New entities are coming into the power buyer field with hopes of staking their claims into as yet untapped homebuyer market segments.
Who Are the Current Power Buyers?
Beyond services that enable everyday consumers to “win” homes when competing against all-cash institutional and wealthy investors such as cash and/or buy-before-you-sell, real estate analyst Mike DelPrete believes that power buying companies “…have just scratched the surface…” in terms of “…building something from the ground up for buyers.”
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Mike DelPrete, real estate analyst and real estate tech guru, pointed to some current “main” players in the power buyer market, companies such as Knock, Homeward, Orchard, Ribbon, Reali and Flyhomes for Agents. All of these power buyer players offer services such as:
- Cash offer and buy-before-you-sell services with a variety of financing methods such as conventional loans, equity advance, buy-then-repurchase
- Transaction fees – either flat fees or percentage fees plus closing costs
- Ancillary services such as appraisal protection, inspection guarantees, home-sale prep, etc.
DelPrete added, “…as we’ve seen with iBuying, it starts small and it grows fast – the number of power buyers is growing exponentially, the amount of money they’re raising is growing exponentially, the number of customers they’re serving is growing exponentially.”
Take a fast look at Knock, Homeward and Orchard in this Part II of this three-part series. Pat III features Ribbon, Reali and Flyhomes for Agents.
Knock
Currently operating in 69 markets, Knock offers Knock GO (Guaranteed Offer) and Knock Home Swap. Knock powers these services with their own underwritten conventional mortgages so buyers can make contingency-fee offers and therefore eliminate the repurchasing process. Go offers a guaranteed closing date and appraisal gap protection.
Knock Home Swap offers buyers an equity advance so they can cover a down payment, $25,000 for home repairs via its own home-prep service, and mortgage payments on the old for-sale home while it’s on the market. Swap promises to buy the home itself if it doesn’t sell within six months.
Homeward
Homeward operates in eight cities across Texas, Georgia, Colorado and Arizona. For a Homeward Cash Offer, homebuyers must go through an approval process (as described in Part I of this three-part series) and set a budget. Buyers then pay an earnest money deposit, schedule an inspection, and sign mortgage disclosure papers.
Homeward makes a cash offer on the buyer’s chosen home and closes within 14 days. While securing a mortgage to repurchase the house from Homeward, buyers pay a prorated rental fee due at closing. For the company’s buy-before-you-sell program, home sellers-turned-homebuyers have a six-month rental option to sell their previous home.
Orchard
Orchard offers two buy-before-you-sell options. With Move First, sellers can access up to 90% of their equity to pay down their mortgage and provide a down payment on a new home. If buyers need an all-cash offer for their new home, they can qualify via Orchard’s Offer Boost.
Orchard Buy & List offers buyers a traditional transaction for buyers wanting a longer timeline (and fewer fees) with a licensed Orchard agent who guides through welling their old home and securing a bridge loan and mortgage to secure a new home.
Thanks to Inman.
