iBuying Real Estate: Trends and Insights for Agents

The internet has changed countless industries, including real estate. From digital listings to iBuying services, sellers and buyers have more options than ever to enter the market. However, not every technological advancement is ideal for each transaction. For example, there are plenty of instances when iBuying is ideal to sell a house, but others when working with a traditional Realtor is better. 

An iBuyer is a tech-enabled platform that makes cash offers on homes, often closing in a few days. In 2022, 1% of single-family homes in the United States were sold through an iBuyer platform. This statistic jumped to 6% in Atlanta, and remains close to this height in other metro markets. 

Demand for iBuying exploded during the COVID-19 pandemic, when people were looking for contactless ways to sell their homes. Homeowners were also looking for speed and convenience in the sale, which drove them to seek out digital cash offers. However, in the years since, demand for iBuying has cooled. 

This guide will explore the benefits and drawbacks of iBuying real estate and how this technology impacts real estate agents. Realtors can thrive despite the rise of iBuying and use this technology to grow their business. Here’s what everyone involved in the real estate transaction needs to know.

What Is iBuying Real Estate, and How Does It Work?

The concept of iBuying means skipping the traditional real estate process in favor of selling to a company that makes an offer using algorithmic data based on a home’s value. Here’s how it works: 

• A seller submits their address to an iBuying platform, which then runs a comparative market analysis (CMA) to estimate the fair market value of the property.  
• The iBuyer makes a cash offer to the seller based on the perceived value of the home. 
• If the seller accepts the offer, the iBuyer can close on the home within a week of making the offer. 
• The iBuyer then resells the home. This is how the software company turns a profit. 

Sellers appreciate the simplicity and speed that come with the iBuying process. Instead of waiting 30 to 60 days to close (and potentially longer if there aren’t immediate offers), sellers can close and move out within a week or two. They also don’t have to worry about showings, inspections, or negotiations when trying to sell. 

The popularity of iBuying has led to several companies launching their own real estate technology platforms. Two of the largest names are Opendoor and Offerpad, while other major real estate brands have tested the viability of this business model. Both Redfin and Zillow tried to enter the iBuying industry, but ended up closing these branches of their businesses.

Pros and Cons of Selling to iBuyer Companies

Every real estate option comes with benefits and drawbacks, and using an iBuyer over a traditional real estate agent is no different. While iBuyers often appeal to homeowners of distressed properties or who need to move quickly for financial reasons, other sellers might be attracted to this business model as well. Here are some of the pros and cons of working with iBuyer companies if you are preparing to sell your home.

Pros for Sellers

• Speed: sellers can close on their homes within a week or two of contacting an iBuyer. There’s no risk of their home staying on the market longer than they want.
• No staging: sellers don’t have to worry about staging or decluttering their properties to appeal to buyers. This can help them save on staging and storage expenses.
• No showings or open houses: sellers don’t have to disrupt their schedules for showings. This is particularly beneficial if they have pets or small children. 
• No negotiations: sellers don’t have to worry about negotiating offers or making repairs to close the deal. Many iBuyer companies purchase homes sight-unseen, without requiring home inspections and appraisals.  
• Fewer contingencies: iBuyers rarely have contingencies on the sale. This means sellers don’t have to work around the needs of others to close a deal. 
• Reduced risk: Once an offer is made, the iBuyer is likely to go through with it. This is different from traditional buyers who might pull out if there is a problem or if they can’t secure financing. The all-cash offer model means sellers don’t have to worry about buyers getting loans.

Cons for Sellers

• Lower offers: iBuyer companies typically offer 5-15% below fair market value. This is how they make money. After purchasing a house, the company resells the property at a higher rate. 
• No negotiations: sellers cannot counter the offers made by iBuyer companies. If a company makes a low offer, you either accept it or walk away from the deal. 
• Unexpected service fees: sellers may be expected to pay between 5-10% of the home’s value in service fees. This is sometimes more expensive than paying agent commissions. Each iBuyer company has its own service fee scale and costs. 
• Limited market availability: iBuyer companies are only available in certain metro areas. Even if you want to work with an iBuyer company, you might not be able to find one in your area. 
• Lack of human guidance: sellers will not have access to a human real estate agent to guide them through this process. They also might not be able to talk with a customer service representative if they have any questions about the iBuying process.

The Impact of iBuyer Services on Traditional Real Estate Agents

When iBuyer companies first debuted, they posed a significant threat to traditional real estate agents. New forms of technology were disrupting countless industries, and it appeared that iBuying was going to lead the next wave. However, despite its initial popularity, and despite its surge during the COVID-19 pandemic, the iBuying market has cooled in recent years. 

Only 0.5% of total home sales were completed through iBuyers in 2023, which is around 1,000 home sales per month. This is a significant drop from 2021 and 2022 iBuyer transactions, which reached 9,000 sales per month. 

With major players like RedFin and Zillow closing their iBuying arms, consumers have fewer options to choose from when receiving offers. Zillow is one of the most popular websites in the world and the largest real estate website, with more than 50% of total monthly site visits. With sellers no longer receiving iBuyer messaging from this company, there is less awareness that iBuying is an option. 

Demand for iBuying has also cooled because sellers want to maximize their home sale profits. Many iBuyer companies developed reputations for low-balling customers. What seemed like a cool technological innovation at the time is now often perceived as an opportunity to sell quickly in exchange for lower profits. 

As a result of all these changes, traditional home-selling methods are retaining their popularity. Sellers continue to hire Realtors and work with them to list their properties. Realtors can also work with iBuyer companies when buyers are interested in homes purchased by these firms. Real estate as a career path is still viable despite technological changes.

How Agents Can Compete Against iBuyer Programs

Realtors can still work with sellers who are interested in iBuyers and potentially win over clients who are trying to decide between online companies and human real estate professionals. Here are a few ways to make a difference in the real estate market and grow your business, even if you operate in a region with a large iBuying presence.

1. Lead with Value-Add Services

Realtors can position themselves as trusted advisors to sellers, not just transaction facilitators between two parties. When competing with both iBuying companies and other agents, Realtors need to showcase the value they provide throughout the home-selling process. 

Here are a few ways Realtors can lead with value and win over potential real estate transactions: 

• Offer pre-listing consultations: review comparative properties, repair opportunities, and marketing strategies with potential clients. Create space for clients to ask questions and learn about the home sale process. This can make entering the market feel less daunting. 
• Build staging into your offering: some Realtors offer concierge programs that include professional photography and staging services. This takes the burden off customers to handle staging and decluttering work themselves. 
• Let customers review their options: not every homeowner wants to make repairs and upgrades to their homes. Review as-is listing options. 
• Discuss opportunities to sell quickly: review pricing strategies, open houses, and marketing opportunities that can attract buyers. Listen to the concerns of sellers and actively address them. 

Experienced Realtors know how to sell themselves and their services to clients. These skills can help you win over sellers who are seriously considering working with iBuyers.

2. Educate Clients on All Options, Including iBuying

One of the biggest mistakes Realtors make is ignoring iBuying when talking to clients. If sellers think you are trying to hide alternative options from them, they might become more curious about iBuying and want to explore platforms that offer this service. Instead, you can build iBuying into your sales pitch and address it directly when it comes up in conversation. 

Consider creating a side-by-side net sheet that reviews your business model against an iBuying service. You can even customize this pitch to each specific customer. For example, you can explain how iBuyers typically offer less than the fair market value of a home and won’t negotiate deals. You can also compare iBuyer service fees to your real estate commissions. Let the numbers prove that hiring you is the better real estate deal. 

It’s also not a bad idea to review the benefits of working with iBuyers, including their flexible closing date options. Trusted Realtors will let their clients choose the best options and will never try to force their hands. Your goal is to make people feel informed when navigating the real estate industry. If a client decides that selling to an iBuyer is the best route for them, that’s their choice. 

3. Partner With iBuyers, Don’t Fight Them

If you are worried about iBuyers in your local real estate market, consider how you can work with these companies to win over customers. For example, when sharing a CMA with sellers, list the “instant offer” comparisons along with the market value of the home. This will show that sellers are more likely to lose money if they choose the iBuyer business model. 

You can also use iBuyer offers to create urgency or set floors in negotiations. For example, if a buyer’s agent submits a low offer, you can show that the seller could make more money working with these tech-based real estate companies instead of accepting the bids the buyers made. Agents can also allude to other options and offers in order to encourage buyers to offer fewer contingencies or be more flexible with closing dates.   

Realtors can also work directly with iBuyer companies. You can register as a certified iBuyer agent or referral partner. When the iBuyer makes a sale, the company will contact you to resell the house in the traditional market. This is similar to working with real estate investors in your area. New agents looking to grow their experience and portfolio might benefit from partnering with iBuyer firms.

4. Leverage Tech to Match the iBuyer Experience

People who are interested in the iBuyer business model are often tech-forward and interested in how new companies can disrupt existing systems. As a Realtor, you can attract these clients by showcasing your own tech adoption through the home sale process. A few of the latest tech trends in the real estate industry include: 

• Digital client portals 
• Automated showing scheduling
• Virtual tours
• Drone photos and videos
• E-signing 
• Real-time feedback tools 

Each of these technology tools is designed to reduce friction in the home sale process. You can highlight how your business is designed to offer convenience and speed while still maximizing the home’s purchase price. Showcase how it’s worth hiring a traditional agent in the local market to streamline the selling process while still potentially turning a profit.

5. Focus on Niche and High-Trust Clients

If you don’t want to work with iBuyers or have to justify your business against them, consider entering niches that aren’t appealing to iBuyer program designs. For example, iBuyers work best in cookie-cutter homes where there isn’t a lot of price flexibility and there are several similar comparative properties nearby. As a Realtor, you can specialize in luxury, historic, or rural properties where iBuyers don’t reach. 

You can also try to reach home sellers who are looking for a traditional sale and aren’t familiar with technology or don’t want to work with online tools. While these sellers are becoming less common, they are still found throughout the housing market. 

However you run your business, continue to build long-term relationships and run your business in a manner that generates referrals. No matter how the housing market or real estate technology evolves, good relationships and ethical practices can keep your business going.

Comparing iBuyer Real Estate Scenarios

Agents who are selling real estate can use data points and examples to highlight why selling to an iBuyer is not always the best idea. Here’s how to create a fact sheet related to iBuying. 

• Run a CMA on the property to identify its market value. 
• Estimate the total costs of selling with an agent, including closing costs, staging, photography, and repairs. 
• Be honest about potential sale prices and acknowledge that offers from buyers might come below asking. 
• Then estimate the average offer by iBuyer companies. 
• Research the fees from these companies to get an idea of what home sellers would pay. 
• Compare the costs of a traditional sale against an iBuyer’s offer. Show sellers what the real cost of an instant cash offer looks like. 
• It’s better to provide a range for prices for both scenarios instead of dealing with absolute numbers. No one can predict exactly what a home will sell for. 

When running these scenarios, be honest about the hidden expenses that come with selling. For example, a seller who waits 60 days or more for the deal to close has to make two more mortgage payments on the property. This might be more of a financial burden than they want. Selling to an iBuyer might be a better way to get the property off their hands immediately. 

Know that every seller is different and has unique needs and pain points. Listen to key details related to the sale as you draft these mock scenarios. This will help you run more accurate calculations and showcase how working with a Realtor through the selling process is often the better fit.

The Future of the iBuying Business Model

The iBuyer market has not seen a lot of growth in recent years. In fact, with Zillow Offers and RedfinNow closing down, it has shrunk significantly as of late. This has led some people to wonder if there is a future in iBuying at all. 

Hpwever, there is still a place for iBuying in the open market. AI tools could improve valuation algorithms and potentially offer sellers fairer prices. New companies could open that allow sellers to trade in their homes without going through the showing and negotiation processes. However, there isn’t a lot of demand at present for sellers looking for a hassle-free sale with an iBuyer company.

Sellers, buyers, and agents may turn to hybrid models in the future that allow for fair market offers online. They might use digital tools to help with CMAs and financing options like bridge loans and buy-before-you-sell companies. There’s still a lot to explore in modern technology beyond iBuyer firms in real estate.  

Today’s agents don’t necessarily have to fear iBuyers, but they should be aware of these firms and keep an eye out for new trade-in and home-selling trends. Getting ahead of new ideas and opportunities can help Realtors have open conversations with sellers about their options. They can ensure everyone is informed and prepared to move forward with the home sale process.

How FastExpert Agents Can Stand Out

Real estate agents who work with FastExpert can grow their client base and take advantage of educational tools and resources. FastExpert can help agents gain local insights that allow them to estimate fair market offers in their CMAs. They can help their clients sell houses for higher prices with expert marketing strategies that increase demand for properties. This means they can offer more value to home sellers and win them over with their skills and experience. 

If you aren’t already using FastExpert, explore its resources today. Take the next step in your real estate career and get the exposure you need. Today’s agents don’t have to fear instant buyers. Instead, they can work alongside them and win customers over with targeted pitches.

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