How to Compete Against Cash Offers

how to compete against cash offers

How do you compete in a competitive market like Austin when you’re up against cash offers? It’s a mess out there and we’re going to break that down in this blog. Blake Outlaw of Homeward will be joining us to talk about the current real estate market in Austin.

TABLE OF CONTENTS

Current State of the Austin Real Estate Market

Blake sees something that is a long time building that is going to take a while for us to get out. We had a shortage of housing that started on the heels of 2009, the banking mess. Now here we are feeling the pressure of having not enough homes on the market. Every time a plane flies overhead, Blake is convinced that it’s full of people that are on a one-way trip to Austin. 

There are a lot of people moving to Austin, it’s a great city to live in, but we don’t have enough houses. We don’t have enough supply and we have a big demand. 

Prices are moving fast and buyers are in the market. It’s such an emotional purchase where buyers are in the market fighting and competing, trying a way to find to get a house. These are real people with real jobs with real money. This isn’t like what we saw in 2006 or 2007 when we had this massive spike of buyers, but they were also kind of straw buyers or investors who really didn’t have the emotional and physical need for housing.

A Drop in Demand in the Austin Housing Market

Over the past three to four weeks it seems that the demand has dropped a little bit. This was because of the rising interest rates that are pushing people out of the market and there’s certain fatigue. The challenge however even with the rising interest rates the cost of a home today is a little more expensive than it was yesterday and it is probably going to be a bit more expensive tomorrow just because of interest rates.

If you take the price out of the equation the cost of ownership is rising. The commensurate thing that is going to keep us in a place where people are still buying a home is that it’s not cheaper to rent in Austin. The actual rates have a paste home purchase prices in their escalation so you’re seeing even more until pressure and people pushing into homeownership. It’s the tension that is untenable in the past when rates rose, people became renters. 

About Homeward

Blake spent a fair amount of his life as a real estate practitioner. He has kept running the same problem that the buying public runs into. People want to buy a home, they’ve got a home to sell. They don’t want to lose a home for sale, particularly in today’s market where you going to get a thousand offers in the first hour, you’re going to be forced to sell your home then you’re going to have nowhere to go. So they don’t want to list it until they know where they’re going.

Homeward was built by real estate agents specifically for solving this dilemma that we see in the market. We saw over and over again, people who want to buy but they have to sell. 43% of people that are buying a home there are also selling a home. Half the market is unable to make a move and convenient way in the way that will help them secure their next home or before they sell, so we invented Homeward.

It is a solution to help real estate agents help their clients buy before they sell. Homeward started making cash offers to purchase homes for clients before their existing homes. Homeward realized the value that cash offers are four times more likely to get accepted. There is a study recently that was published that cash offers have a 342% better chance of winning an offer when you are using cash vs finance or homesale contingent.

What Makes Homeward Different

Blake states that the fundamental difference between Homeward and what a lot of people are chasing after those is that they understand it. They are Realtors, they have been in the real estate space where they understand the market and they understand the buyer’s concerns. 

Have you been at that breakfast room table? At that coffee shop meeting a client feeling the pressure? Homeward built this all around the consumer having a fantastic real estate experience because they know what that looks like. 

They know that each and every client that buys and sells a home needs a hyperlocal market expert. An agent who understands and knows the market that they know and trust. A lot of Homeward competitors are coming into thinking that they can grab that real estate commission or shut it. They are trying to dislodge the real estate agent or discourage the real estate agent from making the money they work really hard for.

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From the beginning, real estate brokerages, banks, tech companies, or any myriad of people have been trying to come into our space and dislodge the real estate agent. No one’s been able to effectively do it because the real estate agent adds tremendous value. 

It’s a consumer’s biggest asset. They don’t know what they’re doing. They need a coach, an advisor, an educator, and some days a therapist through the process. That’s where we keep the real estate agent front center and we just come alongside the real estate agent to help their clients make a move.

Homeward’s Cash Back Offer Program

Homeward tries to keep it really simple and has raised over $500 million in the last year using that cash to purchase.  when you have a client from to them,  they go buy a new home for them.  by the Home back from home word Wednesday finalized their mortgage or finalize the sale of your existing home. 

What are the Payment Terms and Rates?

When utilizing home word the mortgage company,  the cost to the consumers is 1%. If they are selling a home, Homeward can actually be able to do it I’ll give you 0%. If they’re not selling a home, so in that shorter term, Homeward will be buying a home and they’re just turning around and buying right back. They do that for 0%. 

For clients who are buying a home and need six months to sell the existing home and buy back, Homeward charges 1%, and that’s 1% per the purchase price. For a $500,000 home, they’re gonna buy it back for $505,000 when they use Homeward.

Homeward is very comparative, they also have a price match for the Best Price Guarantee for the period of the time that they own, and the clients cover their carrying cost. Homeward breakeven on what they call rent, which is getting the home in their name while the client lives there, they get to enjoy it live in it as they own it and when they finalize the transaction, the clock stops. 

It could be a few weeks, a few months, or it will really depend on the circumstances brought to them. If you have a home to fell, it will depend upon home quickly you can sell that home.

In terms of having a 30-day contract, Homeward will always purchase the home. There are some programs out there or solutions from their competitors where a lot of mortgage people are realizing that finance contingent offers are a thing of the past. They try to develop solutions to compete with what Homeward is doing.

What the competitors are going is basically underwriting a file and hoping that they can get it to close on time. If they don’t, the sellers and the buyers are at risk. In some cases, they’ll step in and buy the house.

Homeward started out on day one saying that they were going to buy the home and it allows them to close in 14 days and close quickly with a real cash offer with no contingencies. When they are buying a home and using Homeward as their mortgage, that’s when they buy it back from Homeward. They take the title and sell it back to them. There’s only one closing from a cost perspective with them.

Homeward is also making revenue in a title that offsets that additional transactional cost that would have to be passed to the client. They are structured in a way where the client uses the bundle and it’s super economically efficient.

The Biggest Concern of Sellers in Central Texas

Blake stated that the biggest concern of home sellers in Central Texas is not knowing where to move. That’s the biggest challenge. In an agent training session we had with Anthony Lamacchia, he says that it’s time to quit bragging on Facebook about how quickly you sell the home. 

You need to be talking about the solution you can provide for the sellers because it’s a stressful period. If you want to get that listing and you want to serve the client at the highest level, you need to have a plan a well thought out plan for how they’re going to sell and buy.

The Sellers’ Process in Homeward

When Blake looks at Google maps or drives around a neighborhood where he can see a lot of rooftops, he is convinced that the person living in that home, owns the home, and has a zillion dollars worth of equity. 

They want to do something with that. They want to move, but they have that hesitancy of trying and not being able to compete with a contingency, hence they don’t try and just stay put. As real estate and consumers learn more about Homeward’s solution, they can help unlock that potential and enabled them to make the move that they want.

Homeward lays out a really simple plan for sellers. When a listing agent goes to an appointment and meets with a client who’s a potential seller who also wants to buy, the conversation is very simple.

Hey, you’re gonna get top dollar for this home? There’s no doubt about it, and I’m gonna help you get there. But the thing you really want to do is to buy a home. So let me turn our focus, let’s talk about what you want to buy and we’re gonna do it with cash. I’ve got a program we’ll get you taken care of.

This will cost the seller 1%. Homeward will be buying a home for them, they’re gonna get to move into the home and pay rent while they sell their old home and they’re gonna buy back.

You need to be the guide for the seller. When you get that listing consultation and you have someone that is very nervous because a lot of people are. We prepare our sellers by saying let’s get everything ready that we can and which part of the house you want to do as much as you can so we don’t disrupt your whole living situation.

Deciding to Buy or Sell a Home

People love to move, they love to buy houses, and they love the opportunity to make a move. It’s become super easy to search and tour houses now. Buyers can be in their pajamas at 11 o’clock at night and look for a home. It’s an emotional decision backed by logic and that emotional decision happens day in and day out. They then start doing the logic saying that they can’t get there.

Blake says that if you’re prepared and you have a plan, Homeward has set up something where they don’t charge the consumer upfront because they can get approved with them. They don’t charge anything to the agent. Blake thinks that they can earmark pilot cash for them and then they can be prepared to make the offer. 

It’s like for the client or buyer that list buy or they want to sell and buy, get approved. It’s good for 90 days, and go shopping and have a plan for getting your house ready so you can make those quick decisions.

For real estate agents, you really need to speak to that fear the seller has. Sellers don’t care about how quickly you sold a home, instead, they care about now is where they’re going o go and how you are going to help them do that. With real estate agents having better discussions about that, they’re going to land more listings and they’d be able to do the buyers.

Connect with Blake

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