- Opendoor offers the lowest fees, the largest service area, the most in-house ancillary services. As the original iBuyer, it has tremendous institutional knowledge.
- Offerpad has the highest fees and the lowest customer ratings but offers the most additional services, such as assistance with moving.
- Knock is a lender that focuses exclusively on home trade-ins, allowing sellers to move first while still selling on the open market. It also has the highest customer ratings.
If you need to sell your home quickly, and you aren’t intent on getting the highest possible price, then you should consider working with an iBuyer.
iBuyers are companies that extend instant cash offers and flexible closing dates to sellers. They’re usually tech-centric and use data analytics to value properties — and they’re backed by investors, so they can afford to buy up a lot of homes.
iBuyers differ from conventional cash buyers and home flippers in how they earn money. Rather than purely earning a profit by reselling the homes they buy, most iBuyers earn money through service fees. As a result, they’re typically able to make cash offers that are closer to fair market value.
If you’re interested in working with an iBuyer, research can quickly lead you down a rabbit hole of endless comparisons: Opendoor vs. Offerpad, Offerpad vs. Opendoor, Opendoor vs. Knock vs. Offerpad.
Read on to learn the strengths and weaknesses of today’s leading iBuyers.
|Service fee||Capped at 5%||6-10%||1.25% convenience fee|
|Rating||4.05 stars||1.77 stars||4.8 stars|
|Time to offer||24 hours||24 hours||Get approved in 4 days|
|Cancellation fee||None||1% (starting 4 days after the revised offer)||None|
|Flexible closing date?||Yes||Yes||Traditional sale|
|Repair costs||Deducted from offer||Deducted from offer||$25,000 advance (must be repaid)|
When to Choose Opendoor
Opendoor was the first iBuyer and completes the highest volume of transactions compared to its competitors — making it the leading iBuyer in the U.S. It currently operates in over 20 markets across 12 U.S. states.
Opendoor’s process is a pretty typical iBuyer experience:
- Apply online. Begin by entering your information into an online form on Opendoor’s website. You’ll provide key details about your property, including photos.
- Get a cash offer. If your home meets Opendoor’s standards, you’ll receive a cash offer within 24 hours.
- Complete an inspection. If you accept Opendoor’s offer, an Opendoor inspector will visit your property and assess what repairs (if any) are needed.
- Receive an adjusted offer. Based on the inspection, you’ll receive an updated offer that deducts the cost of repairs.
- Choose your closing date. If you accept the updated offer, you can choose a closing date — which can be in as few as 14 days or up to 60 days.
- Receive the proceeds. You’ll receive payment for your property within a day or two of closing.
Previously, Opendoor’s service fee could range as high as 14%, but in late 2020, the company capped fees at 5% of your home’s sale price.
Our friends at Clever have partnered with Opendoor — and if you’re interested, you can request your cash offer in minutes.
Other Features and Benefits
- Opendoor Trade-In: Sellers can trade their previous home for a new one, which can ease the stress of having to oversee two closings while also packing and moving. Sellers who opt for the trade-in will receive a 1.25% rebate, which can be paid in cash or put toward the new home’s closing costs. To unlock these benefits, you must purchase your new home from Opendoor.
- Opendoor Trade-Up: If you want to purchase a newly constructed home, Opendoor partners with builder Lennar Homes. After selling your old home to Opendoor, you can schedule a smooth, same-day move to a newly-built Lennar home.
- Buyer Rebates: Buyers who purchase a home from Opendoor could be eligible for a 1% credit or 1% cash back at closing.
- Opendoor Home Loans: Opendoor offers in-house financing, with competitive interest rates and no fees. Customers may also qualify for a $1,000 credit at closing.
- Opendoor Title Services: Opendoor offers in-house title insurance and escrow services, which can simplify the closing process.
Who Should Sell to Opendoor?
If you’re trying to minimize your service fees and prioritize an easy sale, Opendoor is a great choice.
Opendoor offers the lowest fees and has the largest service area. Its in-house ancillary services also provide a smooth, all-inclusive transaction.
When to Choose Offerpad
Offerpad was the second iBuyer, launched soon after Opendoor, and currently operates in 14 cities across seven states. The two companies have similar business models, but Offerpad offers several distinct ancillary services — and charges higher fees.
Here’s how selling to Offerpad works:
- Apply online. Complete an online application on Offerpad’s website by submitting descriptions and photos of your home.
- Receive a cash offer. If your home meets Offerpad’s standards, you’ll receive a cash offer. You’ll have four days to decide whether to accept.
- Complete the inspection. If you accept Offerpad’s initial offer, the company will send an inspector to the property within 15 days. The inspection will determine whether Offerpad will require repairs.
- Receive an updated offer. After the inspection, Offerpad may revise its initial offer to reflect the cost of repairs it deems necessary. You’ll have the option of hiring your own contractors or accepting Offerpad’s repair estimate, which will be deducted from its cash offer. (Note: You’ll only have four days to consider the revised offer. If you back out after those four days are up, you’ll be charged a 1% cancellation fee.)
- Complete a walk through. If you choose to do your own repairs, Offerpad will schedule a walk-through two days before closing to make sure all repairs meet its standards.
- Choose your closing date. If you accept Offerpad’s cash offer, you can close in as little as eight days or up to 90 days.
Offerpad’s service fee is 6-10% of the sale price, plus closing costs.
Other Benefits and Services
- Home Trade-In: In about half of Offerpad’s markets, the company can coordinate your sale with the purchase of your new home, to ease your transition. Sellers can qualify for this program whether they’re buying an Offerpad property or a conventional MLS listing.
- Extended Stay: After closing, Offerpad allows you to stay in your home for up to three days. The company will withhold $3,000 from your sale proceeds as a deposit against potential damages, and those funds will be released after a post-move out inspection.
- Free Local Move: Offerpad offers free moving services within a 50 mile radius through the third-party vendor Bellhop. (Note: This offer is for free moving services only; sellers will have to do their own packing.)
Who Should Sell to Offerpad?
If you don’t mind paying slightly higher fees in exchange for some additional services, Offerpad may be a good option.
While Offerpad charges higher fees than both Opendoor and Knock, it does offer some conveniences such as free moves, extended stays, and even a trade-in option.
When to Choose Knock
Unlike Opendoor and Offerpad, Knock isn’t technically an iBuyer at all. Its entire business model focuses on its Home Swap program, through which it finances home trade-ins with early mortgage approvals and interest-free bridge loans.
Knock’s mission is to help sellers make a seamless transition between their old and new homes. To accomplish this, Knock will approve home sellers for a loan on a new property before their old one sells.
The company also offers interest-free assistance with down payments, overlapping mortgage costs, and repairs.
Here’s how a typical Knock transaction works:
- Apply online. Similar to applying for a typical home loan, Knock requires customers to complete two rounds of screening. The company also takes your old home into consideration. If you’re eligible, Knock will approve you for a new mortgage and offer a bridge loan to help cover the interim costs.
- Purchase and move into your new home. Work with a traditional real estate agent to find a new home. Knock’s financial assistance allows buyers to make a non-contingent — a.k.a., highly competitive — offer on a new home. If the seller accepts, you can close the deal and move in.
- Prepare and list your home. After your old home is vacant, you’ll have 45 days to either complete your own repairs or allow Knock’s contractors to handle them. When your home is ready, you’ll work with a traditional realtor to list and sell your home.
- Sell your old home. Once the sale of your old home is complete, you’ll settle your bill with Knock. The company will deduct its service fees, repair costs, and the balance of your bridge loan from the proceeds of your sale.
Knock charges a 1.25% convenience fee, based on the price of your new home, plus a $1,450 administrative fee. If you’re unable to sell your home within six months, Knock will buy it for 80-85% of fair market value.
Who Should Sell to Knock?
If you want the benefits of a traditional home sale on the open market, plus the financial flexibility to purchase a new home before selling your old one, Knock may be a great fit for your goals.
iBuyers vs Real Estate Agents
If you want to sell your home, a realtor or an iBuyer can both help you achieve that goal. But they get there in radically different ways and appeal to different priorities.
- A real estate agent can help you compete to get the best possible sale price on the open market
- An iBuyer might pay less, but can move much faster and offer more certainty
Your decision really comes down to your individual priorities. If you want to get the highest possible price for your home, and you’re not under any time pressure, a realtor is probably your best option.
If you prefer a fast, frictionless, and certain sale, and you’re not concerned about maximizing the sale price, an iBuyer sale might be your best option.
Real estate agents
A realtor is a middleman. They help guide your home onto the market, drum up interest, and then negotiate the sale price as high as possible. However, you’ll have to accept key trade offs including uncertainty and a potentially long process.
Your home’s sale price is a product of the market — basically, how much someone is willing to pay for your home. If a lot of people want your home, they’ll bid against each other, and the highest bid typically wins.
However, working with a realtor isn’t risk-free. If there’s little or no interest in your home, it may sit on the market for months — or fail to sell at all. If you must sell, you may be forced to accept a lowball offer that’s below the fair market value.
A conventional sale can also take a while. According to Zillow, the average home sale takes 55-70 days from start to finish.
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iBuyers use proprietary algorithms and data to estimate a home’s value. This price won’t be bid up by several interested buyers— but it will likely be pretty accurate, since it’s based on historical sale data and comparisons to similar properties.
iBuyers also move fast. Many extend cash offers within 24 hours and allow you to close in as little as eight to 10 days. This eliminates much of the waiting and uncertainty — in exchange for a price that’s probably lower than what you’d get on the open market.
In our in-depth Opendoor review, we took a look at the pros, cons, and potential fees associated with the nation’s leading iBuyer.
As the second iBuyer on the scene, Offerpad made waves as an Opendoor competitor. Our exhaustive review provides the answers you need about fees, drawbacks, and the potential perks of using Offerpad.
Knock lets homeowners buy a new house before selling their old one. But is there a catch? Our review offers a fair and balanced look at Knock’s offerings.