What is an iBuyer?

    What is an iBuyer?

    Dec 06, 2019

    Typically an iBuyer represents a group of investors who seek out homes that are for sale, are in very good condition, in "hot" areas of the country, and are offered at a price commensurate with market value. The company representing this group of investors offers to buy the home immediately for a reduced price. This is often done sight unseen. If the owner chooses to accept the offer, closing can literally be in a couple of days.

    If you learn that you are being transferred and have to move immediately, this offer can be very tempting to say the least. iBuyers boast that the process is quick and easy, but the homeowner is going to pay a price for this convenience. The purchase price from the iBuyer is more often than not below the fair market value and costs the seller hard earned equity. They also charge a full commission, plus some other fees, that can add up to as much as 13%.

    Let's look at an example of his this might work using $200K as the estimated value of the home.

    Realtor iBuyer

    $200,000 listing price $180,000 offer for home (about 10% below market value)

    $12,000 listing & selling realtors $0 (Wow! Looking good here, but wait....)


    $0 service charge $17,000 service charge (range 7-13%; average 9.5%)

    estimated $1000 in closing costs for seller estimated $950 in closing costs for seller

    The iBuyer will then put the home back on the market at or slightly above market value. The lure of selling a home without any hassle is a strong one, but if a homeowner can move forward and list the home with a realtor, the monetary advantage to the homeowner is high. Also, iBuyers often focus on hot markets where homes sell fast such as Huntsville. They want a home where there will be little if any outlay in updating, repairing, etc. and will sell quickly when put back on the market. These factors make your home very attractive to an iBuyer, but they also make it attractive to the regular buyer looking for a home. Weigh the pros and cons carefully if you find yourself in this situation.