The complexity and uncertainty of real estate transactions has long been a source of major headaches for buyers and sellers, with closings routinely contingent upon multiple factors, including the sale of a buyer’s existing property and their ability to secure financing. More recently, there’s also the increased risk that someone else will come along with a more attractive cash offer at the last moment.
The only thing a buyer can be sure of is that until a transaction closes, nothing can be taken for granted.
“I have every advantage possible. I’m a real estate tech entrepreneur and I’m a licensed real estate broker,” HomeLight Chief Executive Drew Uher told Karen Webster about his own personal experience of moving in today’s incredibly competitive housing market. “And still, with cash offers, we lost a couple of homes.”
That frustrating personal experience was one of the inspirations for HomeLight, as it aims to build what Uher says will be “the contingency-free real estate transaction of the future,” where buyers and sellers alike will be able to proceed with much greater certainty that real estate transactions will get done.
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“The idea is that people should be able to buy and sell real estate with certainty,” Uher said. “They should know that when they put in a contract to buy a home, that contract is definitely going to close, meaning there should not be a contingency.”
HomeLight has created a number of products to eliminate contingencies. Its Cash Offer product, for example, allows a buyer who needs a mortgage to make a cash offer on a house, which ensures that they’re more competitive and increases their chances of securing their dream home – often for a lower price.
With real estate inventory so tight across the U.S. these days, cash offers have become a lot more common. Uher explained that home builders have been “under-building” for almost a decade due to the repercussions of the Great Recession in the late 2000s, when there was too much inventory. Now, buyers are faced with the opposite situation: There aren’t enough homes for sale, leading to bidding wars on the few homes that can be found. That means cash offers are king, because they give a seller much greater certainty compared to a bid from someone who still needs to secure financing.
“If you don’t have a cash offer, it’s really hard to become a home buyer right now – it’s almost a necessity,” Uher said.
Once people make the decision to buy a home, it becomes a life-defining moment that’s similar to getting married and having kids, Uher said – and so they want to achieve that goal at all costs. He believes that’s why HomeLight’s offerings are resonating with buyers.
“If you’re a buyer and you find that dream home, you don’t want to lose it,” he said. “There are other considerations, but more than anything else, you want to win. The products we’ve rolled out help buyers achieve that.”
Another way HomeLight is looking to eliminate contingencies is with its trade-in process, which eliminates the need for buyers to sell their current home before buying a new one, Uher explained. That offering has seen big demand from buyers and real estate agents alike, he said, because it’s superior to the classic iBuying model, giving agents a strong differentiator that others don’t have.
As Uher explained, HomeLight pays the homeowner 90 percent of their home’s value upfront before it’s even listed. The company then gets its top agent on the case to sell the home for the highest possible price. The customer gets the remaining 10 percent of the sale price, minus HomeLight’s 1.5 percent commission.
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“This allows you to maximize value and get the most possible money for your home, rather than selling it to an iBuyer that will just flip the home and pocket all of the profit,” Uher noted.
Customers can even use HomeLight’s two products in conjunction to further increase their chances: They can trade in their home and also use the cash offer product to make a solid offer on their dream home.
“We hope to bring these products to a much wider swath of agents, because they add so much value to the right client,” Uher said. “The demand for this product is tremendous.”