How does Cash Home Buying work in America?

Real Estate Technology with Houzeo Corp.

The companies that buy houses for cash are called cash buying companies. These companies are the big names of real estate buyers who are known to make cash offers to the owners of the homes. Usually, the buyers get fair value for the property which remains to be under the bracket of 70% to 90% of the property’s market value.

Another thing to know about the cash buying companies is that they usually make the final offer and are not open to negotiating the same. When you are selling the home for cash, then do not expect to get the full 100% value of your home. However, the best websites for FSBO such as Houzeo creates an MLS listing and enables you to get 100% fair market value of the property.

The benefit of cash home buyers is that they make cash offers immediately. They offer cash for both the houses and land properties. They have been helping house sellers to avoid the hassle of creating MLS listings, marketing the home, making repairs, clicking pictures, home staging, and a lot more. etc. 

Types of Cash Home Buyers

Now it is essential to know that there are two main types of Cash house buyers.

 “We Buy Houses for Cash” Companies

One of the cash buying companies that are known to buy houses in any condition and make an instant cash offer for distressed properties is “We Buy Houses for Cash” companies. Homeowners who are worried about the bad state of their properties and a long list of repair work can contact this company. These companies excel in buying inherited homes that require a lot of repairs. The homes that have major repair issues or are stuck in foreclosure, can also look forward to seeking help from such companies.

Depending on the condition of the home, you can expect an amount of 30% to 70% of the fair market value of the property. Compared to other options such as HomeVestors which are franchise networks, this network involves retail cash buying companies.


These are the companies that buy homes for cash by making instant cash offers. The offers they make are non-negotiable and their value depends upon the location of the house, its condition, how much repair is needed, ARV or After Repair Value price, and more.

Compared to the previous option, buyers offer a better value of the home which remains to be around 70% to 90% of the home’s fair market value. iBuyer companies rely on the advanced methods of proprietary algorithms to determine the correct price of the home and do not use local sales data or expert data.

One of the best iBuyer companies called Opendoor and Offerpad makes the best offers to the sellers. As compared to other iBuyers, they ensure better prices as well as a fast closing schedule. Selling a house to an iBuyer makes sense when you have a house in good condition and want to sell the house instantly. Different iBuyer operate in different ways, but most of the companies have a similar buying model.

  • Firstly, you need to furnish all the details and information about your home. Most iBuyers accept all the basic information about the property online or on the phone.
  • Next, the company makes a preliminary cash offer. After checking the house through a range of eligibility criteria, you can get a cash offer. 
  • In the next step, you need to get the home inspection done. The onsite expert will do the same. This happens once you agree to the cash offer made by the company.
  • After the home inspection, the company deducts the repair costs and other expenses to make the final offer.
  • Now is the time to review the cash offer and close the deal.

The best part about the iBuyer companies is that they provide higher flexibility on the closing schedule.

An important tip for you is that before selling your property to the iBuyers, always ensure to get an estimate from a local realtor. This is when you can know how much your home can sell for exactly in the open market.

How Much do they pay?

While the iBuyers can pay a high amount for the home which is more than 100% at times, they also pay as low as 70% of the home’s fair market value. It all depends on the condition of the home, the age of the home, and its locality. iBuyers is best for you in case you have a good house that does not need any major repairs.

While the iBuyers provide a hassle-free home sale and a gratifying experience adding to the convenience of the home sellers, they charge a service fee as well. You most often need to pay the final service fee of around 10% to 18% of the home price. Again, the iBuyer fees will also depend on the condition and location of the home. If you have a house in good condition that does not need any repair and is located in one of the posh localities, then the service fees will be only 5%.

Why should you consider selling to the iBuyer?

Here are the reasons why you must consider selling your home to the iBuyer:

They make instant cash offers. iBuyers make a cash offer within a time period of 24-48 hours. The moment you accept it, they move very fast and close the property sale, compared to the sluggish traditional home sale.

Since you don’t have to list your home on the MLS or other websites, you need not spend time waiting for potential buyers. While selling to an iBuyer, you can easily skip the hassle of a regular home sale and get immediate cash for your house.

iBuyers are a reputed company that ensures a convenient home-sale transaction. These companies have enough finances and can be considered reliable.

You need not incur the cost and hassle of making house repairs and home staging when you sell to an iBuyer. You can also check out ibuyer reviews for more information.

Why selling your house to an iBuyer may not work for you?

Here are some of the drawbacks:

  • iBuyers offer take it or leave it cash deals. The seller cannot negotiate with the company and push the price of the deal up.
  • iBuyers are available only at a few locations.
  • iBuyer buys only good-conditioned homes and not distressed properties.


Another option for you is to seek the services of Houzeo, one of the best flat fee MLS and FSBO websites,  to list on the MLS and get the best money for your house.

You can also check out Houzeo reviews to get a better understanding of how they work.

Comments (3)

Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

This is an excellent post with great information. Thanks for sharing it.

Have a super fantastic week!
Joe Jackson, Realtor-KWCP

Sep 16, 2022 05:09 AM
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Jigar.  Sellers should realize upfront that a quick all cash transaction means someone else is betting on full price later by you eating the discount now! There is no free lunch. As a seller you are picking up the tab. Enjoy your day

Sep 16, 2022 05:39 AM
Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em:

Great information.  Thanks for sharing and enjoy your week!

Sep 16, 2022 06:05 AM