What Criteria Do iBuyers Use?
Updated: Mar 27
As a seller, you have many options for selling your property. One option that is increasing in popularity is selling through an iBuyer. This is a way to move quickly by avoiding showings, open houses, and extended time on the market. But how do iBuyers make decisions on what houses to purchase?
It’s clear how sellers choose which iBuyer deal to accept: they balance price and convenience. Sellers are left to make this decision on their own without guidance – sorting through fees and incentives to calculate their net returns. That’s why we recommend working with a Certified Agent through Keller Offers, so that you don’t have to choose between an iBuyer offer and representation.
As for iBuyers, they tend to use four main criteria for selecting which houses to target: Condition, Price, Challenges, and Market Activity. Let’s explore all of these! By understanding where iBuyers are coming from, you can best position your house, should you desire an iBuyer offer. In general, iBuyers are looking for fairly priced houses that can be quickly improved and put back on the market, so anything that impairs that process will make a house less attractive.
Condition is key to iBuyer offers. Large-scale structural issues such as foundation problems can be an immediate red flag for iBuyers. Expensive and time-intensive repairs will disrupt the process in two ways. First, they require much more work to evaluate and put a price tag on. Second, because these types of repairs can take weeks to pull off, and might require additional permits when completed, they will increase the time iBuyers have to hold onto houses, thus reducing the iBuyer’s profit margin. Additionally, foundation repairs can cause plumbing issues, another time and cost intensive repair to risk. In general, these houses will be out of the running, and might be a better target for a flipper or someone who has more risk tolerance.
The general condition of the house matters as well. While you don’t need a spotless house, we recommend that you do basic maintenance so that the iBuyer’s evaluators can visualize a quick path to market. You will submit pictures of the house, and sharing a high-quality, tidy house can help the process. Many iBuyers put an age limit on the houses they are purchasing, making a better condition more likely.
Tip: iBuyers will inspect the house, so disclose any major issues and fix minor ones.
Price matters! iBuyers want to make a fair offer that fits sellers needs. In a 2019 study of 20,000 iBuyer purchases, researcher Mike DelPrete found that iBuyers paid a median purchase price that was 98.6% of what the same house could have gotten on the open market. This means that accepted offers are within a fairly narrow range.
Then, when they sell the home, the median appreciation on iBuyer homes is 3.3%, and much of that increased price is due to improvements that the iBuyer made. iBuyer margins are thin.
iBuyers tend to prefer established neighborhoods with median prices around the national average. In some markets, this will bump up a little. iBuyers will be more interested in a planned community in the suburbs than a townhome in a historic district.
Tip: iBuyers will offer the price that makes sense for their model, so have a Certified Agent work with you to evaluate any offer you receive.
iBuyers will get scared away by any variables that make selling the house more challenging. An unpermitted addition would dramatically delay the sales process. Anything that would make the house harder for you as a seller to sell will impact an iBuyer. Selling to an iBuyer is not an easy out for a challenging condition your house has.
When looking at these challenges, it’s best to talk with an expert to ensure that you’ve covered all angles. You don’t want to get your hopes up, and then come to find out that iBuyers won’t buy in a 55+ senior community because the buyer pool is too small.
Tip: Have an expert go through a checklist of challenges with you so that you can determine what is solvable and what is not.
Level of Market Activity
The market can greatly impact iBuyers. How strong is the local market? How quickly and for what price will the house sell should the iBuyer acquire it? The impact of other sales is key to the projections that iBuyers make. If they predict the house will be difficult to sell, they will be hesitant to make an offer because they don’t want to end up holding the house. Additionally, some iBuyers will only buy a certain number of homes in an area, so they might face an internal market saturation issue.
As a seller, there isn’t a lot you can do to control the market, so this is really external to your house. If you want an iBuyer offer, sometimes it’s better to move quickly, yet it is difficult to predict the market. Work with an expert to make it happen!
Tip: Work with a real estate agent to stay abreast of changes in the market so that you can adjust your strategy as needed.
As a seller, you likely want to maximize your sales price and the convenience to your family. As you’ve seen, there are a lot of variables to weigh, so getting a specialist to help is highly recommended. Keller Offers Certified Agents are trained in all aspects of iBuyer sales and are a great option!