Many of us value speed and convenience, from fast takeout to on-demand streaming. The same can be said for many of today’s home sellers, who are looking to move quickly and without the hassle of listing a home the traditional way.
Enter iBuyers, who can provide a seller an instant home offer in cash 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 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, but one that’s lower than the price you’d get out on the market. This is because iBuyers have to account for not only their operations, but also the costs of making necessary repairs to your home, and then either holding or reselling the property.
“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.”
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.
Beyond a fast closing, instant home offers can be appealing for several reasons, including the fact that there’s no need for showings or open houses.
“This is a pandemic-friendly option for selling your home without ever having to put it on the market,” says Brandon Brittingham, CEO of The Maryland & Delaware Group of Long & Foster Real Estate in Salisbury, Maryland.
iBuyers aren’t available in every housing market, however — the business simply doesn’t work (yet) in some areas. The iBuyers with the largest footprints include:
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 home offer 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. Note that you can’t negotiate the price, so if you’re unsatisfied with what you’re offered, you can try another iBuyer, or you might have to look into selling your home another way.
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.
“If this happens, 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 offer 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 (say, when you’re planning to move). 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 many advantages to accepting an instant home offer, but also a few downsides that can considerably outweigh the benefits.
- 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
- Possibility for a lower offer than what you’d get selling traditionally
- Fees ranging from 5 percent to 10 percent of offer price
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,” according to Charles Bezak, a real estate agent with Realty One Group in Las Vegas.
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 — a concern now in the pandemic, and an inconvenience in regular circumstances.
“You usually aren’t required to have a formal appraisal with an iBuying company,” adds Brittingham. “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 is taking off today 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.”
Should you get 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.
The reality, though, is that sellers today have the upper hand due to high demand and low inventory, so you should try to take advantage of that and work with a real estate agent to get the most money for your home.
“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.”