iBuyers. Get a real cash offer and compare it to a local buyer.
See both numbers, see how each one was calculated, and decide which path actually fits your situation. An iBuyer is a specific kind of cash buyer that operates through a website and an algorithm instead of a sign in your yard, and the math is not the same as a local cash buyer's.
Below is how an iBuyer offer is built, what the service fee costs, and when an iBuyer fits versus when a local cash buyer is the better call.
What an iBuyer actually is.
An iBuyer is a venture-backed company that uses an algorithm to make cash offers on houses, buys the houses that accept, does light work on them, and resells them on the open market. The whole model depends on scale and on the accuracy of the algorithm. They are not trying to fix up distressed houses. They are trying to buy clean houses efficiently, hold them briefly, and flip them with minimal work.
The category emerged around 2014 with Opendoor. By 2019 there were several big operators (Opendoor, Offerpad, Zillow Offers, Redfin Now). Most of the space contracted sharply in 2022 when interest rates rose and holding costs spiked[1]. Zillow Offers shut down. Redfin Now shut down. The survivors are Opendoor and Offerpad, with smaller regional players in some markets. Coverage by metro has been uneven and can change without notice; Redfin tracks current iBuyer share and metro footprint in its periodic reports [2].
How an iBuyer offer is built.
You enter your address on the iBuyer's website. You answer a short condition questionnaire (number of bedrooms, bathrooms, any known issues, year of last major updates). The algorithm pulls recent sales of similar homes nearby and generates an offer in 24 to 48 hours.
The offer you see is a gross number. What you actually net at closing is smaller, because iBuyer economics pull from several pieces:
The service fee
Opendoor and Offerpad both charge a service fee, historically in the 5 to 8 percent range, disclosed upfront in the offer. This is the biggest cost. It is how the iBuyer makes money on the deal.
For comparison, a traditional MLS sale pays 5 to 6 percent total in agent commissions (usually split between the buyer's and seller's agents). An iBuyer service fee is roughly in the same zone, which is by design. The iBuyer is positioning itself as an alternative to the MLS, not as a discount channel.
The offer discount
The offer itself is usually a few percent below what a traditional retail buyer would pay for the same house on the MLS. Academic research on iBuyer pricing finds the combined effect of service fee plus offer spread is meaningful, varies by market, and has widened when interest rates rise[3].
The inspection repair credit
After you accept the offer, the iBuyer sends their own inspector. The inspector finds things. The iBuyer asks for repair credits off the purchase price, typically a few thousand to $15,000 depending on what shows up. You can push back, but the iBuyer's contract usually lets them walk if the repair credit is not agreed to. In practice, most sellers agree to some version of the credit rather than restart the process.
Closing costs
You still pay your share of closing costs (title, transfer tax, prorated property tax). The iBuyer does not cover those for you.
The net
Gross offer, minus service fee, minus repair credit, minus seller closing costs, equals what actually hits your bank account. For a $300,000 gross offer on a typical suburban house, a 6 percent service fee is $18,000. A $5,000 repair credit is another $5,000. Seller closing costs might be another $4,000 to $6,000. Net to seller is somewhere around $271,000 to $273,000.
For comparison, the same house sold to a local cash home buyer might come in with a gross offer in the $255,000 to $275,000 range, with no service fee, smaller or no repair credit, and similar seller closing costs. The net from the two paths often lands in the same zone, within a few percent of each other.
What an iBuyer wants in a house.
iBuyer algorithms have boxes. They will not buy everything. In most markets, the typical box looks like this:
- Built after about 1960 or 1970. Older houses have too much variance in condition to price algorithmically.
- Single-family detached or simple townhouse. Not a mobile home, not a condo with complex HOA rules, not a multi-family.
- No major condition issues. No foundation problems, no fire damage, no water damage, no visible structural concerns, no unpermitted additions that are obvious.
- In a metro area the iBuyer operates in. Most iBuyers publish a ZIP code footprint. Outside the footprint, they will not make an offer.
- Market value in a usable range. Typically $150,000 to $600,000 or so, varying by metro. The algorithm is less reliable at the extremes.
If your house is outside the box, the iBuyer will either decline to make an offer or make a low offer with big condition-based carve-outs. Do not take a low algorithmic offer personally. The algorithm is not saying your house is worthless. It is saying this is not the kind of house the iBuyer's model wants to hold.
How iBuyers differ from local cash buyers.
The names overlap (both are cash, both close fast, both are direct buyers). The businesses are not the same.
Who is on the other side
An iBuyer is a corporation with investors, a board, and a published set of numbers they have to hit. A local cash buyer is usually a small LLC run by one or two people who live in the area. The local buyer's math changes with each deal. The iBuyer's math is set by the algorithm.
What they are willing to buy
The iBuyer wants clean houses in specific ZIP codes that fit its box. A local cash buyer will often buy houses the iBuyer will not touch (older stock, condition issues, strange layouts, out-of-footprint neighborhoods). If your house has real condition problems, the local cash buyer is the one who will actually make an offer.
How they price
The iBuyer prices for a quick relist at near-retail, then takes its fee. The local cash buyer prices for a flip or a rental, with repair costs and holding costs factored in. On a clean house, the iBuyer's gross offer is usually higher than the local cash buyer's, but the net after fees and credits is similar. On a house that needs work, the iBuyer either will not buy it or makes an offer that is worse than the local cash buyer after the repair credit hits.
How they close
Both close in about 10 to 14 days. The iBuyer process is more structured (standardized contracts, centralized closing coordinator, clear deadlines). The local cash buyer is more flexible (can work around your timing, can wait for probate, can close on a specific date you need).
Transparency
iBuyers disclose their fee structure. The gross offer is in black and white. The service fee is in black and white. The net is calculable. A local cash buyer shows you a single number, and the math behind it is their business. Both can be honest. The iBuyer is easier to verify on paper.
When an iBuyer fits.
An iBuyer is a legitimate option in specific cases.
- Your house fits their box. Built after 1970, clean condition, in their ZIP footprint, in their price range.
- You value the predictable process. A website, an algorithmic offer, a standardized contract, a defined closing window. No negotiation over price. No kitchen-table sales pitch.
- You have run the math. You have compared the iBuyer's net (after fee and credits) to a local cash buyer's offer and to an estimated MLS net (after commissions, repairs, and carrying costs). You have decided the iBuyer's number is acceptable.
- You do not want to deal with showings. The iBuyer path skips the MLS, same as any cash sale.
- You are okay with the repair credit re-trade. This is a feature of iBuyer deals, not a bug. If you cannot accept a mid-process credit request, the iBuyer path will frustrate you.
When an iBuyer does not fit.
- Your house has real condition issues. An iBuyer will either decline or make an offer so low after condition adjustments that it is not worth the trouble. A local cash buyer who underwrites condition into the purchase price is a better fit.
- Your house is older than the algorithm likes. Pre-1960 stock, especially the pre-1940 housing that is common in older Northeast and Midwest cities, often falls outside the iBuyer's comfort zone.
- You need flexibility on the closing date. iBuyer processes are standardized. They are not great at adjusting for probate, family timelines, or tenant transitions.
- You are in a ZIP code the iBuyer does not serve. There is no workaround. Outside the footprint, they do not buy.
- You want to negotiate. The iBuyer's price is the iBuyer's price. The algorithm does not bargain.
- The service fee is more than the speed is worth to you. On a clean, listable house, paying 6 percent to an iBuyer instead of 5 to 6 percent to MLS agents usually nets you similar money for similar-or-less effort. A quick sanity check against an MLS comp or against a local cash buyer's offer is worth doing before you accept.
What stays true regardless.
Disclosure is still disclosure. Sellers have the same duty to disclose known material defects on their state's statutory disclosure form [4] whether the buyer is an iBuyer or a person. Do not skip it because the process feels automated.
The net matters more than the gross. An iBuyer's published offer is gross. Compare nets.
Read the contract before you sign. iBuyer contracts are long and written by their lawyers. Your attorney should review them the same way they would review any other contract.
The honest summary.
An iBuyer is a specific kind of cash buyer. It works fast, it charges a service fee, it only buys houses that fit its box, and it reserves the right to request repair credits after inspection. On the right house, in the right market, with a seller who wants a predictable process, it is a reasonable option.
It is not the default cash path. It is one of them. Comparing the iBuyer's net against a local cash buyer's net and against an estimated MLS net is how you decide. Our offer gives you a range from a different angle, so you can line up the numbers and pick the one that actually fits your situation.
See your cash offer.
About a minute. No signup. The math is on the next screen.