The Truth About iBuyers

iBuyers are the new home buyers in town. Financed by large Hedge Fund Kingpins, Wall Street Magnates, and Foreign Investors, these home iBuyers have very sophisticated software and they don’t mind telling you that the “i” in iBuyer stands for “instant”.

Yes, they are our well-funded multi-millionaire and billionaire competitors. And we are going to expose some of the gimmicks they use to razzle and dazzle the home seller. Ready?

iBuyer Gimmick #1 – Competitive Cash Offer (not with their HUGE expenses)

Don’t Believe It. Don’t be Bamboozled. iBuyer companies have massive multi-million dollar advertising budgets for television, radio, and internet. Who pays for this national advertising? YOU – the Home Seller. iBuyer companies also have huge overhead expenses with large offices and dozens or hundreds of staff people. Who pays their bloated overhead expenses? YOU – the Home Seller. 

98% of Market Value – One iBuyer promoted offers up to 98% of the market value of the home. Hah! If that has ever happened it is because someone made a big mistake. The transaction costs in buying a house and then selling it will be far greater than the 2% discount the iBuyer is claiming. Don’t get suckered-in with this baloney.

iBuyers cannot offer competitive cash offers – they would lose money if they did. Their business models have huge expenses that local home buyer companies do not have. Local home buyer companies can make higher offers because they have much lower expenses.

Zillow Offers, a former division of Zillow, was an iBuyer for 3 years. They managed to lose $881,000,000 before deciding to declare bankruptcy.

The iBuyers are at a HUGE disadvantage when compared to experienced, local home buyer companies.

Local home buyers companies are much more efficient and much more familiar with their local markets.

A small 3 bedroom 2 bath house in Houston with distinctive green siding.

iBuyer Gimmick #2 – Repairs – Skullduggery Alert!

REPAIRS REPAIRS REPAIRS !!! – Now who is responsible for contacting multiple contractors, obtaining multiple repair estimates, and supervising home repair work over a period of weeks or months? The home owner or the iBuyer?

Some iBuyers expect the Home Owner to perform some or all of the tasks of home repairs. Ha! That is the responsibility of the “instant” iBuyer.

DO NOT sign any contract that obligates you to perform any home repair.
DO NOT sign any contract that allows a home iBuyer an extended or unreasonable time period to negotiate repair costs.
DO NOT sign any contract that allows the home iBuyer to inflate or “over-estimate” the home repair costs – this can cost the home seller tens of thousands of dollars.
DO NOT accept any money or “Advance Funds” to repair your house while you own it. This is a legal TRAP. This contractual agreement can easily devolve into your worse nightmare. The iBuyer should be responsible for ALL repairs after they have closed title.

Professional local home buyers will buy houses in “as-is” condition. Period.

iBuyer Gimmick #3 – Instant Offer (kinda, sorta)

Well, not so instant. iBuyer offers are almost always contingent upon one or more inspections by their representatives. If they find any physical damage to the house they will revise their “instant” offer downwards. Professional home inspectors usually find between 20 – 50 “deficiencies” in a typical home inspection.

iBuyer Gimmick #4 – No or Small Fees (does 13% sound like a fee?)

Your friendly realtor asks for 6% of the home’s selling price as a commission. The stated fees home sellers pay to home iBuyers range up to 13%. If they offer a lower fee then they will compensate with a lower purchase offer. Regardless, all of the fees the iBuyers charge are deducted from the home seller’s proceeds.

iBuyer Gimmick #5 – Sell Without Listing

Good grief, How dumb do these iBuyers think home owners are? iBuyers and local home buyer companies make “Cash Offers” for houses. They do NOT ask for a signature on a realtor’s listing agreement.

iBuyer Gimmick #6 – Extended Stay (Become a Tenant)

iBuyers promote “Stay in the House” or “Extended Stay” as a benefit – Home sellers can sell their home and then stay in their house for days or months after selling to the iBuyer. This is NOT free. These Wall Street investors are not Santa Claus. The home seller becomes a tenant and the iBuyer becomes a landlord. The iBuyer landlord MUST be paid some form of rent because they are paying taxes, insurance, maintenance, and HOA fees. Home sellers will either be writing a rent check in the traditional sense or it will be in the form of a much more deeply discounted selling price.

iBuyer Gimmick #7 – Pick Your Closing Date

Well, this is a little ridiculous. A home seller can choose his/her title company and the date of closing. This has always been the case. This “benefit” from iBuyers is just marketing “fluff”.

iBuyer Gimmick #8 – Free Local Move

Pay Moving Costs? Here is some more marketing “fluff”. It’s not really free since the iBuyer factored it into their original purchase offer.

iBuyer Gimmick #9 – Bundling (they will be your realtor)

If the iBuyer can’t offer a competitive cash offer then the home owner may be pitched the “bundling” option which includes listing the house with a traditional realtor. “Bundling Power” – sell your house, buy another house, obtain a new mortgage for it, and more; Oh, they claim you save money with all of this bundling. Well, there will be fees every step of the way – Remember those massive overhead and advertising expenses they have to pay?

iBuyer Gimmick #10 – Deception & Misleading Advertising

Deceiving Home Owners – In 2022 the Federal Trade Commission (FTC) took action to stop one of the largest iBuyer companies in the United States from cheating potential sellers with misleading claims about its Home-Buying Service. The company was fined $62,000,000 by the FTC. (They are still in business and advertising nationally.)

According to Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, the company “promised to revolutionize the real estate market but built its business using old-fashioned deception about how much consumers could earn from selling their home on the platform. There is nothing innovative about cheating consumers.”

Click HERE to read the FTC’s press release on this subject

FTC Takes Action to Stop Online Home Buying Firm Opendoor Labs, Inc. from Cheating Potential Sellers with Misleading Claims about its Home-Buying Service


Are you are getting a better deal with an iBuyer? Are you really?

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