Words with the letter “i” in front of them are typically associated with technology. iBuying is the marriage of technology and real estate and comes in handy if you’re looking for a potentially more direct way of buying or selling a home. Let’s learn more.
What is an iBuyer in real estate
An iBuyer is a technology company in the business of buying and selling real estate. It typically markets itself as an easy way to sell (and sometimes purchase) property by cutting out the middleperson — real estate agents and banks — making it a simplified and direct process. Note that iBuyers don’t operate in all states.
The iBuying model typically follows this sequence: Sellers list their homes for sale on the iBuyer’s platform. The platform uses an algorithm to assess the home and provide an all-cash offer. The offer is accepted and the iBuyer takes ownership of the home. Finally, the iBuyer resells the home for profit.
iBuyers are different from house flippers or real estate investors because they’re not looking to hold onto homes for long. They’re looking to buy and sell homes for profit as quickly as possible, which is why they may make offers to sellers that are typically lower than if you were to sell a home through the traditional route.
How iBuyer services work
Even though selling to an iBuyer is typically a lighter load than marketing your home for sale in other ways, there are a few key steps to be aware of:
- If selling a home to an iBuyer, you’ll typically start by researching and selecting a trusted platform.
- Next, you’ll list your home for sale by providing a few key details. Some iBuyer services will accept as little as a home address.
- The iBuyer will assess the home’s value using their algorithm and respond anywhere between 24 and 48 hours, typically with a cash up-front offer. Whether the seller can negotiate that offer, and how long the seller has to accept the offer, may depend on the platform.
- After accepting the offer the seller typically chooses their ideal closing date, which can be in as little as a few weeks depending on the iBuying platform.
- Representatives from the platform will typically come to view the home.
- After viewing the home and conducting a home inspection, the iBuyer will either solidify or adjust the offer.
- The homeowner accepts the offer, and the home sale closes on the chosen date.
Pros and cons of working with an iBuyer
There are advantages and possible disadvantages of working with an iBuyer versus selling a house through a real estate agent or more traditional real estate platform.
- iBuying companies market themselves as being a “no fuss” option. You may not have to worry about multiple open houses and showings or extensive marketing.
- Because iBuyers cut out the middleperson, the home sale is typically faster.
- It’s a relatively predictable process — for example, you can usually choose your closing date.
- iBuyers bid with cash offers. Walking away from a sale with cash up front is often desirable in a real estate deal.
- There may be lower offers and, therefore, typically less profit from home sale.
- The convenience and speed of the transaction may lead to higher service fees averaging 13–15% of the home sale, versus the 5–7% typical of working with an agent.
- iBuying hasn’t been around for too long, so more research may be involved in making sure you’re working with a trusted service and that you’re comfortable with the transaction process.
- Most iBuying platforms don’t operate in all states.
iBuyers are technology companies that were created to make buying and selling real estate fast and simple compared to the more traditional financing and exchange of real estate. If you’re in a rush to sell your home or want a low-maintenance selling or buying option, iBuying may be worth the investigation.