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In this frenzied housing market, cash is king; meaning an all-cash offer is hard to beat. Now, it used to be only wealthy people and investors had the money to pull that off, but now maybe you can too. NPR’s Chris Arnold reports.
CHRIS ARNOLD, BYLINE: Nicole Howson and her partner spent the pandemic cooped up in a small rental apartment with their two kids, so they decided it was time to buy a house.
NICOLE HOWSON: I did, I think, 27 offers. None of them got accepted.
ARNOLD: The family was looking to buy a place near Atlanta, and they bid on one that just seemed perfect.
HOWSON: I was, like, praying for two days. Like, God, please let this be the one. And no, that offer did not get accepted either
ARNOLD: Howson was hearing that often, the winning bids came from buyers who were offering cash.
HOWSON: Like, investors and stuff were putting in cash offers.
ARNOLD: Meaning that they can show they already have the money. They don’t need to qualify for a mortgage. Howson has a job selling cosmetics and does not have a big pile of cash. But then she got a new realtor with a company called Better real estate, and he said that they had this new program that would let her make one of those strong cash offers too. The company would front her that big pile of money.
HOWSON: At first, I was skeptical. I was like, so you are telling me that if I want the house, you guys are just going to buy it for me, and I’m going to pay you back? He’s like, yeah. I mean, you find a house, you put in the offer, and then we buy it, and we sell it back to you.
ARNOLD: This is a pretty new thing. Howson asked her sister-in-law, who’s a realtor, and she’d never even heard of it.
HOWSON: She’s like, I don’t know. Be careful. That sounds a little fishy.
ARNOLD: But she read over the materials, and it turns out it’s a real thing. What’s happening is that about a quarter of all sales now are cash, and that puts regular people at a disadvantage because it can take a long time to go through the whole mortgage underwriting process, get an appraisal. Things can fall apart. That’s why sellers love those cash offers.
So some companies have come up with this fix where they say they’ll buy the house with cash and wrap up the loan part with you later. Tom Willerer is with Opendoor, another company that’s doing this.