This month, we’ll talk to mortgage leaders about where the market is headed and how products are evolving digitally to suit buyers’ needs now. We’ll also explore emerging alternative financing options that are changing the game for buyers and sellers. Join us for Mortgage and Alternative Financing Month.
Even before the COVID-19 pandemic, severe housing shortages were plaguing major markets all over North America. Subsequently, COVID-related restrictions gave way to a historically active real estate market and low inventory in even more markets, including suburban and rural enclaves.
The result for most buyers was a frustratingly unresponsive seller’s market with buyers putting in offer after offer and losing out in bidding wars to moneyed cash buyers. Never before has the distance between a good offer and a winning offer seemed so vast.
Enter Homeward, a homebuying platform currently operating in Texas, Colorado and Georgia that seeks to level the playing field by offering traditional buyers the ability to, essentially, become cash buyers. According to Tim Heyl, Homeward’s CEO and founder, “First, we buy the home a client loves for them — with cash. We call that the Homeward Purchase. Then they buy it back from us. We call that the Customer Purchase.”
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Getting to know Homeward
Heyl is a longtime real estate professional and entrepreneur who founded Homeward in 2018 and was named Inman News Innovator of the Year in 2019. Homeward’s primary services are geared toward two types of buyers: those who have an existing home to sell but are looking to buy first and those buyers who are interested in maximizing their competitive advantage without regard to the sale of a home.
Homeward first approves the client for participation in its program then works with their existing agent to craft a Homeward Offer on behalf of the client, Heyl said. Once the client finalizes their mortgage, they buy their home from Homeward.
This may happen following the underwriting and approval process in the event of a new loan origination or following the sale of a current home in the event of a sale with purchase.
For agents, Homeward offers a powerful differentiator and value-added service. In today’s competitive environment, the ability to help clients write more successful offers not only helps agents convert leads and sign new buyer clients. It helps them better serve existing clients, resulting in rave reviews and future referrals.
Services available with Homeward
Working with Homeward begins with an application from the homebuyer and an approval process of up to five days. Homeward suggests beginning the approval process ahead of time, so that buyers are ready to make an offer when they find the home they want.
The application process is similar to a mortgage preapproval process, and information regarding income, assets and credit will be collected. In the case of a purchase occurring prior to the sale of an existing home, Homeward will also gather information about the home to calculate its equity value.
Homeward can be used for both new construction and existing homes. In the case of new construction, Homeward will require information about the new home’s specifications, price, proposed completion date and percentage of completion.
Buy with cash
Homebuyers wishing to use the buy-with-cash service are able to eliminate contingencies, offer a faster close and win out in multiple-offer situations. According to Heyl, cash buyers are three times more likely to beat financed bids, allowing buyers to shop with confidence in today’s competitive marketplace.
Buy-with-cash clients will pay an earnest money deposit (EMD) of 3 percent. Homebuyers who use Homeward Mortgage, an affiliate company, to finance their purchase receive a credit at closing equal to the 1.9 percent standard convenience fee that Homeward charges, effectively reducing the cost to buy with cash to 0 percent.
If homebuyers obtain financing elsewhere, the standard convenience fee applies. In addition, prorated rent is charged for the period between the home’s purchase by Homeward and its subsequent purchase by the buyer.
Buy before you sell
Homebuyers wishing to purchase a home before selling their current home can opt for the buy-before-you-sell service. This provides greater peace of mind for homeowners worried about selling their home too quickly then being unable to find a home to purchase. It also offers the security of knowing that the homeowners won’t end up paying two mortgages in the event of a delay in closing.
Homebuyers using the buy-before-you-sell option will pay an EMD of 2 percent. Homebuyers using Homeward Mortgage will receive a credit at closing allowing them to pay a discounted convenience fee of 1.4 percent of the home’s sale price. If they use another lender, the standard convenience fee is 2.4 percent in Georgia and 1.9 percent in Texas and Colorado.
Homeward Certified Agents or Brokers
According to Heyl, “Most alternatives to traditional real estate minimize the agent or require homebuyers to work with an agent they don’t know.” By contrast, Homeward helps agents work with their existing clients to provide additional options for more successful offers. To get agents who are new to the service up to speed, the Homeward Certified Agent (HCA) program includes two separate onboarding phases.
The Homeward Certification is a webinar that introduces agents to Homeward and helps them understand how the service works and what types of clients are a good fit for the program. The Homeward Nuts & Bolts webinar is a deep dive into the details of a Homeward transaction, including how to make a Homeward Cash Offer and how to write the sales contract for a Homeward offer.
While certification is not required, “we encourage agents to become HCA certified before they use our services,” Heyl said. “We also encourage them to get their clients approved to use our services as soon as they start working together so that their client is ready to make a cash offer as soon as the home they love hits the market.”
Ask an agent: Jayna Love
According to Jayna Love, team leader for Jayna Love Homes Team with Keller Williams Realty in Austin, Texas, Homeward offers a solution to help combat inventory shortages evident throughout the country, especially in active markets like hers.
“In [Austin], it’s not uncommon for us to be writing five, six, seven or eight offers for our clients before we win one,” she said. “There was a period of time where it was very difficult, and the client would get very discouraged.”
Homeward enables Love and her team to create winning offers in multiple-offer scenarios. “It’s low risk from the seller’s and listing agent’s standpoint, to be able to do that instead of spinning your wheels and allow clients to present a really strong cash offer,” Love said. “There’s nothing like giving that call to your client.”
In addition, because it’s so difficult to find a new home in tight markets, Love’s current homeowners are able to buy the home of their dreams with cash, pay the convenience fee, close quickly, then clean out the previous home and prepare it for showing while the client rents the new home from Homeward. According to Love, this is essential in the age of COVID-19 as well as for families with children and pets.
“People have lives and it’s hard to deal with all of that and keep things pristine” while marketing a home, she said. “It’s inconvenient to sell a house and buy another one simultaneously. Homeward takes away a little of that inconvenience.”
According to Love, the process of connecting Homeward with a client is simple.
- Go to Homeward.com, click on a link, and fill out your information and the client’s information.
- A representative from Homeward calls within the hour to collect additional information and request permission to reach out to the client directly.
- The client must qualify for the program in a similar manner to a mortgage qualification.
- A Homeward representative walks through the process with the agent and client, and answers any questions.
Love and her team’s experience “has really been positive. They’re seasoned professionals behind the scenes. They’ve provided smooth transactions and great customer service.” Love said that because many of Homeward’s team are or have been real estate professionals, their service is intuitive and seamless.
“My clients were raving fans,” she said. “When my clients are happy and winning, it makes me and my team look better and the overall experience for the client better.”
Currently operating in Texas, Colorado and Georgia, Homeward offers frustrated buyers and their agents and brokers a new option for a more efficient and streamlined purchase process using the power of cash buying. Through its affiliated companies, Homeward Mortgage and Homeward Title, it provides a bundled service designed to save homebuyers money, time and effort.
Christy Murdock Edgar is a Realtor, freelance writer, coach and consultant and the owner of Writing Real Estate. She is also the creator of the online course Crafting the Property Description: The Step-by-Step Formula for Reluctant Real Estate Writers. Follow Writing Real Estate on Facebook, Twitter, Instagram and YouTube.