iBuyers are investors who use technology to make a fast offer on your home, sight unseen, based on a proprietary valuation model. iBuyers, such as OfferPad, Opendoor, and Zillow Instant Offers, provide an alternate sales model for people who want to sell their home fast, sometimes in as little as three days.
How it works
iBuyers operate in select major markets. Sellers request a home offer, and then these investors use public information, seller-supplied information, and their own data algorithms to come up with a purchase price. If a seller accepts, the iBuyer finalizes the purchase, maybe makes improvements, and re-lists the property.
For sellers, the advantage is a quick, assured sale without the hassle of showings and negotiations. OfferPad, for example, claims an average closing period of just 22 days. Sellers may not get as much money as if they sold their home on the open market, but they do get their money faster.
Convenience and cost
When selling to an iBuyer, home owners can expect to lose some value in exchange for fast liquidity. While reports are mixed, the cost of such sales can account for 7 to 10 percent, or more, of your home’s fair market value. That compares to the 5 or 6 percent commission taken by a traditional agent.
As reported by Inman, a real estate news source, a representative for Zillow’s Instant Offer service says that 90 percent of sellers who tried their platform decided against the offer and went with a traditional agent instead. Zillow is partnering with select real estate offices to share such leads.
Other iBuyer-realtor partnerships may be coming. Home owners may choose to shorten listing periods with traditional agents and then opt to sell to an iBuyer if the standard process doesn’t yield a fast sale. Others may opt for the immediate, lower-stress option iBuyers provide.