Are iBuyers Worth Considering in this Market?

In 2014, “instant” buyers, or iBuyers, entered the real estate market and have grown in popularity during the pandemic. These online real estate investors use algorithms and digital tools to make instant cash offers on off-market homes, giving sellers a faster alternative to the traditional selling process. But are they worth it, especially in today’s shifting market? This blog will explain how iBuyers work and highlight the benefits and drawbacks associated with using them so you can decide.

What are iBuyers?

Not to be confused with house-flippers, iBuyers are online real estate investors who purchase homes directly from sellers, typically without ever seeing the home in person. A seller simply visits an iBuyer website, enters their address and fills out a quick questionnaire about their home, and within about 24 hours, they receive a cash offer. iBuyers buy the property “as-is,”?allowing sellers to avoid a lengthy selling and closing process.

Current iBuyer Stats

Since 2014, it has been reported that iBuyers have expanded into 43 markets?across the country. Although their market share was only 1.3 percent in the first quarter of 2022,?that number was double and triple the shares seen in the previous two years, thanks in part to fully digital transactions gaining popularity during the pandemic. During Q1, the three largest iBuyers bought nearly 13,000 homes and resold a record 26,000+ homes, with a median price-tag of $347,000. Atlanta, Phoenix, Dallas-Fort Worth, Houston and Charlotte continue to lead the market with iBuyer sales.

WHAT iBUYERS TYPICALLY LOOK FOR:

• Single family houses, townhomes and condominiums
• Little to no need for repairs or renovations
• Median value close to the average market price (typically $100,000 to $600,000)
• Modern construction, though not necessarily new
• Lot sizes between 0.5 and 1.5 acres

WHAT iBUYERS GENERALLY AVOID:

• Fixer-uppers or homes that need considerable repair
• Prefabricated or mobile homes
• Luxury homes and homes that exceed the area’s median value
• Older homes built before 1960

iBuyers vs. Real Estate Agents

Here’s a side-by-side comparison of the services in the table below:

Based on this breakdown, the biggest advantages to using an iBuyer are speed, certainty of sale and all-cash offers. iBuyer services are particularly advantageous to sellers who need to sell their home fast, perhaps due to a sudden job relocation or life change like a divorce, or those who want the trade-in approach of buying and selling at the same time. Research shows that all-cash offers hit an eight-year high in home sales in the second quarter of 2022, proving that quick profit and monetary flexibility are appealing to some sellers.

And yet, all that convenience comes at a cost.

The main disadvantages of using an iBuyer are lower profit, limited availability across markets and strict eligibility criteria for the property to be considered. Working with an iBuyer is also a less personal, non-interactive transaction. Some sellers feel frustrated by their lack of insight into the process or control over the repairs iBuyers require them to pay.

Are They Worth It?

So, is selling your home to an iBuyer worth it? Everyone?hopes to sell their property for as much as possible, but if?time?is more important than?money, selling your home to an iBuyer may be a good option. Ultimately, the answer comes down to each seller’s situation and what they value more: cash or convenience.