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What Is an iBuyer?

Selling to an iBuyer can be faster than a traditional home sale, and buying from one often comes with a unique set of advantages.

Barbara Marquand
Bella Angelos
Chris Jennings
Updated
An iBuyer, or "instant buyer," is a real estate company that uses algorithms and technology to buy and resell homes quickly. When selling a home to an iBuyer, you may get a cash offer in as little as 24 hours.
You can also buy a home from an iBuyer. The company's website or app lets home buyers view available properties, schedule tours and request information. Closing may occur more quickly with an iBuyer because you don't have to accommodate a traditional seller's timeline.
» MORE: How do I sell my house fast?

Working with an iBuyer

The specifics vary by company, but iBuyers tout their ability to make home buying or selling quick and convenient. Here's what you can generally expect.
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Selling a home to an iBuyer

Once you’ve chosen a platform to work with, you can begin the selling process. The process is generally straightforward and follows a series of steps from initial offer to closing:
  1. Apply. Submit basic information about the property using the company’s website or app. You may also be asked to provide photos or other evidence of the state of the home.
  2. Wait for an offer. The iBuyer estimates your home's value and, if it wants to proceed, sends you an offer, along with information about any service charges and closing costs. By comparing iBuyer listings to comparable homes in the area listed on other marketplaces (such as Zillow, Realtor.com or Redfin), you can estimate whether their pricing is competitive in your market. If you’re working with a real estate agent, they may also be able to offer guidance on fair market values.
  3. Schedule an evaluation. If you like the bid and terms, the company will schedule a more detailed evaluation of the home and then provide a final offer. If the company notes any necessary repairs, they may lower their offer in order to cover these costs.
  4. Close. If you decide to move forward with them, you may have the option to choose your closing date, allowing for a bit more flexibility than a traditional transaction because you’re not dependent on an individual buyer. You’ll then plan your move based on the terms of the contract — for example, Offerpad requires sellers to move out within three days of closing.
🤓 Nerdy Tip
You don’t have to agree to the iBuyer’s offer; in fact, you can typically back out at any point prior to closing. This flexibility allows you to evaluate whether the offer aligns with your financial goals and timeline before making a final commitment.

Buying a home from an iBuyer

If you’ve chosen to buy a home from an iBuyer, the process is typically fast and streamlined. Buyers can often move from browsing listings to closing with few negotiations. Here's what the process generally looks like:
  1. Budget. Before shopping, first figure out how much house you can afford. Setting a realistic budget early can save time and help you focus on properties within your price range. 
  2. Shop for a mortgage. Shop mortgage rates among at least a few lenders and get preapproved for a home loan. A mortgage preapproval is a letter from a lender showing how much loan you’re likely to qualify for. Some iBuyers have their own lending divisions, but it's important to shop around to get the best deal.
  3. Browse. You can browse homes for sale on iBuyer websites, schedule times to visit properties and notify the companies if you're interested in a particular listing. Homes owned by iBuyers are typically ready for occupancy because the previous owners have moved out and the companies cover repairs before listing them. But it's still a good idea to get an independent home inspection.
  4. Make an offer. Generally you’ll have the option to make an offer through your own real estate agent or by contacting the company directly, and you can negotiate with the iBuyer on price.
  5. Close. Once you’ve signed the contract and secured financing, you can choose your move-in date. Because the seller is a company and not a person currently living in the home, you may be less likely to deal with delays on their end. For example, the contract won’t be contingent on the timeline of the seller’s next home purchase.
» MORE: How to get preapproved for a mortgage

Costs of selling with an iBuyer

When selling to an iBuyer, there are two costs to consider: service fees and the opportunity cost, or the difference between the iBuyer's offer and what you could get by selling on the open market.

Service fees

The service fees for iBuyers are often 5% of the sale price. The fees don't include typical closing costs that the seller pays for a traditional real estate transaction, such as escrow fees and title insurance. iBuyers estimate those closing costs at 1% to 3% of the sale price. The service fees also don't include the costs of any required repairs, which are deducted from your net proceeds.
If you're selling a home the traditional way with a listing agent, you'll typically pay a 5% to 6% real estate agent commission (though this is negotiable). You’ll also pay closing costs.
You can still use the services of a listing agent when selling your home to an iBuyer. In that case, you'll need to pay your agent's commission as well as the iBuyer's service fee.
» MORE: How much does it cost to sell a house?

Opportunity cost

Sellers can typically expect to receive lower offers from iBuyers than what they’d get on the open market.
The flip side is that this potentially below-market offer is coming in the form of cash, which some sellers value over higher offers that are financed with a mortgage.
» MORE: Are cash offers better for sellers?

Is an iBuyer worth the trade-offs?

The answer depends on your needs. In general, iBuyers are geared to people who value speed, convenience and certainty in the selling process. While every seller’s situation is different, iBuyers may be a good fit for people who want to:
  • Sell their homes quickly.
  • Receive a cash offer.
  • Avoid the uncertainty of a traditional sale.
  • Skip home showings and open houses.
  • Avoid the hassle of negotiating with buyers. 
  • Choose a flexible closing timeline.
  • Move on a tight schedule.
  • Simplify the sale of an inherited property.
If any of these sound like you, then it may be worth exploring offers from iBuyers.
Meanwhile, the traditional route may be a better option for homeowners focused on maximizing their sale price. Selling on the open market exposes a property to more buyers, which can increase competition and potentially lead to higher offers, though it often takes more time and preparation.
Ultimately, the best choice depends on your priorities.

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