What Is An iBuyer?

Andrew Whytock

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Andrew Whytock

June 10th, 2022
Updated June 10th, 2022

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iBuyers

Top iBuyers | iBuyers near me | Pros & Cons | Should I sell to an iBuyer? | How pricing works | The selling process | FAQs

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🔑 Key takeaways
  • iBuyers buy houses at a slight discount to resell them on the open market.
  • The main benefits of working with an iBuyer are convenience, speed, and certainty — you can get a cash offer and close on your own timeline rather than listing your home with a real estate agent and waiting for the right offer.
  • Most iBuyers charge sellers a 5% service fee, but some charge as much as 13%.

An iBuyer is a large real estate company that buys and resells homes using technology to streamline the process. The “i” in iBuyer stands for “instant” because most iBuyers can make an offer on your home in 24–48 hours and close in two weeks or less.

Selling to an iBuyer lets you skip the hassle and uncertainty of listing with a real estate agent and negotiating a deal with a private buyer. You can close on your own timeline and let someone else worry about fixing up your house.

The trade-off for a quick, convenient sale is that iBuyers don't usually pay as much as you’d get for your house on the open market.

Selling to an iBuyer isn't an option for most homeowners because these companies have strict purchase criteria and they only buy houses in select metro areas. Still, if you're interested in selling you can request a free, no-obligation offer from any of the top iBuyers and find out if your home is eligible.

We recommend starting by requesting an offer from Offerpad — one of the largest iBuyers. If you qualify, you'll have a firm cash offer within 24 hours, but there's no obligation to accept.

Enter your ZIP code to see if you qualify for an instant cash offer from Offerpad. 👇

How do iBuyers make money?

iBuyer companies try to purchase houses that can be resold for a small profit on the open market. iBuyers leverage sales data and their own pricing models to provide home sellers with near-instant offers on their houses.

As part of the iBuyer business model, these companies also charge a service fee for the speed and convenience they offer. Opendoor and Offerpad, the two largest iBuyers, charge 5% of the sale price, while RedfinNow charges a variable fee that can be as high as 13%. This fee helps to offset the iBuyer’s carrying costs (utilities, property taxes, etc.) and ensure profitability.

Along the way, iBuyers make money by offering other built-in services for buyers and sellers, like title insurance and mortgages.

Are iBuyers legit?

Yes — iBuyers are legit real estate companies that can give you a near-instant cash offer and purchase your home in less than two weeks.

iBuyers usually make fair offers, but they're not the best option for everyone because the certainty and convenience they offer comes at the cost of services fees (5% or more) and a slightly reduced sale price.

👍 iBuyers are good for…
  • Sellers who are in a rush and need to close quickly.
  • Sellers who want an easy, hassle-free sale.
  • Sellers who are comfortable doing everything online.
👎 iBuyers are bad for…
  • Sellers who want to get the most possible money when they sell their home.
  • Sellers who have time to do prep work and are comfortable working with an agent.
  • Buyers who would rather have the added back-and-forth communication of negotiating with an agent or private seller.

What kind of houses do iBuyers buy?

Each iBuyer has slightly different purchase criteria, but in general iBuyers purchase owner-occupied houses that only need minor repairs.

Typical iBuyer purchase criteria
🏠 Built after 1930
💰 Valued at $100,000–$600,000
🌲 Located on 1.5 acres or less
👤 Owner-occupied

Every company has exceptions, so it's best to request an offer from iBuyers near you to find out if you're eligible to sell. For example, Opendoor generally purchases homes worth up to $600,000, but will pay as much as $1 million in select markets.

Are there iBuyers near me?

The top iBuyers are currently active in 40+ cities across the country, so availability is limited. However, iBuyers continue to expand into new markets as the business model becomes more popular.

iBuyer
States
Opendoor
AL, AZ, CA, CO, FL, GA, ID, IN, MN, MO, NV, NJ, NY, NC, OH, OK, OR, SC, TN, TX, UT, VA
Offerpad
AL, AZ, CA, CO, FL, GA, IN, KS, MO, NV, NC, OH, SC, TN, TX
RedfinNow
AZ, CA, CO, GA, IL, MD, MA, MN, NV, NC, OR, TN, TX, VA, WA

Top iBuyers in 2022

Opendoor

Opendoor

Opendoor

Full Review

Service Fee

5%

Closing Date Window

14–60 days

Average Rating

4.3 | 2718 reviews

✍ Editor's Take
Pros & Cons
Locations
Reviews
Contact

Opendoor is a good option for home sellers who need a fast, predictable sale with minimal hassle. While the price that Opendoor pays might be slightly below the value of comparable homes on the open market, the difference might be worth it for people who value convenience and speed.

Pros

  • 5% service fee is lower than competitors
  • Additional in-house services, including Opendoor Home Loans & OD Title
  • Highly rated in customers' online reviews

Cons

  • Offer prices may vary by market
  • Limited ability to negotiate
  • Buyers may find Opendoor's repairs insufficient

Opendoor is currently purchasing homes in 47 locations, including:

  • AZ: Phoenix, Tucson
  • CA: Los Angeles, Riverside, Sacramento, San Diego
  • CO: Denver
  • FL: Jacksonville, Orlando, Tampa
  • GA: Atlanta
  • MN: Minneapolis-St. Paul
  • NV: Las Vegas
  • NC: Asheville, Charlotte, Raleigh-Durham
  • OR: Portland
  • TN: Nashville
  • TX: Austin, Dallas-Fort Worth, Houston, San Antonio
  • UT: Salt Lake City

As of April 7, 2022, Opendoor's weighted average is 4.3 based on 2718 reviews.

SHOW MORE

Offerpad

Offerpad

Offerpad

Full Review

Service Fee

5%

Closing Date Window

8–90 days

Average Rating

3.7 | 292 reviews

✍ Editor's Take
Pros & Cons
Locations
Reviews
Contact

Offerpad promises the certainty of a cash offer and a fast closing on a date you choose. Of all the iBuyers, Offerpad has the most flexibility when it comes to closing (8—90 days) and is liked by customers for its personalized customer service and perks like a free local move.

Pros

  • Generous closing window compared to competitors
  • Late checkout option gives sellers up to 3 days to move out after closing
  • Access additional services, such as free local moves within 50 miles


Cons

  • You might face a 1% cancellation fee if you back out of the sale
  • Not as widely available as competitors like Opendoor

Offerpad is currently purchasing homes in 25 locations, including:

  • AL: Birmingham
  • AZ: Phoenix, Tucson
  • CA: Riverside, Sacramento, San Bernardino
  • CO: Denver
  • FL: Jacksonville, Orlando, Tampa
  • GA: Atlanta
  • IN: Indianapolis
  • KS: Kansas City
  • MO: Kansas City, St. Louis
  • NV: Las Vegas
  • NC: Charlotte (+ neighboring parts of SC), Raleigh
  • OH: Columbus
  • SC: Columbia
  • TN: Nashville
  • TX: Austin, Dallas-Fort Worth, Houston, San Antonio

As of April 7, 2022, Offerpad's average customer rating is 3.7 based on 292 reviews.

  • Website: www.offerpad.com
  • Phone: 844-388-4539
  • Email (Sellers): info@offerpad.com
  • Email (Buyers): buyers@offerpad.com
SHOW MORE

RedfinNow

RedfinNow

RedfinNow

Full Review

Service Fee

5–13%

Closing Date Window

10–30 days

Average Rating

Not available

✍ Editor's Take
Pros & Cons
Locations
Reviews
Contact

Compared to its competitors, RedfinNow handles a relatively small volume of iBuyer sales and has high service fees (up to 13%). However, RedfinNow shines in several niches, thanks to its willingness to accept older homes and its availability in a wide range of California cities.

Pros

  • Expanded presence in cities across California, including several not served by other iBuyers
  • Large and trusted corporate brand
  • Older homes (built after 1930) are eligible in select cities


Cons

  • Relatively expensive services fees (up to 13% of the offer price)
  • Relatively limited flexibility on closing window, compared to competitors

RedfinNow is currently purchasing homes in 31 locations, including

  • AZ: Phoenix
  • CA: Inland Empire, Los Angeles, Orange County, Palm Springs, Sacramento, San Diego, San Francisco
  • CO: Denver
  • TX: Austin, Dallas, Houston, San Antonio
  • WA: Seattle

As of April 7, 2022, RedfinNow does not have any verified customer reviews on reputable third-party review sites.

SHOW MORE

» DISCOVER: Our complete iBuyer rankings and reviews.

iBuyers are gaining market share

iBuying transaction volumes have been increasing year-over-year for several years, with 2020 being an exception as iBuyer transactions dropped by 50% as a result of the pandemic.[1]

In 2021, iBuyers had a record year, purchasing over 12,000 homes in the second quarter of the year alone.[2]

Opendoor, the largest iBuyer to date, is on the path to being in 100 markets, which would give it a 4% market share in the U.S. residential real estate market.[3]

These trends could signal changes in the way houses are bought and sold, even if iBuyers only end up capturing a small percentage of the overall real estate market. iBuyers provide a hassle-free, predictable experience that realtors could have a difficult time matching.

Pros and cons of selling to an iBuyer

Pros
  • Speed. The entire sale, from initial contact to closing, can happen in two weeks or less.
  • Convenience. Most of the process takes place online. Simply fill out a form and get a preliminary offer, then complete a virtual inspection. If repairs are necessary, the cost can be deducted from the offer, and the iBuyer will take care of them.
  • Certainty. With a cash offer from an iBuyer, there's no need to list your home and wait for the right offer to come in — you can accept and sell right away.
Cons
  • Lower purchase price. iBuyers generally don't pay as much as buyers on the open market because their goal is to resell your house for a profit.
  • No negotiation. When you get an offer from an iBuyer, it's usually a take-it-or-leave-it deal. If you feel the company overlooked something important, some will allow you to make your case and submit additional evidence to support it; however, most will be unwilling to budge on price.
  • Limited coverage. Most companies only operate in select major metro areas across the U.S. In other words, selling to an iBuyer isn't actually an option yet for the vast majority of Americans.
  • Strict criteria. iBuyers are strict about the types of properties they buy. Most will only make offers on properties that are relatively new (post-1930), worth less than $500,000–600,000, and sit on less than 1.5 acres.

Should I sell to an iBuyer?

Selling to an iBuyer makes sense if you need a fast, predictable sale and don’t mind getting less money than you might on the open market. The certainty and speed iBuyers can give you when you sell your home is almost unparalleled.

However, if you have at least a few weeks to spare and want to get the maximum value for your home, working with a realtor is a better option.

Most iBuyers offer free, no-obligation estimates, so it’s worth requesting an offer to see how much an iBuyer would be willing to pay for your home.

✍️ Editor’s note: If you aren’t satisfied with the offer an iBuyer gives you, connect with a real estate agent and tell them you’d like to sell your home quickly. Agents can adjust their approach to help you find a buyer quickly while still getting a fair price for your home.

Most agents can provide you with a free comparative market analysis (CMA) that will show you what your home is worth by comparing it to similar homes on the market.

iBuyer vs. realtor fees

Most iBuyers charge a 5% service fee, on top of the typical closing costs home sellers pay, which can range from 1–3%. iBuyers also deduct repair costs (1–2%) from your initial offer. By comparison, real estate agents usually charge 6% to sell a home, and you might have to pay for repairs out of your own pocket.


iBuyer
Realtor
Fee
5% service fee*
6% listing commission
Closing costs
1–3%
1–3%
Repair costs
1–2%
1–2%
Total
7–10%
8–11%

*Opendoor and Offerpad have a fixed 5% fee, but RedfinNow charges a variable fee that ranges from 5–13%.

However, iBuyers are unlikely to pay as much for your home as you'd get on the open market, so a realtor's listing fees could easily be offset by a higher sale price.

Home sellers who use a discount real estate service like Clever can hire a full-service real estate agent without paying full price — saving money and still getting the best price on the open market.

👋 Get connected with top agents near you today!

How do iBuyers price homes?

iBuyers rely on several inputs when they are pricing a home, including:

  • Local comparisons
  • Proprietary algorithm with advanced data sets
  • Input from local pricing experts
  • Inputs from you on features, upgrades, and condition

While iBuyers are able to use all of this information to provide you with an instant offer, they do a video inspection and sometimes send an inspector to your house who can assess repair costs before you’re presented with a final offer.

Repair costs could range from 1–2% and may make your final offer lower than the initial estimate.

How are iBuyers different from cash buyers?

Unlike iBuyers, cash buyers seek distressed properties that they can force appreciation on through significant repairs and upgrades This is also known as "house flipping."

Cash buyers typically use a comparative market analysis and their own local knowledge to establish a price for houses.

iBuyers, on the other hand, pay close to fair market value for homes but charge service fees to help them make a profit.

How does selling to an iBuyer work?

Regardless of which iBuyer you sell to, you'll go through a similar series of steps:

  • Complete the iBuyer's online submission form.
  • If your home is eligible, you'll receive a preliminary offer within two days.
  • The iBuyer will conduct a virtual and/or in-person inspection of your home before making a final offer.
  • If you accept the final offer, you'll sign a purchase agreement online and schedule a closing date.
  • The iBuyer will complete the necessary paperwork for you to sign on closing day.
  • You'll receive your funds within several days of closing, or sometimes even the same day.

How long does selling to an iBuyer take?

iBuyers typically give sellers an estimate on their home's value within 24–48 hours of receiving a request. After that, the sale can be closed in less than two weeks if you’re in a hurry — but the closing date is flexible.

That’s very fast compared to the typical selling time of 32 days.[4]

However, the speed the iBuyers provide comes at a price: services fees and a lower sale price than you’d get on the open market.

It’s hard for realtors to match this speed, although some can in a hot market.

If you're working with a realtor and you absolutely need to sell quickly, they can adjust their approach to expedite the process. To do so, they may have to lower the original asking price.

Selling a house? We can help!

Clever can connect you with top local listing agents who work for pre-negotiated low rates: just $3,000 for any home under $350,000, or 1% for more expensive homes.

You can interview your Clever agent matches, get free pricing estimates, and compare marketing plans — all with no strings attached.

Ready to learn more? Submit the form below for a free phone consultation with one of our Licensed Concierges.

FAQs about iBuyers

What does iBuyer mean?

The “i” in iBuyer stand for “instant” since iBuyers are companies that make instant cash offers on houses. iBuyers have strict purchase criteria and only operate in select cities, so they're not an option for most home sellers. Learn about the pros and cons of selling to an iBuyer.

What is an iBuyer in real estate?

An iBuyer is a large, venture-backed company that buys houses at or below fair market value to resell them on the open market. iBuyers use a combination of proprietary algorithms, local comps, and pricing expertise to generate offers for potential sellers. Find out how an iBuyer would price your home!

How does iBuying work?

  1. iBuyers have online portals where home sellers can request an offer by filling out a simple form.
  2. After the iBuyer has received the customer’s information, they’ll evaluate the details of the property and offer an estimate.
  3. If the customer still wants to proceed, the iBuyer sends an inspector to the home to note any necessary repairs that will be deducted from the offer price.
  4. The iBuyer then presents the seller with a final offer which they can either accept or reject.
  5. If the seller accepts, they can pick a closing date.
  6. The iBuyer will resell the home after they take possession and list it on their website.

ARTICLE SOURCES
[1]

Mike DelPrete. "iBuyer Market Share Set to Drop by Half in 2020." Accessed February 12, 2021. Updated November 21, 2020.

[3]

Opendoor. "Opendoor Investor Presentation." Accessed February 12, 2021.

[4]

Realtor.com. "Real Estate Data — Inventory." Updated December 2, 2021.

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