An iBuyer or instant buyer is a type of online real estate company or program. They allow users to sell properties almost instantly with a cash offer. The price of the property is determined by the company’s algorithms and technology. As such, a seller cannot really negotiate with an iBuyer. The entire sale process is carried out online and the buyer rarely if ever physically views the property.
iBuying saves the seller plenty of time as they do not need to hire a realtor, list the house, find a buyer, and go through the traditional property selling hoops. Instead of going through the average sale time of 60 days on the market, with an iBuyer a seller can receive funds in a matter of days at the most. In exchange for the quick service, iBuyers charge sellers a rather large fee of 5 to 9%.
If the property in question needs renovations, the cost of the repairs will be deducted from the cash offer. Unlike property flippers, most iBuyers tend to avoid homes that require extensive repairs. After the iBuyer purchases the property, it later resells it at a slightly higher margin. This typically is in the range of 1% but can vary at times. Most iBuyers focus on high volumes rather than high margins unlike property flippers.
Various iBuyers can offer very different pricing for the same property as they use different algorithms. Typically a traditional home sale process is more profitable for the property seller. iBuyers can still be very beneficial to certain sellers that need to close a sale quickly.