Demand for Cash-Offer and Trade-In Programs Reaches All-time High to Help Everyday Homebuyers Compete
HomeLight’s latest Top Agent Insights Report shows 58% of real estate agents expect the rise in cash offers to persist beyond the 2021 housing market craze, fueled in part by The Great Resignation
SCOTTSDALE, Ariz., January 24, 2022–(BUSINESS WIRE)–HomeLight, the real estate technology platform transforming the home buying and selling process for the top real estate agents and their clients, today published its Top Agent Insights New Year 2022 Report.
The quarterly report compiles the findings of a survey of over 1,000 top real estate agents on how the rise of cash offers, whether in true cash or via cash-offer programs from financial technology companies, are shaping the current and future residential real estate market. The data shows that cash-offer and trade-in fintech programs can help first-time homebuyers in good credit standing compete and win in current competitive market conditions — created in part by relocations fueled by “The Great Resignation,” the ongoing trend of employees leaving their jobs voluntarily.
Fifty percent of agents say they are helping people buy or sell homes in response to relocating for a new job or finding the opportunity to work remotely. This, agents expect, will enhance housing demand in mid-sized cities, especially those with access to outdoor recreation. Additionally, 21% of agents are helping workers who left jobs that required going back into the office to search for spacious homes that support a new career working from home.
HomeLight’s agent data shows buyers are doing everything they can to scrounge up enough cash to buy a home:
57% of agents have seen buyers leverage their own retirement or securities funds to pay cash for a home.
49% have seen buyers take out a home equity loan or home equity line of credit for this purpose.
38% have seen buyers get a short-term loan from friends or family with enough money to help buy the home.
Buyers are increasingly turning to different tactics to win a home, including:
Offering a puppy — or a lifetime supply of candy: Creative and outlandish offers are on the rise. Since mid-2020, 7% of real estate agents have seen a buyer grant the seller access to part of the house, such as a garden or amenity, after purchase. Six percent have seen a buyer pay a competing bidder to walk away, and 6% have seen the buyer offer the seller expensive dinners or wine. In some cases, agents have seen offers of a lifetime supply of candy, a puppy, and more that have helped seal the deal.
Forgoing appraisals or repairs, or offering long rent-backs: Buyers are willingly adding or removing once-expected additions to try and close. Common tactics include offering appraisal gap coverage or an appraisal waiver (recommended by 67% as helpful to win a home in 2022), asking for no repairs (53%), and including an escalation clause (29%). In addition, 42% of agents have seen buyers allow the seller to stay in the home for a long period after closing, such as six months to a year, using a rent-back arrangement.
Doubling earnest money deposits: From 2020 to 2021, average earnest money deposits have doubled from 3% to 6% of a property’s contract price on average, according to agent estimates. In the Northeast, agents report a whopping increase from 6% to 11%. In some cases, buyers are making their earnest money deposits non-refundable to show how serious they are about a home.
At the end of the day, cold, hard cash is closing transactions. In the first half of 2021, all-cash deals accounted for nearly a third of home purchases, the highest share recorded since 2014. The re-emergence of institutional investors since the beginning of the pandemic was one contributing factor, though sales to iBuyers (instant buyers) remain a small portion of market share at around 2%.
Seventeen percent of agents saw buyers use a cash-offer or trade-in fintech program to compete in 2021. A majority 58% of real estate agents expect the rise in cash offers to persist beyond the 2021 housing market craze, as sellers now have greater expectations for convenience, speed, and certainty.
The demand for these programs is likely to grow in the face of another hot year for housing. HomeLight provides these services through its Cash Offer and Trade-In programs, currently available in California, Florida, Texas, Arizona, and Colorado.
“Going into 2022, cash offers will be more common as buyers see the need to be more competitive,” comments survey participant Deena Carvajal, a top real estate agent in Orlando. “Utilizing programs such as HomeLight Cash Offer will be a big draw. Sellers will continue to look for those cash offers to make things as easy as possible — and buyers will need to get on board with being creative and utilizing these cash offer programs to get them into a home.”
For all findings, download the full report.
HomeLight’s Top Agent Insights New Year 2022 Report was fielded between November 30-December 15, 2021, through an online poll of more than 1,000 HomeLight Elite™ and top real estate agents across the country. Agents were selected to participate in the survey based on the same performance data HomeLight uses to identify top real estate agents for over a million homebuyers and sellers nationwide.
HomeLight is building the future of real estate — today. Our vision is a world where every real estate transaction is simple, certain, and satisfying for all.
The best real estate agents rely on HomeLight’s platform to deliver better outcomes to homebuyers and sellers during every step of the real estate journey, whether that’s enabling an all-cash offer, unlocking liquidity of their existing home to buy a new one, or creating certainty through a modern closing process. Each year, HomeLight facilitates billions of dollars of residential real estate business on its platform for thousands of agents.
Founded in 2012, HomeLight is a privately held company with offices in Scottsdale, San Francisco, New York, Tampa, and Seattle, with backing from prominent investors including Zeev Ventures, Menlo Ventures, Group 11, Crosslink Capital, Bullpen Capital, Montage Ventures, STCAP, Citi Ventures, Google Ventures, and others.
For additional information and images: homelight.com/press
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Communications Manager, HomeLight