Key takeaways
- Online homebuying companies like iBuyers can make cash offers on your home in a matter of days, or sometimes even hours.
- Typically, all that’s required to request an instant offer is inputting your street address on the company’s website.
- However, in exchange for this speed and convenience, you can expect to receive a lower offer than you would on the open market.
Many of us value speed and convenience, from takeout food to on-demand streaming. The same can be said for a lot of today’s home sellers, who are looking to move quickly and without the hassle of preparing and listing their residence in the traditional ways.
Enter iBuyers, companies that can provide an instant cash offer and a faster, smoother transaction — all almost entirely online. If you’re in the market to sell your home, here’s how to snag an instant home offer, and the pros and cons to consider.
What is an instant home offer?
An instant home offer, often known as iBuying (the “i” is for “instant”), is a cash offer from a company to purchase your home. These companies use proprietary algorithms and public data to formulate an offer price and can make offers quickly, frequently within 24 hours. However, while selling this way is fast, it’s also frugal — your instant offer will very likely be lower than the price you’d get if you sold on the open market. After all, most iBuyers are home-flippers, and they have to account for the costs of making repairs so they can earn a profit on the transaction.
“We’ve always had cash buyers and property sharks willing to contract and close quickly at a discount to make a profit,” says Bruce Ailion, an Atlanta-based attorney and Realtor with RE/MAX Town & Country. “The difference here is that iBuyers typically originate online and cater to buyers who prefer convenience. But their goal remains the same: Purchase below market value and sell for a profit.”
There are other types of companies that buy houses, too, including HomeVestors and the aptly named We Buy Houses. Most also make cash offers and can also close the transaction much faster than a traditional sale — and, like iBuyers, most will also offer substantially less than you’d be able to make otherwise.
What kind of sellers are instant offers best for?
The best candidates for these offers are sellers who are in a big rush to unload their home quickly or under financial pressure and need the cash infusion fast.
“An instant home offer is especially attractive to sellers who need to move due to a job relocation, struggle with an illness, are experiencing financial difficulty, have a fixer-upper-type property that they can’t afford to repair, or need funds and a fast sale to purchase their next home,” Ailion says. Those looking to sell their home in “as-is” condition would also be good candidates, as many cash-homebuying companies will buy homes in any condition, no matter how rough.
Beyond a fast closing, an instant cash offer for a house can be appealing because there’s no need to open up your home to strangers for showings or open houses. In fact, iBuying had a bit of a heyday during the height of the pandemic partially for this reason. These transactions also typically do not require a Realtor — or a Realtor fee.
How to get an instant cash offer for your house
If this sounds like a good route for you, you should know how the process works. Unlike the traditional process of listing your home and waiting for prospective buyers to come to you, getting an instant offer on a home simply requires requesting one. Here are four easy steps to follow.
1. Shop around
First, do your homework: Research whether the homebuying companies you’re considering are reputable by looking at online reviews and Better Business Bureau ratings. If you’re looking into a large, national company, be sure to look at your local branch specifically, as franchises are typically independently owned.
2. Request an instant home offer
Once you’ve narrowed down your list, you can request offers from a few companies to see who can make you the best preliminary offer. Look closely at whether there are any associated service fees, and if so, how much they are. Requesting an offer should not cost you any money, and you’re not under any obligation to accept.
To ask for an offer, you’ll typically either enter some basic information about your home online or provide the info over the phone. You’ll get a preliminary offer quickly, usually within 24 or 48 hours. In some cases, you may be asked to upload photos or videos of the home as well.
3. Receive and review your final offer
Most companies will want to send a representative to evaluate the home in person next, and their preliminary offer may change after their evaluation. If you like the final offer, be sure to review all the paperwork carefully so you understand it fully. A real estate attorney can be a valuable resource here — but don’t spend too much time contemplating, because these offers typically expire fairly quickly.
Pay special attention to what fees you might have to pay. Many cash-homebuying companies cover all fees for you, including closing costs, but iBuyers can charge steep service fees that may cost about the same or even more than what you’d pay in Realtor fees in a traditional sale.
One more thing to be aware of: Cash-homebuyers typically do not negotiate on price. You don’t have to accept their offer, but you likely can’t haggle to see if you can get more.
4. Pick a date to close the deal
If you accept the offer, you’ll usually have the option of choosing a closing date that’s convenient for you. Because the companies are paying in full, with no need for financing or lenders, some can close in as few as seven days. Many are also willing to be flexible for a few months if you need more time to move out.
Instant cash offer pros and cons
There are advantages to accepting an instant cash offer for your house, but the major downside — earning a smaller profit — can considerably outweigh the benefits. “I requested an instant home offer on my house and was offered up to $150,000 below its market value,” says Charles Bezak, an agent with Realty One Group in Las Vegas.
Pros
- Fast process
- Choose your own closing date
- No financing, so low to no risk of deal falling through
- No need to prepare the property for sale or let buyers tour it
- Typically no appraisal requirement
Cons
- Lower sale price
- Potentially high service fees
- Not all areas are served by iBuyers
Should you accept an instant home offer?
Depending on your circumstances, selling to a cash-homebuyer can be worthwhile — especially if you need to move quickly or if getting that cash ASAP is top priority. However, if you have more time, you will almost certainly make more money in a traditional sale with an experienced local real estate agent by your side. “I would check with some local iBuyers just to see what they might offer, but I still see them being very low,” Bezak says.
Bottom line
Since your home is likely your largest, most valuable asset — and a huge part of your net worth — it’s well worth at least exploring listing it with a real estate agent. But an iBuyer is definitely something to consider if you’re particularly pressed for time or cash. “A traditional sale is well worth the effort,” Ailion says. “But there are some circumstances where a home is uniquely disadvantaged or difficult to value, in which case selling to an iBuyer may be preferred.”
FAQs
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For the most part, yes. Most companies that make cash offers are legitimate real estate investment firms that buy homes, fix them up and resell them for a profit. However, every company is different, so do your research and check online reviews to make sure the company you’re dealing with is reputable. And keep in mind that even the most stellar cash-homebuyer is likely to offer you less than you would make on the open market with a traditional, agent-assisted sale.
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Home sellers can get instant offers from iBuyers, such as Offerpad and Opendoor, or a multitude of other homebuying companies, including HomeVestor, We Buy Houses and many smaller, local companies. These outfits make cash offers and can close a sale much more quickly than a traditional sale, but they also offer less money than you could make in a traditional sale.
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Most companies that make instant offers on homes work directly with the homeowner, without involvement from a real estate agent, which means no Realtor commissions to pay. However, some iBuyers charge service fees that add up to the equivalent of a traditional agent commission and require that sellers cover closing costs as well. Be sure to read your contract very carefully to understand which fees you’ll be on the hook for, if any.
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