The Utah-based online real estate brokerage Homie is unveiling an updated version of its Power Buyer program and will soon back with cash homeowners looking to buy a new house before selling their current one, Inman has learned.
The expanded Power Buyer program and new buy-before-you-sell program will be unveiled in Colorado and Utah in the next two weeks, followed by Arizona, Nevada and Idaho in about a month, Homie executives revealed.
The move is an expansion of the company’s existing alternative financing model, and follows what co-founder and president Mike Peregrina said has been a successful bid to get buyers into homes in the hyper-competitive markets in which Homie operates.
“With [the program], we’re upgrading that to be a 100 percent cash offer — no contingencies,” Peregrina told Inman. “We’re actually going to buy the home for you. If you have a home to sell, we’re also going to help you there.”
Earlier this year, Homie began offering a Power Buyer program called Homie Cash, which allowed buyers to make cash-backed offers that were covered by a bridge loan.
The company has told customers they can waive contingencies with Homie Cash, but it still recommended keeping appraisal and due diligence contingencies.
Peregrina said his company has struggled to keep up with the demand for the program.
Under the expansion of the Homie Cash program, the company will buy the customer’s new house in cash and then sell it to them for the same amount using traditional financing.
Under the buy-before-you-sell program, the company would allow a buyer to make a cash offer. Once under contract, the customer has 60 days to sell and close on their existing home. If the house hasn’t sold within those two months, Homie would buy it for about 85 percent of the value, depending on the property.
The offers have no financing or appraisal contingency and can close in as few as 10 days. Whereas the original version of Homie Cash had no additional fees, the new versions come with a fee that’s 1.75 percent of the loan.
The move into Power Buying came on the heels of Homie laying off 119 of its 441 employees in late winter, citing a “changing real estate market.”
With the creation of Homie Cash, the company joined other Power Buyers already offering programs that effectively turn home seekers into cash buyers. Others include HomeLight, Evergreen Home Loans, UpEquity, Knock, Homeward, Orchard, Ribbon and Reali.
Nearly all offers made through the program had no apparent financing contingencies, which Peregrina said made offers through the program more attractive to sellers weighing multiple offers. The program also allowed transactions to close within three to four weeks.
Like other companies working in the space, Homie said customers using its Power Buyer program were several times more likely to have a bid accepted than those using traditional financing with contingencies.
“The demand for it is freaking nuts,” Peregrina said.
For good reason. A report this week found that buyers making offers with traditional mortgage and loan contingencies made on average seven offers before making a successful bid. Buyers working with Power Buyers only made one offer, according to the study.
“Consumers gained a huge advantage when working with a Power Buyer versus using a traditional mortgage with a loan contingency,” the report by online Power Buyer marketplace zavvie said. “What 2021 tells us is that [Power Buying and iBuying] are here to stay and that Power Buying … could eventually become the norm in residential real estate.”
Peregrina said demand for the program has tripled in the past two years in Utah and “we don’t see that slowing down.”
Peregrina said the program isn’t just built for the extremely competitive landscape of the past two years.
“The seller themselves, they’re going to look at 5, 10, 15 offers,” he said, “they’re going to rank them and prioritize cash.”
Homie was founded in 2015 and quickly made waves for its practice of charging a flat fee of $1,500 instead of a commission while still utilizing agents and attorneys who guide customers through the closing process. The company expanded to offer home loans, insurance and title services.
Peregrina said he believes the program will remain relevant even when the market moves away from sellers and in favor of buyers.
“We feel like we’re adding an item to the menu,” Peregrina said. “We’re building a platform that’s going to be able to be flexible regardless of if it’s a seller’s market or buyer’s market.”
Editor’s note: This post has been updated to accurately reflect Peregrina’s role.