January 06, 2022
Tired of making offers on homes only to get turned down again and again? You’re not alone.
Over the last year as home prices soared and available homes dwindled, aspiring home buyers faced new headwinds that left many of them struggling to compete.
Today, even an above-asking-price offer isn’t necessarily going to win the home. Instead, the power has shifted to cash buyers.
This has created a seemingly insurmountable problem for many first-time home buyers, young professionals, and growing families who are well-qualified for a mortgage, but don’t have the savings or equity to make all-cash offers.
A recent OpenDoor survey found that nearly 60% of first-time homebuyers had to make five or more offers before purchasing their home, averaging 10 offers apiece – and frustration has been mounting.
“It's stressful! When buyers begin their search, most believe it might only take a couple of months until they’re in their next home,” says Houwzer buyer agent Lisa Armellino. “This is not the case for many buyers today. Imagine the stress when a buyer puts very strong offers on more than 10 houses over the course of one year. There is a sense of hopelessness, loss, and uncertainty.”
But now, that might be changing.
Houwzer – a top-rated, all-in-one real estate company – is giving qualified home buyers a way to make all-cash offers so they can win the home they want, through what they’re calling the “Cash Advantage.”
The data shows that those who can offer cash have a better chance of getting their offer accepted. All-cash offers are highly preferred by home sellers because they can close faster, come with fewer contingencies, and are less likely to fall through than mortgage-financed offers.
In fact, cash is so alluring that sellers will often accept a lower offer if the offer is in cash.
“Many sellers in this market are looking for the easiest path to settlement, so a cash buyer truly speaks to them,” explains Armellino. “The money is already prepared (sitting in a bank account), and there is no mortgage company to potentially complicate anything.”
The reality is that financed buyers just can’t compete against cash offers – and that’s a problem since cash offers are becoming more prevalent. According to the National Association of Realtors (NAR), all-cash sales rose sharply to comprise 25% of all home sales in April 2021 - up from 15% the previous year.
This influx of cash buyers stems from what The Washington Post calls “the uneven economic impact of the pandemic” – high-paid workers relocating to less-expensive areas, a drop in discretionary spending allowing some consumers to ramp up savings, a booming stock market driving massive gains for investors, and existing homeowners taking advantage of surging home prices to sell their home for top dollar.
If buyers want to land a home in this market, what they really need is cash. And that’s what Houwzer’s Cash Advantage gives them.
“All too often, single family homes are purchased by developers or 'Wall Street' who have the unfair advantage of cash on hand,” says Houwzer’s CEO Mike Maher. “With Cash Advantage, our buyers will now have the same opportunity that has always been limited to those with liquidity. They get the power of a cash offer – without actually having to pay cash.”
Here’s how Cash Advantage works: First, the buyer will get pre-approved through Houwzer Mortgage so they know what they can afford. They then work with a Houwzer buyer agent to find the home they want to buy. As soon as the buyer decides on a home, their agent will use Houwzer’s money to make a strong cash offer on their behalf – giving them a better shot at winning the home. After the seller accepts the offer, their in-house mortgage advisor will help the buyer set up a loan with a competitive interest rate to finance the home. At the closing, the cash offer will be replaced with the mortgage without affecting the deal at all.
“It’s pretty simple,” says Maher. “We let our buyers use Houwzer’s money to make an all-cash offer and then help them finance the home later with a regular mortgage.”
Now, home buyers may finally have what they need to stop writing offers and start winning their dream homes.
