The Pitfalls of Selling via an iBuyer

Just as the Internet has profoundly affected shopping and buying online, it’s now changing the real estate market with the advent of iBuyers. Unlike the traditional transaction between an agent and homeowner, iBuyers purchase a home completely online and advertise that they do it in a shorter timeframe than the tried and true in-person process. The new iBuyers are companies that make a profit by purchasing homes below market and then resell them within 60-90 days. The best known players include Open Door, Redfin, and Zillow Offers, among others.

While iBuyers may appear on the surface to offer a convenient, automated way to sell your home, there are a number of pitfalls to this approach explored in more detail below. Buyer beware — they typical iBuyer pays $15k less for your home on average and can charge transaction fees that are much higher than the traditional realtor commission.


The iBuyer business model is predicated on purchasing homes below market price and then quickly reselling them within 60-90 days. Because the iBuyer assumes all the risk, you’re essentially sacrificing a lower purchase price for greater convenience. Transaction costs may be higher as well and average anywhere from 7 -13% of the price of the home where realtors typically charge a 6% commission or less. There are also opportunity costs to using an iBuyer. Unlike the traditional sale, there is no negotiating with an iBuyer. If you’re in a hot market, you lose the opportunity to create a bidding war and ultimately command a premium price above your original asking figure.

Poor Availability

The iBuying process and associated community are new and don’t yet cover all markets. In fact, they tend to focus on specific locations, cities, or states. Accordingly, even if you are eager to try an iBuyer, they may not be readily available in your area and the lack of options could also adversely affect the pool of potential buyers, further limiting your ultimate sale price.

Lack of Expertise and Personalized Service

iBuying is an online transaction and thus eliminates the emotion that often surrounds the sale and purchase of a home. Not surprisingly, many potential sellers and buyers prefer to speak to an actual person rather than going through an impersonal Web site. Most important, because sales can be complex with easements, contingencies and varying timeframes to resolve before closing, it’s helpful to have an agent managing all of the moving pieces while ensuring both parties are aligned throughout. There is no hand-holding or expert representation on your behalf with an iBuyer — they are simply focused on making the sale in the shortest time possible. In contrast, your agent is an expert in the field and is advocating on your behalf throughout the process to get the best price and overall deal for you. Having this expert on your side can relieve much of the stress during the sale while providing the assurance your home is being considered and marketed in an optimal fashion.

Equivalent Service

The most touted advantage to an iBuyer are the compressed timeframes for the sale. With that said, most realtors provide comparable turnaround times for the sale of a house, provided it’s priced right for the market and in good condition. Moreover, the realtor provides a wealth of other services to ensure the sales goes smoothly, including potentially helping find the next home — all while securing the best return on your home.

Even if iBuyers are not yet an option in your market, they will most likely influence real estate sales now and in the future. Today’s buyers should think carefully before using iBuyers and only consider them they need to make a quick sale and price doesn’t matter.