What Is an iBuyer? How They Work and Who Is Left in 2026

The pitch sounds almost too clean: type an address into a website, get a cash offer in a day or two, pick a closing date, skip the showings. That is the iBuyer model, and for certain homes it works exactly as advertised. For others it does not work at all, and the industry’s short history explains why.

How an iBuyer works

“iBuyer” is short for instant buyer. The process runs on software rather than a walkthrough:

1. The owner submits the address. An automated valuation model estimates the home’s worth from recent sales data, tax records, and the details the owner provides.
2. A preliminary cash offer arrives, often within 24 to 48 hours.
3. The company inspects the home, in person or by video, after the owner accepts.
4. The offer is adjusted. Repair costs the inspection turns up are deducted from the price or requested as credits.
5. Closing happens on the owner’s schedule, with the company letting the seller pick a date within its allowed window.

The company then makes light repairs and relists the home. Its profit comes from the service fee and the resale. That is why iBuyers stick to homes their software can price confidently and their crews can renovate predictably.

Speed is the genuine advantage. No listing, no strangers walking through, no waiting on a buyer’s loan approval. What the model cannot do is handle surprises. That distinction runs through everything below.

Which iBuyers still operate in 2026?

The roster is much shorter than it was five years ago.

Still operating nationally: Opendoor and Offerpad. Both are publicly traded and buy and resell homes in dozens of metros. Both have also shrunk their volumes from the 2021 peak while they chase steady profitability.

Zillow is not an iBuyer anymore. Zillow Offers shut down in November 2021 after the company lost heavily on homes it had overpaid for. Zillow announced it was cutting a quarter of its workforce as part of the wind-down. The Zestimate still exists, but Zillow no longer buys homes.

Redfin is not an iBuyer either. RedfinNow closed in November 2022 amid layoffs, about a year after Zillow’s exit. Redfin operates as a brokerage, not a direct buyer.

Anyone claiming to be “Zillow’s home-buying program” in 2026 is misrepresenting themselves. That is worth remembering when unsolicited offers show up by mail or text.

What iBuyers charge

Three costs stack together in an iBuyer sale:

• The service fee. Offerpad publishes a 5 percent service fee. Opendoor no longer publishes a fixed percentage. Its fee appears in each offer’s breakdown, and the company compares it to a typical agent commission.
• Repair deductions. After the inspection, the company subtracts its estimated repair costs from the offer. This number varies house by house and is where offers most often shrink between the first quote and the final contract.
• Closing costs. Roughly 1 percent, similar to a traditional sale.

Sellers comparing an iBuyer offer to a listing should compare final nets, not headline prices. A listed home carries commission, seller concessions, repair negotiations, and months of carrying costs. An iBuyer sale carries the fee and deductions above. Neither route is free. Which one nets more depends on the house and how fast the owner needs to move.

Is an iBuyer legitimate?

Yes, in the plain sense of the word. Opendoor and Offerpad are real, publicly traded companies that close on homes with real money at licensed title companies. Selling to one is not a scam.

Legitimate does not mean the numbers always land where the marketing suggests, though. The Federal Trade Commission made that point emphatically. Sellers should know the story before treating any instant offer as a market benchmark.

There is a second, sneakier risk: imitators. The iBuyer brand halo attracts copycats who send “instant offer” letters but have no funds and no intention of closing. The screening questions in how to tell a legitimate cash buyer from a scam apply to any direct buyer, algorithmic or human. Proof of funds, closing in their own name, a licensed title company, and no fees to receive an offer.

What the FTC case against Opendoor showed

In August 2022, the FTC announced a $62 million settlement with Opendoor Labs over marketing claims made between 2017 and 2019. The agency alleged Opendoor told sellers they would receive market value and come out ahead of a traditional sale. In practice, the FTC said, many offers ran below market value. The advertised cost comparisons also left out the effect of service fees and repair deductions.

In April 2024, the FTC mailed refund checks to 54,689 home sellers. The checks totaled nearly $62 million, about $1,024 each on average.

Two lessons carry forward. First, the model itself was never the accusation; the marketing was. Second, the FTC’s core complaint doubles as practical advice. Fees and repair deductions decide the real outcome. Sellers should demand the full breakdown in writing and read it before signing. That advice applies equally to any cash buyer, national or local.

iBuyers versus local cash buyers versus agents

Three different tools for three different jobs.

An agent listing reaches the entire retail market and usually produces the highest gross price for a home in marketable condition. It costs commission, weeks to months of time, showings, and often repair work up front. For an owner with a presentable house and no deadline, it is the default for a reason.

An iBuyer trades some of that price ceiling for speed and certainty, but only accepts homes inside its criteria. That means conventional construction, standard lots, moderate price bands, and no major defects. The inspection-then-deduction step means the first number is not the final number.

A local cash buyer exists for the homes the other two channels handle poorly. Think foundation problems, fire or water damage, inherited houses full of belongings, tenants in place, code violations, or a foreclosure clock ticking. A local buyer walks the property before making the offer, buys truly as-is, and can close in days. The mechanics are laid out in how a direct cash sale works.

The honest matrix: standard house plus time equals agent. Standard house plus urgency equals iBuyer or local buyer, whichever nets more. Complicated house equals local buyer or an as-is sale, because the algorithm will simply decline.

Which homes fit the iBuyer model

An owner can save time by self-screening before requesting offers. iBuyers tend to decline or steeply adjust for:

• Structural issues, foundation movement, or unrepaired water damage.
• Unpermitted additions or converted garages.
• Homes outside their price bands, on large acreage, or with unusual layouts.
• Tenant-occupied properties.
• Pre-foreclosure situations with tight legal deadlines.

Owners in those categories are not out of options; they are simply in a different market. And owners under financial stress should talk to a free HUD-approved housing counselor before selling to anyone. A counselor may surface an option that keeps the house entirely.

For everyone else, the request costs nothing. Get the instant offer, get a local agent’s net sheet, and get a direct buyer’s written offer if the house has issues. Then put the three final numbers side by side. The best iBuyer is not a brand name. It is whichever channel wins that comparison for one specific house.

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