It also eliminates the headache some buyers face of having to make two moves across three locations when the timing between a sale and purchase doesn’t line up. Offering a seller cash without contingencies, apart from the inspection, and free of appraisal risk allows for a smoother and more seamless process, he said. The buyer borrowed up to the appraised value and Ribbon cut a check for the difference to the seller, allowing the deal to go through on time.īellinger said he was sold on the program after that and has used it on other purchases that have gone more smoothly. But when the appraisal for the mortgage came in, it was about $30,000 under the offer price. On his first go-around, his buyer presented an offer on a home at the value Ribbon guaranteed, resulting in a winning bid. Jordan Bellinger, a real estate agent with the Bacon Bellinger Real Estate Group in Plano, Texas, said he didn’t know what to expect when he first tried out Ribbon’s program when it was offered through Synergy One Lending, a mortgage bank he works with. While it is rarely required, Ribbon will step forward and honor an offer even if the buyer backs out completely, protecting the other parties involved. Some lenders are willing to cover all or a portion of those costs, and if the market softens significantly, more sellers may be willing to cover the costs to make sure a sale goes through.īuyers can rent the newly purchased home back from Ribbon for up to six months until they sell their prior home and obtain financing. Depending on the level of protection desired, costs can run from 1% to 1.5% to 2.25% of the purchase price. It will guarantee a purchase price within a pre-established range to qualified borrowers and provides the amount in cash at closing. Where Ribbon tries to add value is by smoothing out the purchase process, Shah said. Or maybe the buyer lost income and no longer qualifies, which could become a bigger problem if a recession does hit. It could be that the employer didn’t get the verification of employment back to the lender in time. While that hasn’t mattered as much in the past two years given how quickly homes sell after hitting the market, it has historically been an obstacle.ĭeals can derail because the appraisal came in late or under the amount being financed, Shah said. A buyer who currently owns a home with a mortgage typically needs an out or contingency clause in the event they can’t sell that home in time. And often the buyer of their home needs that same contingency, and so on and so on. The traditional home purchase system is built on a whole chain of dominoes that need to fall at the right time for a deal to move forward.
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