, selling to an iBuyer is not a choice for most Americans.
Other Ways to Sell Your Home: iBuyer Alternatives
» Jump to: MLS Listings | Discount Brokerages | Trade-in Programs
1. List on MLS
If you can put in more time in the house sale, listing on MLS is the best way. An MLS listing gives you a wide exposure that offers 100% of your home’s equity. Even, top iBuyers like Opendoor and Offerpad also extend offers on MLS listings.
So, you can get a cash offer, higher than what you’d get if you directly contact them. You should list your home on the MLS via Houzeo. You have to pay a flat fee of $399 plus a 3% buyer agent’s commission. With an iBuyer, you would pay a 5%.
2. Sell with Discount Brokerage
You can also sell your home with a discount real estate brokerage like Redfin. A discount brokerage manages most, but not all, tasks of the home sale. For that, they either charge a flat fee or a commission, which can vary between 0.5% and 2%.
Most discount brokerages also run special programs to offer additional savings. Redfin, for example, charges 1.5% but refunds 0.5% if you buy a home within 365 days of the home’s sale.
3. Trade-in Program
You can opt for a trade-in program if you want to use its equity to purchase a new home. Many real estate companies, like Homelight and Homeward, facilitate this program.
These companies evaluate the equity of your home. They lend you this equity to purchase a new house. Once you move to your new home, you can sell your old one and pay back the loan amount. These companies also charge a convenience fee, usually 2% of your home’s value.
Are iBuyers Worth the Trade-offs?
iBuyers are excellent for home sellers who need cash urgently. They eliminate the listing, marketing, and showing for a quick sale. As iBuyer reviews highlight, their offers are very low. On top of that, you’ll have to pay 5% to 6% in convenience fees.
We recommend listing your home on the MLS via Houzeo. Houzeo helps you get up to 100% of your home’s worth. Moreover, multiple iBuyers extend offers on MLS listings.
MLS listings create a bidding war between home buyers, cash buyers, and iBuyers. So, you get competitive offers. Houzeo’s technology allows you to compare offers and get the best deal.
» Houzeo Reviews: Check out why more than 7,000 home sellers have rated Houzeo 4.9 stars out of 5.
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Frequently Asked Questions about iBuyer Companies
What is an iBuyer in real estate?
An iBuyer purchases your property quickly with a cash offer. You don’t have to worry about expenses like listing, advertising, showing, and even marketing your home. You can close on the house on your preferred date within a few days or weeks.
Which iBuyer pays the most?
If it's Offerpad vs. Opendoor, Opendoor generally offers more cash. However, this may vary as they use an algorithm to evaluate the house. So, it's better to get offers from both companies and go for a higher one.
Is selling to an iBuyer worth it?
It depends on your requirements. iBuyer companies are good for you if you're in urgent need of cash. But if you want to get a top dollar for your house, you should not sell to an iBuyer. Instead, you should list your house on the MLS.
Are there iBuyer companies near me?
If you live in a metropolis areas, you may find an iBuyer like Offerpad or Opendoor near you. However, they have limited coverage area. So, you might not get an iBuyer if you live in suburban areas.
Which are some best iBuyers for home sale?
Opendoor and Offerpad are the top iBuying companies in the US. However, as their coverage is limited, you may not be able to sell to them. If this is the case, you can sell your house on a cash buyer marketplace like Houzeo.
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