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Many of us value speed and convenience, from takeout food to on-demand streaming. The same can be said for a lot of today’s home sellers, who are looking to move quickly and without the hassle of listing their residence in the traditional ways.
Enter iBuyers, companies that can provide a seller with an instant cash offer for a house and a faster, smoother transaction — all without setting foot inside the property.
If you’re in the market to sell your home, here’s how to snag an instant home offer, and the pros and cons to consider.
What is an iBuyer instant home offer?
An instant home offer, known as iBuying (the “i” is for “instant”), is a cash offer from a company to purchase your home quickly, often made within one day. These iBuyers use proprietary algorithms and property data to formulate an offer price. While fast, it’s frugal — probably lower than the price you’d get out on the open market. After all, iBuyers have to account for not only their overhead and operations, but also the costs of making necessary repairs to your home, which they usually plan to resell in a short amount of time.
“We’ve always had cash buyers and property sharks willing to contract and close quickly at a discount to make a profit,” explains Bruce Ailion, an Atlanta-based attorney and associate broker and Realtor with RE/MAX Town & Country. “The difference here is that iBuyers typically originate online and cater to buyers who prefer convenience, but their goal remains the same: Purchase below market value and sell for a profit.”
Which home sellers should use iBuyers?
The best candidates for selling to an iBuyer are sellers who are under a time constraint or financial pressure to unload their home quickly.
“An instant home offer is especially attractive to sellers who need to move due to a job relocation, struggle with an illness, are experiencing financial difficulty, have a fixer upper-type property that they can’t afford to repair, or need funds and a fast sale to purchase their next home,” Ailion says. Those planning to sell their home “as-is” would also be good candidates.
Beyond a fast closing, an instant cash offer for a house can be appealing for several reasons, including the fact that there’s no need for showings or open houses. In fact, iBuying had a bit of a heyday during the pandemic partially for this reason.
Things are shifting now, though, as inflation and the rise in interest rates have caused home sales to slow down and offers to drop. “There have been some changes in the market. Some participants, like Zillow and Home Partners, have suspended buying, so there is less competition from the large buyers,” as Aillion explains. “Most have lost money on the iBuyer concept and are offering less today than a year ago.”
Many “iBuyers have either halted completely or significantly reduced their buying,” agrees Charles Bezak, a real estate agent with Realty One Group in Las Vegas. “Offers are much lower than they were before as they are projecting lower future prices and increasing rates.”
The latest casualty is RedfinNow, the iBuying arm of real estate brokerage Redfin Corp. After a reduction in April, it shuttered completely on Nov. 9, 2022. The remaining iBuyers with the largest footprints include:
If you still think an instant offer on your home sounds like the best route, you should know how the process works. Bear in mind that iBuyers aren’t available in every housing market — the business simply doesn’t work (yet) in some areas. There are also local firms, commonly known as “We Buy Houses” companies, that make cash offers. But, like iBuyers, these companies won’t pay top dollar for homes.
How to get an instant home offer
Unlike the traditional process of listing your home and waiting for prospective buyers to come to you, getting an instant offer on a home involves requesting one from an iBuyer directly. Here’s how.
1. Shop around
Find out if that iBuyer you’re considering is reputable by looking at customer reviews and its Better Business Bureau rating. Once you’ve narrowed down your list, you can request offers from each iBuyer and compare their offers and associated service fees. Unlike applying for a mortgage, requesting an offer shouldn’t cost you any money.
2. Request an instant home offer
You’ll be prompted to enter information about your home through the iBuyer’s website or app, but be prepared to answer additional questions the company might have, too, such as the age of your roof, when your furnace was last replaced or information regarding a recent renovation.
3. Receive and review your instant home offer
You can expect to receive your instant home offer in as little as 24 hours after you submit your request, but sometimes it can take longer.
If you like the offer, be sure to review it carefully so you understand it fully and what fees you’ll have to pay. A real estate attorney can be a valuable resource as you scrutinize the offer.
Also, be aware that you might not receive an offer at all. That could be because the iBuyer isn’t buying in your area, or your home might not meet certain parameters to generate an offer.
Important note: iBuyers don’t negotiate or counter-offer. If you’re unsatisfied with their price, “you can always request an instant offer from a different iBuyer, find a private investor or home flipper who may give you a highly discounted price to purchase your home, or opt to list and sell your home the traditional way,” Ailion says.
4. Prepare for a home inspection
If you get an instant cash offer for your house and decide to accept it, the iBuyer will order a home inspection to determine if your home has any major issues and what repairs might be needed. You might have the option of making those repairs yourself, or subtracting the estimated repair expenses from the final sale price.
5. Pick a closing date
Once the inspection is complete and the offer has been finalized, you’ll have the option of choosing a closing date that’s convenient for you. Some iBuyers allow you to close in as few as seven days, and many are flexible up to 90 days.
Instant home offer pros and cons
There are some advantages to accepting an instant home offer, but also a few downsides that can considerably outweigh the benefits.
While you don’t have to go through the bother of listing, marketing and showing your home (or paying a Realtor to do that for you), you’ll likely be leaving money on the table with an instant home offer.
“I requested an instant home offer on my house and was offered up to $150,000 below its market value,” Bezak says.
There are other aspects of iBuying, however, that could make a lower offer worth it to you. For example, you don’t have to worry about the deal falling through, which can happen in a normal transaction if a buyer can’t get financing or backs out. You’ll also sidestep the need for prospective buyers to tour your home — an inconvenience in regular circumstances, and a continued health concern for those who remain vulnerable to COVID-19.
“You usually aren’t required to have a formal appraisal with an iBuying company,” adds Brandon Brittingham, CEO of The Maryland & Delaware Group of Long & Foster Real Estate in Salisbury, Maryland. “This is a big deal, as appraisals can add weeks to the process and affect the final price.”
On the other hand, you’ll have to pay the iBuyer a service fee between 5 percent to 10 percent of the offer price, in addition to settling for less money for your home.
iBuying isn’t all extreme low-ball offers, though, and if the need is there, a seller could stand to benefit, Brittingham notes.
“iBuying took off because the gap between the offer and market value is closing,” Brittingham says. “The [sellers] we see are doing it out of convenience or to get into their next house quickly, not out of desperation.”
- Accelerated closing (and you can choose your closing date)
- Low to no risk of deal falling through
- No need to prepare the property for sale (e.g., do repairs or upgrades)
- No in-person open houses or showings
- No appraisal requirement
- No commission paid to a Realtor, which can cost 5 percent to 6 percent of purchase price
- Usually not getting top dollar for home (compared to listing and selling traditionally)
- Fees ranging from 5 percent to 10 percent of offer price
- Risk of no offer at all, especially if the iBuyer market continues to thin
Should you take an instant home offer?
Depending on your circumstances, selling your home to an iBuyer can be worthwhile if you are forced to sell and move quickly, and willing to accept less money than you’d likely get on the open market. Bezak advises, “I would check with some local iBuyers just to see what they might offer, but I still see them being very low.”
That said, this unprecedentedly hot real estate market is finally cooling a bit in some areas. For example, “the power dynamic has shifted within the last month or so in my [Las Vegas] market… we have median home prices in Las Vegas now at roughly $450,000, down from a high of around $482,000, which is a 7% decrease in just 2-3 months — and still falling,” Bezak says. As a result, sellers don’t have the same upper hand they did before, which could make an instant cash offer for a house particularly appealing.
Final word on instant home offers
Since your home is likely your largest, most valuable asset — and a huge part of your net worth — it’s well worth at least exploring listing it with a real estate agent. Generally, you should only consider an iBuyer if you’re particularly pressed for time or cash.
“With the market as hot as it is in most areas, a traditional sale is well worth the effort,” Ailion says. “But there are some circumstances where a home is uniquely disadvantaged or difficult to value, in which case selling to an iBuyer may be preferred.”