There’s a new term in real estate: iBuyer.
iBuyers, short for instant buyers, give sellers an almost instantaneous offer on their homes. Also called instant offer companies, iBuyers promise sellers an offer within a couple of days and closing dates within one to two weeks. Some popular iBuyers include Opendoor, Offerpad, Redfin, and Zillow Offers.
Unlike house flippers, iBuyers aren’t looking for distressed homes. iBuyers purchase moderately-priced homes, fix them up as needed, and relist them. The obvious downside to selling to an iBuyer is that you will not get top dollar for your home. They are looking for homes where they can make a specific profit margin. Typically, the company will analyze your home online, using algorithms to come up with a value. For example, Zillow Offers will most likely offer you their Zestimate price. Sellers should expect an offer of about 10% under fair market value. iBuyers accept a tiny percentage of the homes submitted. If the company decides to make you an offer, they may send a home inspector out to determine what costs they will have in preparing to resell the house.
If you work with an iBuyer, make sure to read all the terms, as you may be required to cover some repairs. While using an iBuyer saves you from paying real estate agent fees, watch out. You may not have to pay the 5-7% real estate commission, but iBuyers charge fees that may run anywhere from 6 to 9%. The total costs of working with an iBuyer can sometimes run as much as 12-15% of your selling price. Working with an iBuyer benefits sellers who don’t have the time or desire to market their home traditionally.
If you are in a situation where you need to sell your home quickly and are willing to take less than your home is worth, then an iBuyer may work out well for you.