It wasn’t that long ago that the only way to sell a home was to hire a real estate agent, list a home on the MLS, and hope that a decent offer would eventually come in. Today, technology is helping to make buying and selling a home more transparent, faster, and fair.
A growing number of companies are offering homeowners a way to bypass the traditional way of selling a home by skipping open houses and showings and selling quickly for cash.
In this article, we’ll explain how companies that buy houses for cash work, the pros and cons of selling for cash, and take a closer look at 5 iBuying companies that are streamlining the process of selling a home.
Key takeaways
- Companies that buy houses for cash may be a good option for sellers who want to close fast.
- Cash offers are normally received within 1-2 business days and closings may occur as quickly as 10- 14 business days.
- Some companies that pay cash make offers well below fair market value, while others use technology and in-depth research to make a fair cash offer.
- There are no open houses or stagings, potentially fewer buyer demands, and no financing contingencies to worry about when selling to a company that buys houses for cash.
Who should consider a cash house buyer?
Selling for cash may be a good strategy for someone who wants to skip a traditional listing process to sell a house fast.
In the real estate business there are 5 main ways to sell a house:
- Conventional listing with a real estate agent on the MLS available to the general public.
- Off market listing to a real estate investor who may offer cash with few contingencies.
- “We Buy Houses” type of companies targeting owners with distressed property willing to sell at a deep discount.
- iBuyer companies – also known as “instant” Buyers – that pay a fair cash price for homes in need of minimal repairs.
- For sale by owner (FSBO), where an owner will list and sell their home on their own.
The first 2 options may be a good fit for sellers who are trying to get maximum value. Sellers like these don’t mind spending the time prepping the property for showings, negotiating with home buyers or their real estate agents, and waiting for contract appraisal and financing contingencies to be removed.
On the other hand, companies that pay cash may be a good match for sellers who don’t have the time or patience to jump through the hoops that some demanding buyers expect. Selling to a company that buys houses for cash can provide a smooth, quick sale with no surprises at a fair price.
Difference between We Buy Houses and iBuyer
While both offer a seller a cash deal with a quick close, there are differences between We Buy House and iBuyer companies.
We Buy House outfits generally want to fix and flip a home. In order to turn a quick profit, they need to buy at a steep discount, make necessary repairs, and re-sell the home at a higher price.
On the other hand, iBuyers normally look for homes in good condition and offer a seller a fair price in exchange for a fast, hassle-free closing.
iBuyers use machine learning, data analysis, and algorithms that factor in a home’s features and location to make a fair cash offer. In some instances, the entire transaction can be completed online via a user-friendly platform with closing as quickly as 10-14 business days.
How companies that pay cash for homes work
Here are the basic steps that a homeowner selling to a cash home-buying company can expect:
- Submit the address of a home online or by phone.
- Receive a cash offer within 24–48 hours.
- Schedule a time for an onsite inspection (some iBuyers may purchase sight unseen).
- Review and accept the final offer (may be adjusted for any detected repairs).
- Close escrow between 10–14 business days and receive cash at closing.
5 companies that buy houses for cash
Depending on the local real estate market, there may be quite a few companies and private investors offering to pay cash for a home. Here’s a look at 5 major companies that buy houses for cash.
Roofstock
In less than 6 years, buyers and sellers have completed more than $4 billion in single-family rental transactions on Roofstock. Roofstock offers owners two ways to sell a house for cash so that sellers can keep their options open:
- Roofstock Offers is a program for sellers with qualified rental properties who want to quickly sell for cash. If the home is already rented, the tenant can stay and the seller can keep collecting the rent until closing. The service fee is just 3% and closings can occur as quickly as 10–14 business days.
- Roofstock Marketplace is used by sellers to market single-family rentals and small multifamily properties to a global network of investors. A seller can request cash-only offers and the sales commission is just 3% or $2,500, whichever is greater. There are no open houses or showings to deal with, and rental income can be collected until the day of closing. The team at Roofstock performs upfront due diligence, creates an attractive listing, and coordinates the entire closing process once an offer is accepted.
Offerpad
Offerpad also provides sellers with two ways to sell for cash. After requesting an offer online, a seller will receive a cash offer within 24 hours and can decide whether to accept the offer or list the home:
- Express Cash Offer is designed for owners who want to sell without listing or showing a home. The service fee is 5% plus repair costs based on a property inspection.
- Flex List with Confidence is for people who want a traditional listing with showings and guidance from real estate experts. The sales commission is 6%, plus estimated seller concessions of 1%, plus repair costs based on a property inspection.
Redfin
Redfin is a full-service real estate brokerage that offers sellers a discounted fee to list a home. The company’s RedfinNow iBuyer program is designed for owners who want to sell directly to Redfin for cash:
- RedfinNow delivers an offer in about 1 day. After speaking with a home sales advisor, a seller has 5 days to accept or choose another option for selling. Once a free home inspection is completed, a final offer is made reflecting repair costs. The RedfinNow convenience fee ranges from 5%-13% and a seller can pick the move out date.
Opendoor
Opendoor is a full-service real estate company where people can buy, sell, and trade a home. The company promises transparent pricing with no hidden fees, and works with buyers and sellers to understand the costs up front:
- Sell to Opendoor is the company’s iBuyer program for sellers who want to get a cash offer, skip showings, and have a flexible closing date. After entering the home address, a seller receives a free offer within 1-2 days and has 5 days to decide. The service charge is no more than 5% plus repair costs based on Opendoor’s assessment.
- Sellers seeking a more traditional sales process can also list with Opendoor. The commission fee is 5%, plus estimated seller concessions of 0%-2%, plus repairs based on the buyer’s inspection.
Zillow
Zillow is an online real estate marketplace that promises customers a nearly seamless end-to-end experience for buying, selling, and renting homes. After answering a few questions online, a seller can get a competitive cash offer with the company’s homebuying program:
- Zillow Offers lets a seller skip the home prep, receive dedicated on-call support, with a guaranteed cash payment at closing. After a seller submits a property and receives a cash offer, a Zillow Advisor follows up within 1–3 days to answer any questions. Zillow completes a free in-person home evaluation, with the cost of any needed repairs reflected in the final offer.
- Zillow notes that selling fees for Zillow Offers fluctuate regularly, and may range both above and below traditional selling fees, based on local market conditions. Historically, service fees have averaged 7.5% and closings can occur in as little as 7 days.
Update: As of November 2021, Zillow announced that they are no longer buying homes.
Things to consider before selling to a cash buyer
Every home seller has a different situation. While selling for cash could be the right decision for one owner, it may not be the best choice for another. Here are things to consider before selling to companies that buy homes for cash:
Advantages of selling to a cash buyer
- Sell quickly for cash and close as quickly as 10-14 business days.
- No maintenance, staging, or open houses and, if the home is rented, the tenant can stay in place.
- No appraisal or financing contingencies.
- iBuyer service fees start as low as 3% of the property purchase price.
- Several i-Buyers offer flexible options of selling for cash or listing on a real estate marketplace.
Disadvantages of selling to a cash buyer
- Companies who pay cash and flip homes may offer a price significantly below fair market value.
- Owners may realize a higher selling price by choosing a traditional method of listing the home and seeking competitive offers.
- iBuyers may still require that repairs be made with costs deducted from the final offer price.
- Cash buyers may be more difficult to negotiate with than real estate investors or buyers looking for a primary residence.
Closing thoughts
There are several ways to sell a home, from traditional listings on the open market to companies that buy houses for cash. The ‘We Buy Houses’ type of companies generally flip homes and expect a deep discount in exchange for a cash offer.
On the other hand, iBuying companies combine machine learning with in-depth research to make a fair all-cash offer for a home. Sellers avoid the hassle of making repairs and staging a home, there may be fewer contract contingencies to worry about, and closing may occur as quickly as 10 business days.
