Hello, LOs!
In a hot housing market in which potential homebuyers are writing love letters to their agents and bidding wars remain prevalent, an all-cash offer can tip the scales.
A recent Redfin report found buyers who offered all cash nearly quadrupled their chances of winning a bidding war, making it the best strategy in this sellers' market. In March, cash offers for listed homes accounted for about 28% of sales, up from 23% a year ago, according to the National Association of Realtors' monthly survey of real estate agents.
Firms including Better Real Estate, HomeLight and Opendoor and lenders such as Guild Mortgage and Homepoint, are guaranteeing to pay cash for the home and let homeowners buy it back at the original sale price.
"All-cash offers from competing buyers or investors are the biggest obstacle that financing homebuyers face in today's hyper-competitive markets," said Phil Shoemaker, president of originations at Homepoint, when the company announced its service this month.
Home Mortgage Disclosure Act data show borrowers can save an average of $8,000 over the life of their loan with the Homepoint offer compared to big banks or direct-to-consumer lenders, the company touted in a news release.
For loan officers whose companies don't offer these services, it means potentially losing business to other lenders that provide competitive mortgage rates.
"I had one other client who ended up not doing his loan with me as he used a similar service through Better.com to make a cash offer," said a loan officer in South Carolina.
It cost him a loan, but he managed the hit because he works with clients nationwide. "This would be a bigger deal for me if I was only doing business in one geographic area that had a red hot market and no non-cash offers were being accepted."
Several loan officers and mortgage brokers said nonbank all-cash offers may be offered in limited locales because they aren't licensed in every state. In addition, fees charged for transaction and participation, depending on lenders' policies, may not make an all-cash offering worth pursuing.
Combined with a possible cooling of the housing market, these LOs and brokers are skeptical that all-cash offer services will add much value to shoppers.
LOs, does your lender have these all-cash programs? If not, how much have you been affected by different lenders' offering this? How do you think demand for these services will change as the housing market cools? Please share your thoughts with me at connie@hwmedia.com
Connie Kim
Mortgage reporter HousingWire
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