iBuyer Reviews: Rankings, Pros, Cons, and Alternatives

The rising inflation has lowered the temperature of the American real estate sector, turning what was once a hot seller’s market bitterly cold. Home prices have declined Y-O-Y for the first time in 10 years. They are expected to fall a further 5% as the year progresses.

If you want to escape the full impact of this downslide and sell your house quickly for cash, contacting an iBuyer should be at the top of your to-do list. These home buying companies can extend cash offers almost instantly and purchase homes as-is.

In this blog, we have provided iBuyer reviews for the top players in the field in 2023. So, consider all options to ensure a smooth home-selling experience.

Rankings: Best iBuyer Companies and Marketplaces in 2023

What is an iBuyer?

 

Reviews: iBuyer Companies and Marketplaces Reviews

iBuyers have rigid criteria that govern their home-buying process. Here is a list of ibuyer companies in 2023 and their reviews to help you make an informed decision.

💡 FACT: Home sellers on Houzeo have received offers from a variety of cash buyers, including iBuyers like Offerpad and Opendoor.

1. Houzeo.com

2. Opendoor

3. Offerpad

4. RedfinNow

5. Zillow Offers

Home Trade-in Services

Sometimes, a mortgage lender may not approve your home loan, or you may need hard cash before buying your next house. In such cases, a home trade-in service will work wonders for you.

The “Buy Before You Sell Program” will provide you with instant cash to purchase and move into your new home. Simultaneously, the home trade-in company will list your current home on the MLS. You can pay them back once you’ve successfully sold your home.

Two of the top home trade-in services in the market are listed below:

1. Knock Real Estate

2. Orchard Homes

Worthy Mentions

HomeLight Buy Before You Sell

HomeLight’s Buy Before You Sell program allows you to buy your dream home by giving you the money to close on the property.

This home-buying service will only list your house on the MLS once your offer on your new home has been accepted. Further, if your old property is sold for more than the amount initially offered, the company will give you the additional amount as well.

👉 Keep in mind that HomeLight will deduct the selling costs and any associated program fees before giving you the additional amount.

FlyHomes

Flyhomes is a mortgage lender home trade-in company that offers fast cash for properties.

Under their Buy Before You Sell program, Flyhomes guarantees that you will get an offer for your home. However, if they list your house on the MLS and your home doesn’t sell within 180 days, they will purchase your property at no extra cost.

 

Are iBuyer Companies Legit?

Yes— iBuy companies are legitimate real estate investors that give you an instant cash offer on your home. These cash offers vary based on the price valuation models used by individual companies.

For example, when comparing Offerpad vs Opendoor, Opendoor generally offers more cash. On the other hand, Offerpad is known for its fast closing timelines.

With swift closings and instant offers, iBuyer platforms are competing with the traditional real estate model head-on to make the home-selling process quick and easy.

However, this convenience does have a price tag attached.

Top iBuyers only offer 70% to 80% of the Fair Market Value and operate in selective markets. Additionally, their service fees range from 5% to 13%. So, these companies may not be the best choice to maximize your cash offer.

iBuyers: Pros and Cons

iBuyer real estate programs work to provide the seller with quick cash in the shortest possible time. Consider the pros and cons of the biggest iBuyers before coming to a decision.

Positive iBuyer Companies Reviews

1. Quick, Hassle-free Sale

With a traditional model, you have to list on the MLS and wait for potential buyers. But with companies like Opendoor, you get to skip all the waiting and sell your home at lightning speed.

Typically, homes listed on the MLS remain on the market for an average of 75 days. This is much longer than the 2 weeks it takes to sell to an iBuyer.

This speed makes iBuying companies and cash house buyers appealing to home sellers in desperate need of liquidity.

2. Fast Closing

The best iBuyers don’t require listing agreements, paperwork, or mortgage approvals. Hence, they can close in just 7 days.

3. Certainty of Sale

With the best home iBuyer, the chances of your transaction going astray are lower compared to the conventional model of selling a house.

There is an assurance that your property will close and you will have hard cash in hand. No need to prep your home, list it on the MLS, and wait for the right offer.

💡 FACT: Home sellers on Houzeo have received offers from major iBuyers, including Opendoor.

4. No Upfront Costs

A seller incurs costs whether they use a traditional broker or a Flat Fee MLS company. On the other hand, real estate iBuyers will acquire your home as-is, so you don’t have to spend money beforehand.

You can avoid essential repairs and home staging expenses by choosing cash home buyers.

Negative iBuyer Companies Reviews

1. Non-Negotiable Cash Offers

iBuyers in real estate extend a take-it-or-leave-it deal. While you can negotiate, you can’t expect more than 70% to 80% of the market value of your home.

If you feel the company overlooked something important, some will allow you to make your case and submit evidence to support it. However, most will be unwilling to budge on price.

👉 When you list on the open market, there is an opportunity to negotiate offers and avail of competitive cash deals.

2. Lower Sale Prices

iBuyers for homes generally deduct all repair, utility, and re-selling expenses when setting a price for the property.

Since they want to sell this home on the open market at a profit, they will offer you marginal prices. Further, these cash offers depend on the location of the property.

For example, iBuyers will offer higher prices for properties in hot markets like Charlotte, NC, compared to slow markets like Austin, Texas.

3. Strict Purchase Criteria

There are certain prerequisites a home must adhere to if an iBuyer is to purchase it. Real estate companies like Opendoor only offer cash for homes that meet all of the following criteria:

• Relatively newer properties (post-1930)
• Worth less than $500,000-$600,000
• Less than 1.5 acres

Because of the stringent purchase criteria, many homes don’t qualify for sale.

💡 FACT: Distressed houses listed on the MLS may get better cash offers as long as one can reside in the property after purchase.

4. Limited Coverage

Since sites like Offerpad operate in select U.S. cities, you won’t get an offer if your property lies outside their coverage area. Thus, selling to an iBuyer is not a choice for most Americans.

The urgent need for cash has often forced homeowners to sell their properties to cash house buyers like We Buy Ugly Houses.

These cash home-buying companies only offer 50% to 70% of the Fair Market Value of the house and exploit such desperate home sellers.

👉 If your home isn’t eligible to sell to an iBuyer, you can work with a local real estate agent or a Flat Fee MLS service.

Understanding iBuyer Companies

Generally, iBuyer companies boast about their ability to get you through the home selling or buying process quickly. However, this may vary from company to company.

Selling a Home to an iBuyer

Here’s how the process works with the largest iBuyers.

Step 1 – Submit Information About Your Home Online

Most companies that buy your house prefer to collect basic information about the property through an online form or over the phone. Once the evaluation ends, you will receive an early estimate of your cash offer.

Step 2 – Receive an Initial Cash Offer

Once the iBuyer company extends the estimated cash offer, you can choose to accept or reject it. These offers are generally non-negotiable, and they are calculated using the company’s home valuation model.

👉 IMPORTANT: Even if your property is eligible, get an estimate from a local realtor to find out how much your home could sell for on the open market. Flat Fee MLS services like Houzeo.com let you list your house on the MLS in under 60 mins!

Step 3 – Complete a Home Inspection

An iBuyer will schedule an onsite inspection if you accept the preliminary cash offer. A third-party home inspector or a local representative from the iBuying company will complete the onsite inspection.

Your final offer will be adjusted accordingly if any repairs are required.

Step 4 – Review the Final Offer

After the inspection, the iBuyer makes the final offer.

If this offer meets your requirements, then you just have to accept the cash offer, sign a purchase agreement, and schedule the closing.

Step 5 – Close the Deal

iBuyers provide flexibility in closing timelines. You don’t even have to wait for a bank to approve your mortgage, and sometimes, you can close within 7 days!

Buying a Home From an iBuyer

Let’s see how you can buy a house from the best ibuyer companies:

Step 1 – Submit an Offer on Your Desired Home

Once you select the property you like, you can take a private tour using the iBuying company’s mobile app or website. You can then submit your offer via a simple form.

Step 2 – Wait for the iBuyer’s Response

After you’ve made your offer, wait for the iBuyer to respond. You should get a reply within 24-48 hours.

Step 3 – Draft the Purchase Agreement

A real estate agent can help with drafting a purchase agreement.

Step 4 – Review and Sign the Purchase Agreement

You can review the agreement, sign it, and decide on a closing date.

Step 5- Schedule an Inspection

A third-party inspector or a local representative from the iBuying company will accompany you while you complete the onsite home inspection. You can negotiate the repairs and closing costs during this meeting.

Step 6- Close the Deal

iBuyer companies provide more flexibility on timing. You can close within 2 weeks.

Which Homes Qualify for Most iBuyer Companies?

Each iBuyer has different purchase criteria, but typically they only purchase owner-occupied homes that require minimal or no repairs.

Generally, the purchase criteria of the best iBuyer companies are similar.

• Home Types: Single-family homes, townhouses, duplexes, condominiums
• Year Built: After 1930
• Lot Size: Maximum lot size of 1–2 acres, depending upon market
• Value: Between $100,000 and $600,000
• Occupancy: Owner-occupied

Certain iBuyers can make exceptions in some markets, so it’s best to request an offer from an iBuyer near you. Several iBuyer reviews mention that the homes which don’t qualify end up on the open market.

How Much Will iBuyers Offer for My Home?

Using advanced technology, iBuyers project a home’s value through AVMs (Automatic Valuation Models).

An AMV will use a large pool of data to analyze the strengths and pitfalls of a property. Further, it will check historical price trends and determine the value of a property.

📈 Price Valuation Models of iBuyers

An iBuying company uses its proprietary algorithm to price homes. It offers its home-buying services based on local sales data and projected re-selling profits. The company decides whether to invest in your home based on millions of data points and decade-long historical price trends.

Traditionally, real estate professionals or brokers viewed local sales data and determined the appropriate listing price. AMVs follow the same pattern, but only work faster and more effortlessly.

It also depends on how easily the iBuyer will be able to sell your house. “We Buy Houses for Cash” companies buy homes at low prices and renovate them to sell at high rates. On the other hand, iBuyers focus on homes that only need a little bit of work– so they can sell them quickly, without any additional investment.  

Generally, iBuyers make offers of around 70% to 80% of the house’s Fair Market Value. While this value rose to 104.1% in 2021, with the current market forecast, it is expected to decrease.

This begs the question: will iBuyers be able to justify their high service fee as their buying capacity decreases?

👉 IMPORTANT: You can get 100% or more than the Fair Market Value if you list your house on the open market. Flat Fee MLS services like Houzeo.com let you list your house on the MLS in under 60 mins!

How to Maximize Cash Offers from iBuyers?

iBuyers do not offer full value for properties. So, here are some steps to help you maximize your chances of getting the best cash offer for your home:

Market to Maximum iBuyers Simultaneously

You could increase the cash offer quote for your property if you market it to multiple iBuyers at the same time. Listing on the open market is the fastest way to get traction from iBuyers.

👉 All major iBuyers have submitted offers on Houzeo properties.

Get Small Fixes Done Yourself

iBuyers make a preliminary cash offer after a walk-through of your property. However, if there are notable repairs or issues found during the on-site home inspection, these companies tend to lower the cash offer. You can avoid a lower cash offer by making repairs on your property.

Support Your Numbers with Data

iBuyers use AVMs to calculate your property’s value when you request a cash offer. If you check the local sales data of the housing market, you will get an approximate value for your home. This allows you to negotiate the cash offer with iBuyer companies, giving you an edge in your home’s sale.

iBuyer Service Fee

The iBuyer service fee is to ensure a hassle-free, convenient sale. Offerpad service fee is 6%, while Opendoor service charge is 5% of the home sale price. This is a cost you have to bear in addition to the typical closing costs of the real estate transaction, like escrow fees and title insurance.

Several iBuyer reviews mention that this fee isn’t negotiable and can often be as high as 14%.

On the other hand, if you’re selling your home with a real estate agent, you’ll typically pay a 5% to 6% real estate agent commission. This is usually split between the listing agent and the buyer’s agent.

You can also list your house on the open market while waiting for an iBuyer to make an offer. However, in such a scenario, you’ll need to pay your agent’s commission as well as the iBuyer’s service fee.

👉 IMPORTANT: You can save the 3% listing agent commission if you use a Flat Fee MLS service like Houzeo.com and list your house on the MLS yourself!

💰 How Much are iBuyer Fees?

iBuyer reviews usually highlight iBuyer service fees to be around 7% to 8%. But, they can be as high as 14%.

Generally, you’ll also have to pay for closing costs (1%-3%) and repairs (1%-2%).

Opendoor	5%
Offerpad	6%

How Do iBuyers Make Money?

Generally, iBuyer companies purchase houses that can be resold for a small profit on the open market. They leverage sales data and their pricing models to provide home sellers with instant offers on their houses.

As part of the iBuyer business model, these companies also charge a service fee for the speed and convenience they offer. This service fee is supposed to help offset the iBuyer’s carrying costs (utilities, property taxes, expenses, etc.) and ensure profitability in the long run.

iBuyers also have a revenue stream through other home buying and selling services like title insurance, mortgages, financing options, etc. Some iBuyers even sell your contact details as “leads” when you request a cash offer.

So, iBuyer companies have three revenue streams:

• Service fees
• Re-selling homes on the open market
• Selling leads

However, major iBuyers haven’t been able to fully stick to this business model, buying homes for more than they hope to sell them for. Zillow incurred a 422 million-dollar-loss in Q3 of 2021 and consequently shut down. RedfinNow followed suit in 2022.

One way websites like Opendoor aim to tackle the instability of the housing market in 2023 is by buying fewer homes. So, if you want to sell your house to a home buying company, this is a good time to get the best price with an iBuyer.

How to Find the Best iBuyer Companies Near Me?

iBuyers operate in limited markets. So getting a cash offer from an iBuyer will be tricky if your property lies outside of their coverage.

Company	Coverage
Houzeo	Nationwide coverage with 80+ markets
Opendoor	53 markets
Offerpad	16 states with 22+ markets

Other Ways to Sell Your Home: iBuyer Alternatives

If your property lies outside the coverage of iBuyer companies or doesn’t pass their eligibility criteria, then you have a few alternatives.

1. List on the MLS

There is a chance to receive the highest sale price when you list on the open market. However, the process will be slightly slower than with iBuying companies.

Real estate agents price homes reasonably and want to get maximum value for their client’s homes. Local sales data and housing market trends help them arrive at a competitive listing price for the house.

If you decide to opt for a cash offer on the house, you have a couple of options:

• List your home “as is“, with the help of an agent, and attract real estate investors who are looking for homes on the MLS.
• Working with an agent connected to house flippers and landlords looking for new deals.

👉 IMPORTANT: It’s possible to sell your home for more than what iBuyers offer! Save 3% listing agent commission and list your house on the MLS within 60 mins!

2. “We Buy Homes for Cash” Companies

These cash home buyers are conventional in their approach, unlike iBuyer companies.

With an all-cash offer, they buy distressed houses such as homes facing foreclosure, inherited homes that need repairs, or couples going through a divorce.

These local cash buyers will offer a cash deal, but only about 30% to 50% of your home’s Fair Market Value. They are looking for a way to make more money by re-selling the property with minimal expenses for repairs.

It’s possible to get 70% of the Fair Market Value of the house if it isn’t in extremely poor condition or the property location is accessible to the city.

» Cash Buyers: Check out America’s best “We Buy Houses for Cash” Companies.

“We Buy Homes for Cash” Companies Near You

Should You Sell to an iBuyer?

Depends on your priorities.

iBuyers are excellent for home sellers who need cash urgently. These iBuyer companies are geared to make home selling simple and convenient. They bypass the uncertainty involved in the home listing, marketing, and showing process.

iBuyer reviews state that quick sales and convenience are an iBuyer company’s biggest advantages when compared to selling your house on the open market.

Many iBuyer reviews mention that iBuyers provide free, no-obligation offers. So, it’s worth seeing how much an iBuyer would be willing to pay for your home. If you aren’t content with the offers you receive, you can work with a realtor.

You can save on the 3% listing agent commission if you sell your house as an owner with a Flat Fee MLS service like Houzeo.com!

Frequently Asked Questions about iBuyer Companies

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