iBuyers: What They Are, How They Work

An iBuyer is a company that uses technology to make near-instant cash offers on homes. These algorithm-based platforms streamline the selling process to help homeowners close and move quickly.

The “i” in iBuyer stands for “instant” because sellers can get an offer in as few as 24 to 48 hours and, in some cases, close in two weeks or less.

While iBuyers may offer more than other 'we buy houses' companies, they're also more selective about the homes they purchase. And sellers should still expect offers to come in at less than market value. iBuyers also charge service fees – often 5% or more, plus repair deductions. 

Although iBuyers like Opendoor have existed since 2014, they still represent a small share of the real estate market — fewer than 1% of all home sellers used one in June 2025, showing limited adoption by sellers.[1]

Not sure which route to take? Use Clever Offers to see what different cash buyers and iBuyers would pay for your home — it's fast, secure, and free.

The story behind iBuyers

iBuyers emerged on the scene as an alternative to the traditional home selling process, which often involved a lot of hassle (finding a realtor, fixing up the house, keeping things spotless for showings, haggling over concessions and closing dates, etc.) and uncertainty as sellers waited for offers and waited again for buyers' financing to be approved.

Starting with the launch of Opendoor in 2014, iBuyers offered a faster process with fewer touch points:

• Preliminary offers were provided on the spot, using a combination of public property information, local housing market data, and owner-provided property details
• Final offers required only a quick home inspection, often conducted by video
• Sellers could avoid making repairs by accepting the iBuyer's repair cost deduction instead
• Closing paperwork was handled by a mobile notary, rather than in-person at the title company
• Sellers could choose their move-out date and have cash in hand in as little as 1–2 weeks

Whereas house flippers typically targeted fixers needing a major rehab, these newer iBuyers targeted newer, more move-in ready homes that were fairly standard for the neighborhood, giving them enough comparable home sale data on which to base their offers.

Soon, other plays followed in Opendoor's footsteps — each offering a slightly different spin on a cash offer.

Over time, these companies have expanded to many major metros in the United States. And while they haven’t dominated the real estate industry, they're still viable alternatives for homeowners who need to sell right away.

Why iBuyers haven’t taken over the housing market

In the early years of the pandemic, iBuyers earned a reputation for making competitive offers on homes, doing quick renovations, and reselling those homes for a profit. Riding a competitive buying frenzy that pushed home values 36% higher in just three years, iBuyers snatched up thousands of homes per month at prices that often exceeded their market value. In 2021, for example, Opendoor's median purchase price hovered at nearly 108% of the fair market price.[2]

However, the model proved unsustainable. As the housing market cooled, iBuyers found themselves holding onto homes for longer and selling them at a loss.[3] Players like RedfinNow and Zillow Offers soon bowed out of the iBuying game altogether, while companies like Opendoor and Offerpad scaled back their purchases and revamped their product offerings to stay afloat.

Today, both iBuyers offer traditional brokerage services alongside direct cash offers. Like Homeward, they also offer sellers the option to get a certain amount of cash upfront and list for additional upside once they've moved.

How much do iBuyers pay for houses?

Today, sellers can expect a typical offer from an iBuyer to fall anywhere from 5–15% below market value — not including service fees, repair deductions, or closing costs. That's if you can sell to an iBuyer at all.

iBuyers maintain stricter purchase criteria than the typical cash investor, limiting their availability to many sellers.

Their initial offers rely heavily on the use of automated valuation models (AVMs) to churn out ballpark home value estimates based on data from the sales of nearby homes, factoring in property-specific information (square footage, layout, finishes, amenities, etc.) and market trends (days on market, sale-to-list price ratio, etc.).

If there's not enough data to go on, or there's little room to profit from the purchase and resale once the home's actual condition is factored in, an iBuyer may lower their initial offer or take it off the table altogether.

iBuyers like Opendoor and Offerpad purchased just 19,127 homes in 2024 — a tiny fraction of the 4.06 million pre-existing homes sold in the U.S.[4][5][6]

How much does it cost to sell to an iBuyer?

The costs of selling to an iBuyer like Opendoor or Offerpad typically include:

• Service fees: 5% or more
• Closing costs: ~1%
• Repair deductions: Based on inspection

On paper, the costs are comparable to what you might pay in a traditional home sale, with two key differences:

1. A real estate agent will likely be able to get you a much more competitive offer
2. You'll have a lot more flexibility to negotiate repair costs, rather than shouldering the entire expense on your own

Here’s how iBuyer offer might stack up against other options when accounting for fees and other costs:

Note: These figures are estimates based on a $500,000 home and may vary depending on location, property condition, and individual company policies.

Want to see what an iBuyer might pay for your house compared to other options? Head to Clever Offers to compare offers from top cash buyers and iBuyers in your area.

Top iBuyer companies

Over the years, major real estate companies like Zillow and Redfin attempted to launch an iBuying model, with little success. 

Today, Opendoor and Offerpad are still the most prominent iBuyers on the market. However, companies like Knock and Homeward have also emerged with cash offer products allowing home sellers to leverage their current home equity to secure a new home on their timeline.

Here’s what makes each of them unique:

Opendoor

Opendoor gives homeowners a streamlined selling process by providing relatively competitive cash offers and the freedom pick your closing date within a 10–60 day window.

Anecdotally, offers from Opendoor vary widely, but a study conducted by Clever Real Estate found that Opendoor typically paid 8-9% below the resale market value. Opendoor also charges a 5% service fee and makes additional deductions for any improvements needed to prep the home for the next buyer.

Offerpad 

Offerpad runs on an instant-offer model similar to Opendoor, paired with free local moves and the ability to list with an Offerpad agent if you want to test the market before settling for quick cash.[7] While the data is limited, an analysis of 123 recent Offerpad listings found an average difference of 14% between Offerpad's purchase price and resale price.

While Offerpad used to charge a 5% service fee in line with Opendoor's, the company no longer disclosed it's fees on its website. However, a conversation with Offerpad's HomePro chatbot in August 2025 indicated that they can now reach as high as 8%.[/tooltip]. Offerpad also makes deductions for repairs.

If you sell to Offerpad, you have a flexible 8-90 day closing window, which allows you to build your sale around your timeline.

Knock

As the leading buy-before-you-sell company, Knock allows homeowners to borrow against their equity to cover the down payment and closing costs on a new house.

These loan can also be used to cover moving expenses, program fees, up to 6 months of ongoing mortgage payments, and minor repairs and improvements on the house you're prepping for sale.

After repairs, Knock customers have 6 months to sell their homes on the open market with a realtor of their choice. If the home doesn’t sell in time, the homeowners can accept Knock’s backup cash offer designed to cover the bridge loan amount and remaining mortgage.

Homeward

Homeward offers a suite of cash offer options to give homeowners more flexibility and purchasing power toward their next home. Homeward's products include:

• An upfront cash offer, with an opportunity to recoup additional upside from an open market sale
• A buy-before-you-sell program similar to Knock’s bridge loan, allowing sellers to borrow against their equity to purchase a new home before they list

While Homeward’s programs help homeowners unlock equity quickly, they come at a price. Depending on the program, you can expect to pay a 1-7% service fee on top of any realtor fees for selling your old home. Customers also accrue carrying costs — such as ongoing mortgage, maintenance, and utility payments — throughout the time it takes to sell their home.

How selling to an iBuyer works

Step 1: Submit home details online. 

Regardless of the iBuyer you choose, you'll start by submitting info about your property on the company’s website.

Answering questions about your home’s age, square footage, bedroom and bathroom count, needed repairs, and other information will help the iBuyer calculate its value.

Step 2: Get an initial cash offer within 24–48 hours.

You'll receive a cash offer on your home based on the information you provide — and information gathered by the company’s algorithm.

Offers vary by the current state of the market, neighborhood, and comps in your area. You should expect an offer of only 90-95% of what you would list for on the open market.

Step 3: Complete an inspection.

After the initial offer, iBuyers require an inspection to evaluate your home’s condition and determine if any repairs are needed.

During this process, the company will either send a representative to your property or coordinate a video call for a virtual walkthrough that evaluates:

• The foundation, roof, and exterior for signs of wear and age
• Major systems, including plumbing, HVAC, and electrical, for any issues
• The condition of the interior fixtures, countertops, and appliances
• Any safety issues like mold, asbestos, pest infestations, or code violations

The company will document any repairs or improvements needed to make your home ready for the next buyer and deduct those potential expenses from their final offer.

If the inspection reveals any major structural or safety issues, there's a chance that the company will walk away from the deal entirely.

Step 4: Receive a final offer (adjusted for repairs and fees).

Once the inspection is complete, the iBuyer’s team will reassess the original price and make any adjustments before extending a purchase agreement.

Final offers will reflect any deductions from the initial offer, including:

• Repair costs 
• Service fees
• Closing costs

Step 5: Close on your timeline.

If you accept the final offer, you’ll pick a closing date that works for you — usually anywhere from 7 to 60 days out. Most iBuyers can close in as little as one to two weeks, making them a great option if you need to move fast.

Should you sell to an iBuyer?

iBuyers are worth looking into when you don't have the time or desire to put your house on the market — and are willing to sacrifice some profit in exchange for the convenience of an all cash sale.

While their offers tend to be more competitive than traditional house flippers, their buy boxes tend to be narrower. They typically target homes that are fairly standard for the neighborhood and don't need a lot of work beyond cosmetic touchups.

Even if you fit the criteria, your offer is still likely to fall short of what you’d likely earn by listing on the open market. Sellers also pay substantial service fees and have less leverage to negotiate repairs and closing costs, since the deal needs to math out in order for the iBuyer to make their profit.

Choosing to sell to an iBuyer instead of another real estate company really comes down to your unique needs.

Selling to an iBuyer may be a good fit if you want to:

• Skip showings, open houses, and repairs
• Close quickly or have the option to choose your own closing date
• Prioritize convenience over maximizing your sale price

You may want to list on the open market instead if you:

• Aim to get the highest possible price for your home
• Own a unique or older property that may not fit an iBuyer's criteria
• Don’t mind waiting longer to sell

If you're on the fence about which route to take, we recommend starting with Clever Offers, which lets you quickly compare offers from a variety of sources, ranging from local options to nationwide iBuyers. You can also test the waters with a no-obligation 7-day MLS listing — allowing you to see what a wider range of buyers would pay for your house as is, without the commitment of a lengthy listing agreement. Answer five simple questions and start comparing offers.

FAQ

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