A handful of new services have brought all-cash offers within the reach of formerly … [+]
Zac Gudakov
In today’s hyper-competitive home market, all-cash offers can give prospective buyers a sizable leg up on the competition. It stands to reason sellers prefer all-cash, because it eliminates the uncertainty of a buyer being unable to obtain mortgage financing, and the transaction falling through.
In fact, all-cash offers are how more and more homes are being purchased. Almost a third (30%) of U.S. home purchases in early 2021 were made entirely in cash, a sizable increase from the 25.3% bought with cash in 2020. Not since 2014, when 30.6% of homes were purchased with cash, has the number been as high, according to a Redfin analysis of January 2001 through April 2021 county records.
The move to all-cash offers reflects, among other trends, the influx of iBuyers, flippers, tintech firms and well-heeled investors invading the market. These buyers have helped make the all-cash offer a virtual prerequisite to fare competitively in the 2022 market.
Now possible
Of course, the typical buyer could no more make an all-cash offer than he or she could single-handedly build the home being purchased. That’s why mortgages exist. But given the leverage all-cash offers provide, it makes sense an array of newer companies now make it possible for buyers to make all-cash offers and walk away homeowners.
Companies that include Flyhomes, Orchard and Better are able to remove the impediment to an all-cash offer for buyers who otherwise would need to rely on traditional mortgage loans to finance the American Dream. Here’s a look at the trio.
Flyhomes
The trailblazer in the all-cash offer space, Flyhomes pioneered the concept when in late 2017 it launched its all-cash service. Other companies soon jumped in with their own versions of the service but were roundly panned for levying high fees on would-be buyers who were already being forced to cough up their last dimes for a domicile.
Seeking to differentiate, Flyhomes recently proclaimed it has become the first and only firm to deliver all-cash offers without fees, additional costs or lender requirements. As a result of covering all the incremental costs associated with using its offer, the cost of a Flyhomes Cash Offer is identical to that of a traditional offer. “In today’s ultra-competitive housing market, it has become increasingly important for us to level the playing field for the average consumer, especially as the presence of iBuyers and institutional investors grows,” Flyhomes co-founder and CEO Tushar Garg reports.
“Not everyone has the luxury of being able to make an all-cash offer on the home of their dream. And yet, it has almost become a prerequisite for entering the homebuying market altogether. By eliminating the incremental closing costs associated with the Flyhomes Cash Offer, we’re able to bring our mission of making every buyer a cash buyer one step closer to reality.”
Orchard
Orchard’s Move First program enables customers to present competitive offers to buy their next homes before selling their current dwellings.
Following customers’ moves out of their homes, Orchard preps, lists and markets the houses, earning top dollar for its customers. An add-on program to Move First, called Offer Boost, can make it possible for buyers who quality to present all-cash offers and move in almost immediately. Orchard levies 6% of the home’s final sale price, as well as an added 1% convenience fee if buyers sell directly to Orchard prior to the conclusion of the 120-day listing period. The cash offer is presented only as part of Orchard’s buy-before-you-sell program
Better
The Better Cash Offer program of digital homeownership platform Better enables home buyers to submit all-cash offers. The cash offer is proffered only as part of the company’s buy-before-you-sell program. A 2.5% convenience fee is waived if customers use a Better mortgage for long-term financing.