Cash cuts the costs of homebuying and wins bidding wars in today’s competitive housing market. It eliminates the need to pay interest on a loan and even saves on some of the closing costs.
Making all-cash offers is attractive and preferred by sellers because deals can close quickly, without waiting on buyers to secure financing.
But let’s face it, not everybody has enough cash lying around to purchase a home.
It was that thought that led to the launch of Ribbon, a tech-based startup. Launched in Charlotte, North Carolina, the aim of the company is to help homebuyers make all-cash offers.
Ribbon is not a lender but does underwrite potential homebuyers using its own data system to predict whether a buyer is eligible for mortgage and for what amount. They also run appraisals on the home the buyer is interested in.
Ribbon helps you secure your home by being a guaranteed back up buyer. For instance, if there is a problem with the mortgage, Ribbon buys the home and allows the client to rent it until they’re able to purchase it.
Ribbon charges 1.95% of the purchase price if the mortgage comes through and the sale closes. If the buyer chooses not to buy, Ribbon charges 2.95% of the original purchase price.
“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,” Ribbon CEO Shaival Shah told Curbed. “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.”
How it works
- Fill out an online application. This takes about 10 minutes online and you’ll get your buying power in 24 hours. Your buying power is Ribbon’s commitment that they will buy a home for you up to a specified amount. No questions asked once you’re approved.
- Make the offer. When you’re ready to make the offer, Ribbon will work with your agent to make the best offer possible. Ribbon is guaranteed to close. They buy the home for you.
- Don’t wait on your mortgage. Move in at closing, no matter what. If you get the mortgage before you close, the home is yours. But if you need more time to get the mortgage, you can move in and rent the home until you have everything in place.
What types of homes will Ribbon buy?
There can be exceptions, but generally Ribbon will purchase homes that meet the following criteria:
- Valuation between $100K and $600K
- Single family residential homes (around three beds, two baths)
- Some townhomes and condos that can receive traditional financing and allow for rentals
- At least 1,300 square feet
- Lot size of less than one acre
- Clear title held by the seller
In this competitive housing market it is interesting to see startups pop up with the aim of helping buyers. Right now Ribbon is only in the Charlotte housing market, but they are launching in other markets soon. Stay tuned.