What Is an iBuyer? A Real Estate Guide
“What is an iBuyer?” is a question many homeowners are asking these days. An iBuyer is a well-funded real estate technology company that uses digital tools to purchase homes directly from homeowners and close quickly.
iBuyers usually offer much closer to market value than other types of investors and flippers, but the amount they pay varies. Additionally, iBuyers charge a service fee and are very selective about the types of homes they will purchase. However, the iBuyer model offers homeowners a unique alternative when selling their properties, balancing speed and convenience against the potential costs.
What does iBuyer stand for?
iBuyer stands for “instant” buyer, not internet buyer. The little “i” for “instant” describes the fast cash offers these operations can make on homes.
The term “iBuyer” appears to have originated from an internal report released by banking firm Evercore in 2017. The report discussed the “iBuyer” business model as one that was “likely to garner increased attention over the next few years.”
How do iBuyers work?
A couple in Atlanta is ready to sell their charming and recently renovated three-bed, two-bath ranch-style home. As busy working parents, stress levels are high. They’ve heard about iBuyers and wonder if utilizing one is a good option.
They enter their property details into a website form and receive a virtual all-cash offer. They share photos of the home, complete a digital walkthrough, and have the property exterior inspected.
After some email back-and-forth, they get their final iBuyer offer:
Example offer details: 85% of what a real estate agent estimated they could earn, minus a 5% service fee, a $1,500 repair credit, and 1% in closing costs*
The couple finds this offer satisfactory and can close in days without mortgage lender involvement. They skip showing the home and drop their keys in a lockbox upon move-out. Soon, the couple is moving into a newly built suburban dwelling.
While this example is hypothetical, it represents how a small but growing number of people are choosing to sell their homes through iBuyer real estate solutions.
Let’s look at the iBuyer real estate trend and common questions about how iBuyers work. We’ll also discuss HomeLight’s Simple Sale platform, an online home-selling program that provides competitive all-cash offers for homes nationwide.
