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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 preparing and 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 instant home offer?
An instant home offer, often 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 public data to formulate an offer price. While fast, it’s frugal — your offer will probably be lower than the price you’d get 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,” says Bruce Ailion, an Atlanta-based attorney 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.”
There are other types of companies that buy houses, too, including HomeVestors, HomeGo and the aptly named We Buy Houses. Most also make cash offers and can also close the transaction much faster than a traditional sale — and, like iBuyers, most will also offer less than you’d be able to make otherwise.
Which home sellers should consider an instant offer?
The best candidates for instant-offer deals 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 looking 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,” says Charles Bezak, an 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.”
One big recent casualty was RedfinNow, the iBuying arm of real estate brokerage Redfin — it shuttered in November 2022.
How to get an instant home offer
If an instant offer on your home sounds like a good route for you, you should know how the process works. Bear in mind that iBuyers aren’t available in every housing market — the remaining iBuyers with the largest footprints include Offerpad and Opendoor. But even if your hometown is not covered by the major players, chances are a smaller local company is buying houses in your area.
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 the 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 and compare their offers and associated service fees. Requesting an offer should not 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 any recent renovations.
3. Receive and review your instant home offer
With most companies, you will 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 here.
Important note: It’s possible that a particular company doesn’t operate in your area, or that your home doesn’t meet certain parameters the company has set. In these cases, you will not receive an offer. In addition, be aware that iBuyers don’t negotiate or accept counter-offers. 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 typically 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 usually 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. Case in point: “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. 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. This can range between 5 and 10 percent of the sale price, which is about the same or higher than what you’d pay in Realtor fees in a traditional sale.
- Lower sale price
- Fees ranging from 5 to 10 percent of sale price
- Risk of no offer at all, especially as 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 — especially if you need to sell quickly, and getting that cash ASAP is top priority. However, if you have more time, you will almost certainly make more money in a traditional sale with an experienced local real estate agent by your side. “I would check with some local iBuyers just to see what they might offer, but I still see them being very low,” Bezak says.
However, the hot real estate market is finally cooling a bit in many areas. For example, “the power dynamic has shifted within the last month or so in my [Las Vegas] market,” 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. But an iBuyer is definitely something to consider if you’re particularly pressed for time or cash. “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.”
Yes. Selling your home for cash is perfectly legal and not uncommon. However, most companies that make cash offers are likely to offer you less than you would make on the open market with a traditional, agent-assisted sale. And every company is different, so do your research and check online reviews to make sure the company you’re dealing with is reputable.
Home sellers can get instant offers from iBuyers, such as Offerpad and Opendoor, or a multitude of other homebuying companies, including HomeVestor and We Buy Houses. Some of these companies operate largely online, and some will have an in-person aspect to them. Most make cash offers and can close a sale much more quickly than a typical, agent-assisted process, but most also offer less money than you could make on the open market.
Most companies that make instant offers on homes work directly with the homeowner, without involvement from a real estate agent. If that’s the case, then no, you do not pay Realtor fees. That doesn’t necessarily mean you save that money, though — some companies charge service fees that add up to the equivalent of a traditional agent commission. Sellers are responsible for paying closing costs with most instant offers, including the iBuyers Opendoor and Offerpad.