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Traditionally, selling a home has been somewhat of a lengthy process. From selecting a real estate agent to hosting showings to navigating the closing, it can take months to finalize a home sale.
But for people who don’t want to wait that long to sell their house, a new and faster alternative has emerged: iBuying. Instead of dealing with the back-and-forth of a traditional home sale, owners who work with iBuyers will receive an instant (well, almost) offer on their home, usually within 24 to 48 hours.
If you’re weighing up the pros and cons of iBuyers vs. Realtors, there are a few things to consider – including the speed of sale, costs, and more. Here’s what you should know.
Selling to an iBuyer
The “i” in iBuyer stands for two things: internet and instant. Most iBuyers are online companies that make quick cash offers on homes, fix them up, and re-sell them for a profit. Many iBuyers will have your offer ready within a day or two, and the entire sale can be completed within weeks.
Selling to an iBuyer is simple and straightforward, although the exact process will vary depending on which iBuying company you choose. Generally, you’ll get started by visiting the iBuyer’s website and providing some basic details about your property (sometimes, all the iBuyer needs is your address).
Then, based on your home’s location and local real estate market data, the iBuyer will present you with an offer. After extending this initial offer, some iBuying companies will require an in-person inspection of your home to get a better idea of its condition. If they find any issues, they may modify the original bid. Once you have the final offer, you can accept and choose your closing date, or you can decline it.
Working with an iBuyer can significantly shorten the home sale process, but it does have its downsides. Most notably, the offers from these companies are usually lower than what you’d get from a traditional listing because iBuyers are focused on generating the highest possible profit from fixing and flipping your home. And although you won’t need to pay any real estate commissions to an iBuyer, these companies charge a fee for their services (typically 6 to 8 percent of your home’s sale price).
Since 2017, four companies (Offerpad, Zillow, Opendoor and Redfin) have accounted for 95 percent of iBuyer sales. Zillow shut down its iBuying business in late 2021 and Redfin shuttered RedfinNow in November 2022, but the other two continue to dominate the field. Their activity reached a record level in 2021, according to real estate data analyst CoreLogic. Still, they’re a relatively small share of total real estate transactions, about 1 percent nationally — and they still tend to be mainly in the South and Southwest.
Selling through a real estate agent
Although you aren’t required to hire one, a real estate agent can be a tremendous asset during the sale process. A seller’s agent – also known as a listing agent – oversees many aspects of the home-selling process, including:
- Advising on how to price your property
- Marketing your listing
- Setting up viewings
- Negotiating with potential buyers and their agents
For their services, real estate agents typically receive between 5 and 6 percent of a home’s sale price in commission, which is slightly less than the average iBuyer service fee.
One of the best ways to find a real estate agent is by asking friends and family for referrals. Alternatively, you can research online to find the best agents in your area. Once you’ve identified a few candidates, speak with them individually about their experience, working style, references, and rates, and then make a decision.
Because there are more steps involved, selling through a real estate agent takes longer than selling to an iBuyer. You might get (and accept) an offer fairly quickly — in August 2022, properties typically remained on the market for 16 days, according to National Association of Realtors data — but proceedings while the home is “in contract” take longer, especially if the buyer needs a mortgage. Overall, it’s common for a traditional real estate transaction to take between two and four months (and sometimes longer) from listing to closing.
On the plus side, however, a good agent will provide invaluable insight into the market and selling process — which can help you sell your home for a higher price.
Comparing Realtors and iBuyers: pros and cons
When it comes to iBuyers vs real estate agents, the pros and cons are relatively straightforward. Here’s how these two home-selling options compare.
From a seller’s perspective, speed is the most compelling reason to work with an iBuyer over a real estate agent. iBuying eliminates many parts of the traditional home sale process, including finding an agent, pricing your home, running open houses, and negotiating with buyers. With an iBuyer, the sale can be completed in weeks, whereas a traditional sale may take months.
There are costs associated with both iBuyers and real estate agents, but iBuyers’ fees tend to be slightly higher. The exact percentages vary, but on average, iBuyers’ service fees are between 6 and 8 percent of your home’s sale price, while real estate commissions are typically around 5 to 6 percent. Also, offers from iBuyers are generally lower than what you’d get from a traditional sale, meaning that you’ll probably net less money from selling to an iBuyer.
At the same time, though, homes sold to iBuyers aren’t shown to the public, which means that you’ll save money on typical presale prep, such as cleaning, painting and staging. And iBuyers generally buy homes as-is, so they won’t demand costly repairs or replacements, as human buyers might.
Selling to an iBuyer is simple: within a couple of days, you’ll receive a no-commitment cash offer that you can either accept or decline (and that’s it: iBuyers don’t do negotiations). In contrast, selling through a real estate agent gives you more flexibility because it allows you to work one-on-one with a real estate professional of your choice and entertain offers from multiple buyers. Then, after you’ve received the offers, you can negotiate with the buyers to find a final price that works for both of you.
Bottom line: iBuyers vs Realtors
When comparing iBuyers vs Realtors, there’s no clear-cut winner. The right choice will depend on how fast you want to sell your home, how much money you’re hoping to get from the sale, and how much work effort you want to put into the whole process.
Still on the fence? You can pursue them both, up to a point. In many cases, it’s free to request an offer from an iBuyer, and once you have it, there’s no obligation to accept. At the same time, you can find a local real estate agent and ask for a free comparative market analysis (CMA) to get an idea of how much your home is worth. Just don’t sign any sort of exclusive-right-to-sell contract with the agent if you are going to seriously market your home to iBuyers — you don’t want to pay commissions and fees to them both.