Great service! A lot of people don't have experience or simply don't want to deal with the Craigslist experience. Putting another option between a private party sale and the dealer is great.
Questions that immediately come to mind - how do you handle negotiations, and how do buyers pay? How do you pay the seller afterward? (cash, verifying a cashier's check - other comments point out the common scams etc.) (Or is Instamotor just a transaction facilitator)? Where is the vehicle listed? Do you handle smog checks as well (for California)? Also, how do you filter out non-serious buyers, especially for performance vehicles? A lot of sellers ask for some sort of proof of payment or cash ready before a test drive. It seems like you're mainly handling high-end cars where the 5% commission will pay off too, how does the model change for say a $5K vehicle?
Finally as a buy I would want to do my own inspection unless the inspection is at a mechanic I already trust - there is way too much conflict of interest having the selling side do an inspection.
Some ways to get it more buyer-friendly would be to offer a CARFAX as well.