What an iBuyer Actually Is and How It Makes Money
2 min read · Last updated 2026-08-03 · Reviewed by Camilo Palacio, Licensed Florida Real Estate Professional (License #3280644, REALTOR®)
An iBuyer is a company that uses an algorithm to generate a purchase price for your house, buys it directly, then resells it later, similar to how a used-car dealer buys and resells cars. It makes money on a service fee, usually several percent of your price, plus deductions for repairs its own inspection finds. Cash Flow Deals works differently: it locks your net price before repairs are scoped, and a real buyer's own lender funds the purchase.
| Factor | Traditional Route | Cash Flow Deals |
|---|---|---|
| Who sets the price | An algorithm, based on comparable sales and market data | A net price locked before repairs are scoped |
| How the company makes money | A service fee, commonly in the mid-single-digit percent range of your price, deducted at closing | A separate fee on the closing statement, not a markup on your price |
| What happens after closing | The company holds title and resells the house itself later | Title transfers once, directly from you to a real buyer, at closing |
| Is the business model stable | Not guaranteed. Zillow shut down its iBuying business in November 2021 after posting a $420 million quarterly loss. | Works through a licensed local broker partner as an ongoing part of the transaction |
How an iBuyer's Algorithm Sets Your Price
An iBuyer pulls your address, recent comparable sales, and public property data into a pricing algorithm, called an automated valuation model, and spits out a purchase price, usually within a day or two of you submitting your address. It's the same basic idea as a used-car dealer's online trade-in tool: fast, computer-generated, and based on data rather than someone walking through your house first. The number you see upfront isn't final. It's a starting point that gets adjusted once the company actually inspects the property.
Why Zillow Shut Down Its iBuying Business
Zillow ran one of the largest iBuying operations under the name Zillow Offers, until it shut the division down in November 2021. The company's own disclosures pointed to major financial losses, including a reported $420 million loss in the home-buying division in a single quarter, and Zillow ended up selling off roughly 7,000 homes it was still holding when it exited. The shutdown is a real case study in how the iBuying model depends on accurately predicting home prices at scale, and how badly it can go wrong when that prediction is off in a shifting market.
The Fees You Actually Pay an iBuyer
An iBuyer's price and a market-rate sale price aren't the same number for a reason. iBuyers typically charge a service fee, often landing in the mid-single-digit percent range of your home's price, to cover their overhead, resale risk, and profit margin. On top of that, most iBuyers send an inspector after you've accepted their initial number and then deduct estimated repair costs from your final payout. Between the service fee and the repair deductions, what you net can end up noticeably below the number that first showed up on your screen.
How Cash Flow Deals Is Different From an iBuyer
Cash Flow Deals is not an iBuyer. It doesn't run an algorithm, buy your house itself, or hold it for resale. Instead, it's a real estate investment company that locks your net price before repairs are even scoped, using a novation-based, flat-fee process arranged through a licensed local broker partner. Title transfers once, directly from you to a real buyer, and that buyer's own FHA or conventional lender funds the purchase at closing. The fee for the service shows up as its own line item on the closing statement, separate from your price, not baked into it.
Who an iBuyer Actually Works Best For
An iBuyer tends to make the most sense for a seller with a fairly standard, well-maintained house in a market the company's algorithm covers confidently, who values speed and price certainty over squeezing out the highest possible number. It tends to make less sense for a house that needs real repair work, sits in a market an iBuyer doesn't actively buy in, or belongs to a seller who wants to compare multiple paths before committing to one company's number.
Common questions
Do iBuyers still exist after Zillow left the business?
Yes. Other companies continued running iBuying operations after Zillow exited in November 2021, though that shutdown is a real example of how volatile the model can be even for a large, well-capitalized company.
Is an iBuyer the same thing as a cash buyer?
Not exactly. A cash buyer can be any individual or company paying with funds already on hand. An iBuyer specifically uses an algorithm to price homes at scale and typically operates as a larger, tech-driven company.
Does an iBuyer's initial price change after inspection?
Usually, yes. Most iBuyers send an inspector after you accept their initial number and then deduct estimated repair costs, so your final payout can come in lower than the first figure you saw.
Is Cash Flow Deals an iBuyer?
No. Cash Flow Deals doesn't run a pricing algorithm or buy and resell houses itself. It's a real estate investment company that locks a net price before repairs are scoped and connects your house with a real buyer whose own lender funds the purchase.