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Disruptor Roundup: Ribbon Ties a Cash Bow on Home Offers

Sep 3, 2018 by

Editor’s Note: The Disruptor Roundup analyzes companies implementing unconventional models.

Ribbon is a cash-buyer intermediary that allows homebuyers to beat out the competition in a busy market with multiple-offer scenarios. Buyers have the competitive edge by being able to submit an all-cash offer on the home, removing any contingencies the buyer would normally require, such as needing to sell before being able to purchase a home. These types of contingencies can be a red flag to sellers who are looking for a quick and easy transaction with no obstacles.

The process? Buyers must first fill out a Buying Power application with Ribbon and should hear back within a day. Once approved, the buyer selects the home and makes a Ribbon Offer—a standard offer to purchase with an addendum that legally binds Ribbon to purchase the home if the buyer is not able to by the closing date.

Ribbon can purchase the home on behalf of the buyer, giving them more time to qualify for and obtain a mortgage so they can then purchase the property back. In the meantime, the buyer pays Ribbon monthly rent and a one-month security deposit to live in the home. There is a maximum 1-year lease period in which the buyer can obtain a mortgage and purchase the home back, and a 90-day period in which the sale price is locked in at the amount Ribbon purchased it for.

There are restrictions, however. Right now, Ribbon is only available in Charlotte, N.C.; however, the company is expanding into other markets in the near future, according to their website. Additionally, properties must be single-family residential homes (typically 3 bedrooms and 2 bathrooms with at least one garage) in the $ 100k-$ 600k range. While some townhomes and condos may be eligible, they must allow traditional financing and rentals. Also, these homes must have clear title held by the seller, must be at least 1,300 square feet and have a lot size of less than an acre.

Additionally, Ribbon does not provide mortgage services and cannot determine a buyer’s ability to secure a home loan. While Ribbon’s Buying Power serves as an initial vetting of the candidate, only a mortgage provider can issue a home loan, adding a bit of uncertainty to the transaction.

What happens if the buyer decides not to purchase the home or can’t qualify for a mortgage? Ribbon isn’t a property manager and will likely sell the home to another individual who would then become the landlord should the buyer continue renting. And while Ribbon’s transaction fee is typically 1.95 percent, applicants who choose not to purchase the property within the required time frame must pay a 2.95 percent fee instead.

The question remains—is it worth it for buyers? While Ribbon claims that its offers typically command a 5 percent or more discount, with Ribbon’s fee, the track to homeownership can become more expensive, especially as rent is added into the equation for those who need more time to secure a home loan. However, it may be worth it for some buyers who would normally have detrimental contingencies so they can more easily win on home bids in a bustling market.

A bonus? The flexibility to choose any real estate agent. Ribbon clients can choose to work with a Ribbon Certified Agent (any agent who has helped buyers use Ribbon in the past), or their own agent as well.

Dominguez_Liz_60x60_4cLiz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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Making the Next Play: With Instant Offers, Zillow to Begin Buying and Selling

Apr 15, 2018 by

Zillow announced on Thursday it is becoming a buyer and seller through its Instant Offers platform, beginning in Las Vegas and Phoenix with Premier Agents this spring. Arik Prawer, formerly chief integration officer at Invitation Homes, has been appointed chief business development officer to oversee the participation of Zillow on the platform.

On Instant Offers, Zillow is going to be represented by a Premier agent in the area, and make improvements to properties, if needed, to swiftly turn around transactions. Zillow has chosen to enlist help in the process—a distinction from Opendoor and Offerpad—to “enable agents to earn commissions,” according to the announcement from the company.

In a CNBC interview on Friday, CEO Spencer Rascoff discussed the motivation to participate, noting he expects to have held between 300 and 1,000 homes for sale by year-end.

“We’re ready to be investors in our own marketplace, because what we know is that home sellers welcome a hassle-free experience,” explained Rascoff. “We think we have huge advantages because we have access to this huge audience of sellers [and] huge audience of buyers…that’s why we’re doing this.

“We’ve done this a very industry-friendly way, and that’s why the reaction so far in the industry has been welcoming,” Rascoff said.

WHITE PAPER: The Disruption of the Real Estate Industry: A Survival Guide for Brokers and Agents

Instant Offers was introduced in May 2017 in Las Vegas and Orlando; with the announcement on Thursday, it has expanded to Phoenix. For its foray into Las Vegas and Phoenix, Zillow has partnered with Berkshire Hathaway HomeServices Arizona and Nevada Properties, Coldwell Banker Premier Realty and West USA Realty.

“Even in today’s hot market, many sellers are stressed and searching for a more seamless way to sell their homes,” said Jeremy Wacksman, chief marketing officer at Zillow, in a statement. “They want help, and while most prefer to sell their home on the open market with an agent, some value convenience and time over price. This expansion of Instant Offers, and Zillow’s entrance into the marketplace, will help us better serve both types of consumers, as well as provide an opportunity for Premier Agents to connect with sellers.

“This is expected to be a vibrant line of business for us and for our partners in the real estate industry, while providing homeowners with more choices and information,” Wacksman said.

“We are tremendously honored to have been selected by Zillow as a primary partner in their expanded Instant Offers program,” said Robert Hamrick, chairman and CEO of Coldwell Banker Premier Realty, in a statement. “Coldwell Banker Premier Realty has a decades-long legacy of combining high-touch client engagement with high-tech innovations for fully-serviced home-selling and -buying experiences. Our agents are competing with investor buyers. As Zillow’s partner in the Instant Offers program, we are able to stay in front of changing consumer demands and provide clients an additional option when selling their home. Our brokerage is passionate about empowering our agents to best meet their clients’ needs. We are excited to be a part of Zillow’s program.”

With Instant Offers, homeowners enter information about their property, and, within two business days, get investor offers and a comparative market analysis (CMA) by a Premier Agent. For agents, the benefit is that they can earn listings of presumably ready-to-act sellers.

Eighty-seven percent of agents and brokers in a June 2017 RISMedia survey believed Instant Offers is “a shift by Zillow toward becoming a brokerage.”

“We have always felt, and will continue to maintain, that agents are a crucial part of the real estate transaction and our goal is to find ways to continue to integrate them in the transaction process, even as the process continues to grow and evolve,” said Zillow in a statement to RISMedia at the time.

Stay tuned to RISMedia for more developments.

DeVita_Suzanne_60x60Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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1 in 3 Make Offers on Homes Sight Unseen?

Jul 6, 2017 by

A new Redfin survey says that 1 in 3 Make Offers on Homes Sight Unseen?  We find that fascinating.  Is it true?  Is this what you’re seeing? CLICK HERE to see the survey article.

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Zillow Offers Anyone $1Million to Fix Zestimate Issue

May 28, 2017 by

So Zillow is offering anyone or any team $ 1 million to fix their Zestimate issue.  Are you good a programming??

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Zillow Offers Anyone $1Million to Fix Zestimate Issue

May 25, 2017 by

So Zillow is offering anyone or any team $ 1 million to fix their Zestimate issue.  Are you good a programming??

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