Cash is king, especially for Florida home buyers.
According to Florida realtors, the number of homes purchased without a mortgage has skyrocketed. From May 2020 to this year, the number of homes bought entirely with cash has grown by 150 percent. The booming housing market has put home buyers in need of a loan at a disadvantage.
Ribbon, a real estate startup, wants to empower homebuyers to resist cash bids. The company is expanding to Florida this month.
“Florida and Tampa are now one of the most popular real estate markets in the country,” said Shaival Shah, co-founder of Ribbon. “And on any given day, there are many offers from many different home buyers.”
The company will place an offer for the house with full payment in lieu of the buyer. If the offer is accepted, Ribbon will buy the house and then sell it to the buyer for the same price when they finish getting the loan.
If the buyer cannot secure funding by the time the sale closes, Ribbon will lease the home to the buyer for up to 180 days until the buyer can pay for it, Shah said.
“Florida is one of our most sought-after markets,” he said, adding that the company has received many inquiries from consumers and real estate agents in Florida since its launch in 2017.
Cash buyers accounted for 37% of all home buyers in Tampa during the first quarter of the year, according to the company. real estate broker Redfin… According to Kendall Bonner, owner of RE / MAX Capital Realty in Tampa, these home buyers, usually investors or high net worth buyers looking for a second home, are more likely to bid above the listing.
“It is frustrating and frustrating for both the client and the agent when you finally find a suitable home and lose it to a money investor,” she said. “It’s exhausting. It’s hard to live up to your customers’ expectations when things are so volatile. “
Bonner will be one of the first agents in Florida to use Ribbon as a tool, and hopes the company can help locals trying to find a home. She said she sees many homeowners are afraid to sell their homes, fearing that if they sell too quickly, they won’t be able to buy another one in this competitive market. Many lenders require homeowners to sell their current home before buying their next, she said.
“Sellers can afford to turn down these offers,” Bonner said. “And some of these buyers are intimidated by the opportunity to participate in the current market.”
The tape can act as a bridge between buyer and seller during this transition period. The company does not guarantee that the offer will be accepted, but guarantees the sellers that the deal will be closed.
“We can accept buyers, FHA and VA or conventional mortgages, and then increase your likelihood of acceptance by converting them into a cash offer,” Shah said.
Andrew Bouery, an Atlanta home buyer with the US Army National Guard, tried to buy a home with 20 other offers and was unable to stand out with his VA loan. His realtor Edgar Gonzalez of EXP Realty said he also struggled with his other clients.
“I knew we were going to be at the bottom of the stack,” Gonzalez said of the VA loan. “I had to start looking for other alternatives to be competitive. If not, then I won’t be able to get these guys a house. “
Gonzalez found the Feed through Instagram ads and tried to try it out. Ultimately, this gave Bouery a boost, and he found himself a home. He was able to move, paid the rent to Lenta while the military sorted out the mortgage documents, and he had extra time to buy the house right away.
Tampa Bay entered Top 25 U.S. Urban Areas Seeing the Most Growth in Home Sales in 2021 with more than 8 percent growth between January and June, according to Credible, the online loan marketplace. It was one of 10 Florida regions on the list whose growth was mainly driven by home shortages during the pandemic.
“In the upper end of the market, the really rich are doing fine. They have money and they can use those resources, ”said Daniel Roccato, professor of finance at the University of San Diego and personal finance expert at Credible. “At the other end of the market, especially for first-time buyers, this part of the market has been hit hard by the rising prices.”
Looking at the big picture, Roccato said, more options for buyers increase competition, which is good for the market. But you always have to consider the cost.
Ribbon charges a commission of 1 to 3.25 percent, more than any other state the company serves, due to the higher costs of closing Florida.
“Compare this carefully to the traditional tool of getting a pre-approval letter and getting your down payment,” Roccato said.