iBuyers have so far mostly focused their efforts in states and cities that have experienced the largest population growth in recent years. Those states are Texas, Arizona, Florida, Georgia and North Carolina.

About 75% of all iBuyer purchases have occurred in those five states since 2017, according to CoreLogic. And 76% of the purchases within those states were concentrated in 10 metro areas, including:

Are there any alternatives to iBuyers?

HomeLight’s Simple Sale platform is another option for selling your home quickly and with fewer hassles. With Simple Sale, you can receive a competitive all-cash offer to buy your home, on your timeline.

Simple Sale has a network of cash buyers on its platform, and partner investors have a wide range of investment strategies, including fix-and-flip and buy-and-hold. This enables Simple Sale to provide cash offers for a wide array of properties, even those that need some or a lot of work.

You can skip staging and repairs, and sell without agent commissions or upfront selling costs. Answer a few basic questions about your home’s condition, how much work it needs, and your selling timeline to get started with Simple Sale today.

Service fee: Some transaction fees apply. No hidden fees or agent commission costs, and requesting a no-obligation offer is free.

Locations: Available across most of the nation — input your address to see if we could provide a cash offer for your property

Closing window: After we’ve collected key details about your home, we’ll provide a cash offer in as few as 48 hours, with the ability to close in as little as 10 days. You have the flexibility to pick a move day that works for your schedule, typically within 30 days of closing.

Below you can hear about how Baohan Wu, a seller who used Simple Sale to sell his high-rise apartment, closed within three and a half weeks and what he thought of the process overall.

How much are iBuyer costs and fees?

iBuyer costs and fees vary depending on the company and specific program, but the largest iBuyers are almost identical in this regard to remain competitive with one another.

Offerpad and Opendoor, for instance, both charge a service fee of 5% of the home’s sale price. This a bit under the average 5.8% commission real estate agents receive in traditional home sales, but you may accept a lower offer with an iBuyer versus open market sale.

In addition to the service fee are closing costs. Offerpad and Opendoor estimate these to be between 1% and 2% of the sale price, depending on the state and municipality. Lumped into this sum are things such as escrow fees, title fees, and transfer taxes, all of which are standard for any real estate transaction.

The last fees included are those for any home repairs deemed necessary by the iBuyer. After you’ve agreed to an iBuyer’s offer to buy your home, the company inspects the home for anything they need to repair or replace in order to sell it. If you accept their deal, then they deduct the estimated cost of those repairs from the final offer price.

Here’s a basic example of how these fees would look in the sale of a $250,000 home:

Working with an iBuyer

Selling to iBuyer

1. To sell your home quickly to an iBuyer, you first need to make sure you qualify to do so.
2. To check this, go to each iBuyer’s website and explore what cities they operate in. To request an offer, you’ll have to provide basic information such as the home’s address, age, square footage, condition, features and upgrades.
3. If you meet the iBuyer’s purchasing criteria, then an offer will be sent to you in as little as 24-48 hours. It will include a breakdown of fees and costs associated with the sale. An iBuyer representative will likely call or email you to discuss the offer and answer any questions.
4. You then have some time to think about what you want to do. The offer is typically valid for at least a few days, and can be quickly updated even after the expiration.
5. If you accept, then an assessment will be scheduled so the iBuyer can evaluate the condition of the home.
6. If repairs are needed, the company will provide an estimate on what it will cost and deduct that amount from the net proceeds you receive in the sale.
7. You then choose a closing date and when you want to move out. After you close, you’ll get paid in a matter of days.

Buying from iBuyer

Buying a house from an iBuyer is not much different than buying a home the traditional way.

1. Before even starting to shop, take the time to figure out what you can afford and get preapproved for a home loan.
2. You can then browse iBuyer’s inventories directly on their websites. The properties are commonly available for private viewing at any time. All you have to do is download the company’s app or go on their website to reserve a time slot and then use the app or a provided code to access the home.
3. The homes are usually ready to move into since the companies will do light repairs before listing them, but it’s a good idea to have an independent inspector look at any home you’re seriously considering.
4. If the inspector finds anything noteworthy, then this can be a bargaining chip during final sale negotiations.
5. All of this can be done on your own, but you can always choose to hire your own real estate agent or ask to work with an agent who is partnered with the iBuyer you’re wanting to purchase from.

Pros and cons of selling to an iBuyer

Pros:

The most notable benefits of selling to an iBuyer are speed and convenience. You don’t need to work with a real estate agent if you don’t want to. You don’t need to list your house on the market. You don’t even need to stage the home or make it available for potential buyers to walk through. You can simply sell it as is and close the deal in as little as two weeks.

The process is also more certain and predictable. If an iBuyer wants to purchase your home, they’ll offer you cash in as little as a few days and you know the deal won’t fall through due to a financing or appraisal contingency. And since you get to set the closing date, you know exactly when everything will happen.

Cons:

The most significant downside to selling your home to an iBuyer is you eliminate the possibility of a bidding war.

You can try to negotiate with an iBuyer, but their business model relies on purchasing homes for as close to what their algorithms tell them the homes are worth.

They won’t necessarily lowball you with their offer, but they likely won’t pay more than what they believe they can get in a quick resale.

Another potential negative to selling to an iBuyer is they have set standards when it comes to a home’s condition and the repairs they believe it needs in order to execute a smooth listing. If you don’t want to pay for those repairs, that could be a sticking point.

iBuyer variations: Cash offer and home trade-in

In the past couple of years, iBuyers and other proptech companies have begun expanding their reach into what is known as “power buyer” programs. These include such services as cash-backed offers and home trade-ins.

Cash-backed offer

With a cash offer program, a power buyer company typically purchases a home on behalf of a pre-qualified buyer using cash. At that point, the buyer can usually move in right away while they obtain a mortgage to repurchase the home from the power buyer.

Cash offer programs generally enable buyers to remove the financing contingency from their offer and close faster, strengthening their position in a competitive market. In fact, cash offers are 3x more likely to win and can get you 5% savings, on average, versus offers with a loan.

Companies providing cash-backed offer programs include HomeLight, Flyhomes, Opendoor, Ribbon, and Better.

Trade-in

Many people need to sell their existing home in order to have enough funds to cover the purchase of their new home. Some house buying companies offer or specialize in what are known as trade-in programs to make this a smoother process.

Generally trade-in companies will offer to buy your current home, freeing up your funds to buy a new home and removing the need for a home sale contingency.

Some companies that offer home trade-in programs include HomeLight, Knock, Opendoor and Orchard.

iBuying vs. house flipping

The modern-day practice of house flipping has been a popular means of making money among savvy investors for decades. Well-known real estate investing operations like We Buy Houses and We Buy Ugly Houses have existed since the late ’80s to mid-’90s.

House flipping is predicated on the ability to buy low (typically, at around 70% of the home’s estimated after-repair value) and sell high. This strategy often works best with foreclosed properties or when homes need significant repairs that investors can affordably fix and still profit from the resales.

iBuying is a different model. An iBuyer’s primary profit is a service fee charged to the people they buy from. For that fee, iBuyers provide sellers speed, convenience, and certainty.

They also make some amount of money by ideally selling houses for more than they purchased them for, but the margins are much tighter because they are reselling homes faster and while making fewer to no repairs.

iBuyer vs. working with a real estate agent

How does working with an iBuyer compare to listing your home with a real estate agent? Let’s take a look at each option side by side.