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iBuyer: What It Is And What To Know About Using One In Real Estate

Kevin Graham7-minute read
PUBLISHED: October 13, 2021 | UPDATED: September 08, 2022

If you're looking to buy a home right now, you know just how competitive the market is. According to the National Association of REALTORS®, the average property was on the market for only 17 days in September. Given this, home sellers can be really picky about the offers they get because buyers want what they’re offering.

Of course, sellers want to make as much money as possible, but both buyers and sellers value certainty. What if you didn’t have to make your offer contingent on the sale of your previous home because you knew you had an offer?

An iBuyer uses technology to provide offers on homes, smoothing the process for people looking to sell a home while at the same time buying another. Additionally, iBuyers have to turn around and sell those homes they buy, providing a potential resource for buyers, particularly in markets with scarce inventory.

We’ll go over how the whole process works along with the advantages and disadvantages. But first, let’s touch on the basics.

What Is An iBuyer?

An iBuyer, also referred to as an instant buyer, makes use of data and the immense amounts of computing power afforded by today’s technology to feed an algorithm that looks at your home and the housing market in your area to give you an offer on your home in a day or two without you having to go to the expense and effort of listing your home for sale. The algorithm is sometimes supplemented with information from real estate professionals. You can accept this or choose to go forward with putting your property on the market, but it’s an offer.

Of course, you may realize that you’re not in a position to judge market value. The iBuyer has an advantage over you here. Wouldn’t it be nice to have a real estate agent who can advise you? We recommend you check out our Offer Guarantee program. Available in select markets now, we’ll be rolling it out to more areas in the future.

While we’ll have more on the way the Offer Guarantee works below, the general landscape of iBuying involves various business models. However, a commonality is making an offer based on information about your home and market values in your area. These homes are purchased and then resold at a later date.

iBuyers Vs. Real Estate Agents

iBuyers combine market data with information they have about your home, putting the data into a powerful algorithm that generates an offer. Real estate agents often perform a competitive market analysis to help you determine the proper sale price for your home. The difference is that a real estate agent will help you put your property on the market.

Putting your property on the market can yield advantages, particularly in a competitive market. Even if the iBuyer’s offer is based upon market value, it’s important to realize that appraised values can lag behind what’s actually happening in a market at times because all appraisals are based on past sales, even if they’re recent.

By putting a home on the market, you’re hoping to start a bidding war and get the best possible offer for your home. Agents charge a commission that’s usually around 6%, but depending on the price you get, you may find that it’s worth it.

As we’ll discuss below, there is no reason not to get an offer from an iBuyer and also work with a real estate agent. For starters, you still need to find a new home even if you take the offer from the iBuyer. You’re also under no obligation to take the offer. You might see what they’re offering and decide to still put your home on the market. Having a real estate agent doesn’t hurt.

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How Does iBuying Work?

Now that we’ve gone over the basics of iBuying, what does the process actually look like? Let’s look at this from the perspective of both a buyer and seller.

Buying A Home From An iBuyer

iBuyers have websites where they’ll list inventory they have available for sale to home buyers. Depending on the site, you may be able to schedule a tour or do a virtual tour. Be prepared for them to have certain rules like the requirement that you have a mortgage preapproval. Some of them may offer their own financing, although you should be free to get a mortgage anywhere.

You should also be prepared to pay for certain closing costs, although you may find they’re cheaper than a traditional real estate transaction because you’re not dealing with as many costs.

Selling Your Home To An iBuyer

The process of selling your home into an iBuyer may vary a bit depending on who you’re selling to. We'll go over some general factors that can affect the property value you’re given before going into a little more depth on the Offer Guarantee program from Rocket Homes Real Estate LLC.

When coming up with a market value for your home, these algorithms take into account things like the style of the home, the number of units, the square footage and the number of bedrooms and bathrooms. Things like a pool or a finished basement may also be considered. The computer calculations may be bolstered or adjusted based on feedback from local experts.

Once all of this information is taken into account, you’re given an offer good for a certain period. The offer may also be contingent on inspection as well.

When you use Rocket HomesSM Offer Guarantee rogram, you get the best of both worlds. Let’s take a look at it.

Offer Guarantee Program

One of the big distinctions of our program as compared to other iBuyer offerings is that we pair you with a real estate agent from the start. As mentioned earlier, there’s an information gap when you’re looking at these offers because you don’t buy and sell homes every day, so most people have no idea how to accurately evaluate the potential of their home or a proper sale price.

Here’s the breakdown of how this option works:

  • A Rocket Homes Agent is provided to either help you list your home or move forward with our Offer Guarantee program.
  • If you don’t have financing lined up already, we help you apply for a Verified Approval from Rocket Mortgage®.
  • Rocket Homes gets you a guaranteed offer from one of our iBuyer partners good for the next 60 days. Importantly, this is a cash offer. It’s not going to fall through at the last second.
  • You can accept the offer or list your home on the market at this point.
  • Search for a home with your Rocket Homes Verified Partner Agent.
  • After you’ve had an offer accepted, you can activate your guaranteed offer and sell your current home, unless you’ve received a better offer from another buyer in the market.
  • We set up title and closing with our partners at Amrock.
  • You close on both homes at the same time.

Of course, you’re not required to go with the guaranteed offer and if you can negotiate a better offer on the market, you’re free to do so.

Pros And Cons Of Working With An iBuyer

There are benefits and drawbacks to working with an iBuyer. Let’s run through them.


  • Less work: You don’t have to stage your home, market it and leave for open houses. The only real viewing done is an inspection to verify the accuracy of the information.
  • No repairs: If there any repairs to be done, iBuyers generally handle them. It may reduce the offer you get, but at least you won’t have to handle the work.
  • Guaranteed offer: These are guaranteed offers, generally in cash. There won’t be financing issues.
  • No commission charge: If you sell with a real estate agent, they usually make a commission on the sale. This is split between the buyer’s agent and the listing agent and is generally paid by the seller. Typically, it amounts to 6% of the purchase price.
  • Buy confidently: Because you have a firm offer that you know is good, you can move forward with the purchase of your next home knowing that you can reinvest your profits into your new home if you want. You also want to have to worry about juggling two mortgage payments.


  • Service or listing fee: This is generally how these services make money. It also helps cover their costs while they hold the house waiting to sell it. Costs are going to vary from service to service. Rocket Homes offers a reduced listing fee.
  • You may get more on the market: These iBuyer services try to offer you market value, but depending on how competitive your market is, it can be difficult for even the most recent appraisals to match what’s happening on the ground. In some areas where people are particularly motivated, they may pay above market.

How To Choose An iBuyer

When you’re selling your home, money plays a big part in any decision. Ideally, you’ll want to take the highest possible offer with the lowest possible service fee if you do go with an iBuyer.

However, money shouldn’t be your only concern. You also want to make sure you’re working with an entity that has your best interest in mind. If you can work with a real estate agent who can tell you whether an offer is good or if you should list, that’s a very attractive proposition. That’s where our Offer Guarantee can help you be confident in your decisions.

The Bottom Line

iBuyer programs offer the enticing proposition of receiving a guaranteed offer, which can be especially important in hot markets because you don’t have to make your offer contingent on the sale of your current home or worry about having to carry more than one mortgage payment. Rocket Homes has an Offer Guarantee program available in select markets and coming to more areas in the future.

An additional upside is that you don’t have to worry about repairs or showing your home. You should know that they make their money on a service fee, though. Depending on market conditions in your area, you may be able to receive a better offer by listing your home if people offer higher than market pricing. This is where the guidance of a real estate agent can really help.

If you’re looking to buy or sell a home, work with one of our Verified Partner Agents who understands your market and can align with your goals. If you’re getting ready to list your home, check out this post on how to increase your home value.

Kevin Graham

Kevin Graham is a Senior Blog Writer for Rocket Companies. He specializes in economics, mortgage qualification and personal finance topics. As someone with cerebral palsy spastic quadriplegia that requires the use of a wheelchair, he also takes on articles around modifying your home for physical challenges and smart home tech. Kevin has a BA in Journalism from Oakland University. Prior to joining Rocket Mortgage he freelanced for various newspapers in the Metro Detroit area.