Many real estate professionals compare iBuying with Power Buyers. Both are consolidating services to create more seamless experience for buyers and sellers BUT Power Buyers do not require HUGE up-front capital costs to supply potential buyers with large inventories of for-sale homes.
Following up Part II of this three-part series, Power Buyers Players Part III offers cursory summaries of power buyer companies, Ribbon, Reali and Flyhomes for Agents.
Considered by Inman’s tech wizard Craig Rowe the “first hybrid fintech-proptech application, Ribbon offers both consumers and industry professionals a variety of services. To access any of the company’s services, consumers must first invite their own agent to the Ribbon platform.
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RibbonBoost offers buyers cash backing and appraisal gap protection. Ribbon Reserve offers buyers with iffy or no financing a home purchase on their behalf. That financing enables the buyer to move in to the house by paying a prorated rental fee. Buyers then have six months to secure financing and then buy the house from Ribbon for the original sale price
Ribbon additionally offers RibbonRescue which enables already under contract buyers to use RibbonReserve for a higher fee with a guaranteed closing service for sellers.
Reali offers cash backing and buy-before-you-sell services for California buyers. Services work like most other power buyers.
Buyers have the support of a dedicated local agent and a transaction coordinator or cash offer specialist. Additionally, Reali offers a home search platform and mortgages through its Reali Loans.
Flyhomes for Agents
Flyhomes for Agents joins other subsidiaries (Flyhomes Brokerage, Flyhomes Mortgage and Flyhomes Closing) under the parent company, Flyhomes.
Both the company’s cash offer and buy-before-you-sell options are funded via a short-term loan given to buyers for a contingency-free offer. The short-term offer is then refinanced to a long-term loan with a 30-to-45 day closing time frame. Flyhomes, for buy-before-you-sell consumers, applies proceeds from the sale of an old home to a down payment on the new home. Buy-before-you-sell clients pay a broker commission, any transfer or excise tax, seller closing costs and a daily holding or rental fee. If the home doesn’t sell within six months, the seller can decide whether or not to have Flyhomes purchase it or keep it on the open market.
Cash offer buyers pay origination, desktop appraisal, title, escrow and other settlement fees. If using a Flyhomes agent, these costs can be partially waived. Also, if the buyer uses a Flyhomes agent to purchase a home, the buyer won’t pay a commission since Flyhomes agents work on a base salary and transaction bonus.
Other Players Wading into Power Buying Waters
Companies such as HomeLight, Opendoor and Better are dipping their toes into power buying. Lease-to-own companies such as Divvy, Landis and Halo offer the same benefits as cash backing but with much longer repurchase timelines and down payment assistance.
Words to the Wise
The power buying model has a long way to go (and grow) before the model hits a tipping point. In the meanwhile, here are some words to wise agents and power buyers alike.
For agents to maintain their clients’ trust, Zavvie co-founder and Chief Data Officer Stefan Peterson, said, “Agents need to be proactively bringing all of these options to their clients because these (options) are good for clients and clients are going to hear about them. If agents don’t bring their clients to these options, clients are going to go to these options on their own without an agent, and I don’t think that’s what is ideal.”
For power buyers, Cyril Berdugo, co-founder and co-CEO with Landis, said, that power buyers will succeed if they keep two things in mind: the agent and the consumer. Berdugo said, “Agents are still going to be at the center of the transaction, and clients are going to reach out to their agents for options and alternatives. The only thing that power buyers need to do is educate the agent in the best way possible so the agent can make the best decision possible for their client.”
Thanks to Inman.