“iBuyers,”make cash offers for your current home at an algorithmically determined “fair market price,” allowing you to take the money, buy your next home, and move out at whatever date works best for you. The transaction closes in a matter of days.

The companies then clean and fix up your old house and sell it on the open market, collecting a fee from the seller. And because the price at which iBuyers buy the house is usually not the maximum the house would fetch if it was sold traditionally, they likely make a small gain on the sale price.

And as real estate consultant Victor Lund notes, the service iBuyers provide boils down to a financing instrument. The companies essentially extend a line of credit to a homebuyer using the existing property as the collateral. Customers then use that line of credit to buy a home.