What is an iBuyer?

What is an iBuyer and how can Canadians take advantage? Find out here.

Today we’re going to discuss something you’re going to hear much more about in the coming years: iBuyers. What’s an iBuyer? The “i” stands for institution. iBuyers are institutional buyers that are popping up in the U.S. like Opendoor, Offerpad, and now Zillow Offers. These are publicly traded, Wall Street-backed companies with billions of dollars that are looking to provide a new option to home sellers and hopefully grab market share.

As you can see by the graph at 0:35 in the video above, their growth in the marketplace has been exponential. In 2019, pardon the pun, the numbers have been off the charts! Big companies like Zillow are focusing almost exclusively on this iBuyer platform.

What is an iBuyer? (The Canadian Context)

In the simplest terms, an iBuyer (Instant Buyer) is a company that uses technology and local market data to make an immediate cash offer on your home. While the traditional real estate process relies on finding a single buyer through showings and open houses, an iBuyer is the buyer.

In Canada, the iBuyer model is a specialized alternative to the “listing and waiting” game. Unlike the massive, impersonal tech platforms seen in the USA, Canadian iBuyers like Cash Offer Canada combine high-speed data with deep local market knowledge to provide a certain exit for homeowners who value speed and convenience over everything else.

How iBuying Works in 4 Simple Steps

The process is designed to remove the “friction” of a traditional sale. Here is exactly how a transaction with a Canadian iBuyer typically unfolds:

• Step 1: Quick Assessment: You provide your property address and basic details (year built, recent upgrades, and condition). The iBuyer either completes a digital or in-person assessment of your property.

• Step 2: The Preliminary Offer: Using a proprietary “valuation engine,” the iBuyer compares your home against thousands of recent local sales to generate a fair, market-based cash offer—usually within 24 to 48 hours.

• Step 3: Verification: A brief, no-stress home inspection is conducted to confirm the property’s condition and verify that no major structural repairs are needed.

• Step 4: You Pick the Closing Date: This is the biggest advantage. Whether you need to move in 7 days or 60, you choose the timeline that fits your next move.

What Does an iBuyer Offer a Seller?

First, it is the most convenient way to sell your property. You can go on the website, enter your information, and receive a cash offer on your home within 24 hours. That offer is only pending a visual inspection, and you can have the cash for your home in as quickly as seven days. You’re also allowed to pick the closing date that suits you, so you can take a few weeks more to move out of the house if you need it. This is a convenient way to move instead of trying to do it all in one day.

Second, these large buyers don’t have a financing clause, so you don’t have to worry about them getting a mortgage or their financing falling through. There’s a lot of certainty there. Third, you don’t need to be concerned about picking up a paintbrush or doing deferred maintenance. You can even leave all debris in the house, anything you don’t want to take with you. The iBuyers will get rid of it. From a convenience standpoint, there’s nothing better, that’s why you’re seeing such a massive increase in the market for iBuyers.

“I thought, ‘Why not do a trial run here in Canada and see what happens?'”

There’s a cost to all this, of course. When you only expose your home to one buyer, and that buyer is incentivized to try to get it for slightly less so they can take it and fix it up, resell it, and hopefully make a profit on it, you’re missing out on the opportunity to take it to the marketplace. That’s what we do as Realtors. We try to elevate the level of competition for your home so you get the most amount of money in your pockets at the end of the day. You give up the potential to maximize the sale in exchange for convenience, control, and certainty. Fundamentally, that’s what the iBuyer movement is.

A couple of years ago I was talking to a few brokers and agency owners and they were all afraid and anxious about these iBuyers coming into the market and stealing market share, and that’s exactly what’s happened. Watching this over the years, it’s become a growing concern in the United States. There’s a substantial amount of money pouring into this iBuyer space. We didn’t have this in Canada yet, but if the public wants it, I thought, ‘Why not do a trial run here in Canada and see what happens?’

So, I started a company with a group of investors, and we created Cash Offer LP. It’s exactly the same promise: sell fast, stress-free, and convenient. Ultimately what we’re offering is an instant cash offer on your home and you’re in control of the closing dates. So, we ran a small test on this and received 1500 visits to the website. Out of those visits, 150 requested an offer on their home. I sent out an elimination email to everyone, basically saying; I can’t possibly do this many evaluations, but here’s our model, we’re buying homes at 10% back of the market value, if that’s of interest to you, please tell me and I’ll proceed. 30 people emailed back and asked me to proceed. We made offers, and six of those became homes we bought.

Therefore, there’s a market for this here, but it’s not for everyone. If you have time on your hands and you want to maximize the sale of your home, this is not the product for you. We specialize in consulting you on how to fix your house up, then we do targeting marketing campaigns to put your home in front of thousands of buyers, to get you the most amount of money. That is still our core product. In addition to that, we still offer our guaranteed sale where you get all of the marketing and the fallback plan of the guaranteed sale in 29 days. Now, we have a third option, which is the instant cash offer. The whole purpose of this is to give our customers as many options as we possibly can.

Is an iBuyer Deal Right for You?

iBuying isn’t for everyone, but it is the perfect solution if you fall into these categories:

• The “Bridge” Buyer: You’ve already found your dream home and need to unlock your equity immediately to avoid losing the deal.

• The Relocator: You’ve started a new job in another province and don’t have the luxury of managing a listing from afar.

• The “As-Is” Seller: Your home needs significant cosmetic updates or minor repairs that you don’t have the time, desire, or cash to manage.

• The Privacy-Focused: You want to avoid dozens of strangers walking through your home during open houses.

• The Homeowner Facing Foreclosure: You are dealing with a looming bank deadline or mortgage default and need a guaranteed sale to rescue your remaining equity before the legal process completes. Unlike a traditional sale that can take months, an iBuyer can often close fast enough to stop a foreclosure or power of sale in its tracks.

Understand the full trade-offs of a cash sale compared to a traditional listing.

If you’re interested in knowing a bit more about our cash offer iBuyer program, you can take a look around the Cash Offer website. All the frequently asked questions are there.

As always, We would love to consult you on how to maximize your home sale or how to buy a property. If you have any further questions for us, please reach out by phone or email. We would love to help you.

– Posted by AJ Hazzi on Tuesday, December 3rd, 2019