With bidding wars on homes flaring up all over the country, cash offers trump all
as reported by Jeff Andrews
Anyone who has sold a home knows there’s a fair amount of uncertainty in the transaction between receiving an offer and actually closing the sale, which can take as long as 90 days. A buyer’s mortgage application could unexpectedly be denied, or the buyer could walk away from the deal at the last minute, forcing the seller to start the whole process over again by putting the home back on the market.
It’s no wonder then that when armed with an all-cash offer on a home, the offer is 97 percent more likely to be accepted, according to Redfin. Cash offers remove much of the time and uncertainty associated with obtaining a mortgage for the transaction, allowing sellers to move in short order and on coordinated timelines.
With one economist calling this spring “the most competitive housing market in recorded history,” all-cash offers have become a trump card for the wealthy in home-bidding wars that have erupted all over the country. But Ribbon, a startup that launched last week, wants to give the cash-offer advantage to everyone.
Backed by venture capital firms NFX, Bain Capital, Greylock, and NYCA, the startup launched in Charlotte, North Carolina, and represents both home buyers and sellers, and, in short, provides a guaranteed offer to facilitate all-cash home transactions, in exchange for a 1.95 percent fee.
“We’re taking that single value proposition that a lot of these institutions and iBuyers have, which is access to capital, and we’re democratizing that capital for the benefit of consumers instead of using it for corporate profits,” said Ribbon CEO Shaival Shah. “Cash discounts that consumers earn from our program flow directly back to the consumer. Based on our early deal volume, customers are seeing an average of 5 percent savings to the purchase price by using Ribbon.”