Homeward Blog

A note from our CEO

The Homeward Team
August 10, 2022
7
 min read

Team –

I know the past few months have felt uneasy.

After a period of remarkable growth and success in our business, it’s been difficult to watch the rapid cooling in the market and the impact it’s had on our near-term ambitions. I know that layoffs across the industry, and especially at our competitors, have led many of you to wonder whether Homeward would take similar actions. As I shared in June, we’ve taken these challenges in the market seriously. But I did not want us to make knee-jerk reactions, especially one that would negatively impact our people.

However, I am now writing to you with sad news: Homeward will be laying off ~20% of its workforce today. I know that this message is hard to hear, and it’s something I had hoped never to have to deliver. People are at the heart of everything we do here. We have navigated the highs and lows of real estate – together – and built a business that helps people achieve their dreams of homeownership. I’ve always been so proud, and remain proud, of this team.

But, meeting the moment sometimes requires a business to evolve. Despite having a strong financial start to the year, we are currently staffed for more growth than we’re now forecasting. This reduction today is necessary for our future success, but that doesn’t make it easier to part with so many of our colleagues. Layoffs carry real consequences for people, and this isn’t a decision we make lightly.

We are committed to doing everything we can to support the employees leaving today, and those staying. And it’s important that we are as transparent as possible in how we reached this conclusion.

Understanding why

Homeward has built our brand around giving agents and their clients a new and better way to achieve their homeownership goals. In our early days, we helped customers simplify the buying/selling process with Buy Before You Sell. As the market intensified, we launched Buy With Cash to help customers win among a crowded pool of offers. Most companies never find product-market fit once, let alone twice. Our successes catalyzed extraordinary growth – growth that required rapid hiring to simply keep up with demand.

Thanks to your hard work, May was our strongest month ever for the business. At that time, we felt confident that we were armed with the necessary cash to keep the business humming. We planned for a future built upon our strengths and the desire to help more customers, in more states, with more innovative products. Given our Q2 results, I do not believe that our optimism and excitement about the road ahead was misguided.

But – the market has changed dramatically in recent months: high inflation has persisted, interest rates are rising dramatically, and home sales have fallen from historic highs. Coupled with affordability concerns, fewer buyers are seeking homes. There is also less demand for cash offer products that differentiate buyers in the homebuying process.

Our original product, Buy Before You Sell, remains as popular as ever — and we feel confident it will continue to be sought out by buyers and sellers no matter the strength of the market. Still, losing demand in part of our portfolio - specifically, Buy With Cash - has had a sudden and sizable impact on our business.

When we talked with you at the All-Hands in June, we believed our cash runway was sufficient to bridge this period of lower activity. We reduced our non-people costs and planned our spend to hedge against further decline. However, the continuing acceleration and severity of the market shift has forced us to consider deeper changes to our business. It’s become clear that these headwinds are part of broader challenges facing our economy. We don’t know how long real estate will continue to soften, so we must plan for a less active market.

As a result, we are refocusing on our core promise: to make buying and selling homes easier and more accessible. Customers and agents today face very different challenges than only a few months ago. And while we have great ambitions, we must stay focused. Moving forward, we will concentrate investments on more evergreen solutions that provide value to our agents and their clients in any market, while reducing our spend in areas that aren’t as essential to this promise. We're doubling down on efforts to achieve profitability and ensuring our team is properly staffed to match these goals.

I know these changes are painful and disruptive, so our leadership team has made every effort to ensure that our new roadmap can carry us through the next phase of our business.

To our impacted employees

There’s no doubt that these layoffs will introduce challenges to your lives and we want to support you as best we can during this time of transition. First, we will be offering tenure-based severance pay. While your health benefits already extend through the end of August, Homeward will contribute two additional months should you elect to extend further with COBRA.

We also want to support your efforts to find a new role elsewhere. Homeward will be offering outplacement services through our recruiting team and removing the non-compete clause for impacted employees.

Finally, we want to recognize the contributions you made here with two changes to your stock options. First, we are removing the vesting “cliff” for all impacted employees so that your stock options will now be vested based on the number of months you have worked at Homeward, even if you worked here less than 12 months. Additionally, we are extending the time period you have to exercise your stock options from 90 days to one year.

What you can expect moving forward

Over the course of today, those of you impacted by the layoff will receive invitations via your personal email to a 1:1 meeting with a leader in your department and a people team representative to discuss the details of your transition and answer questions.

For those of you remaining at Homeward, we’ll talk more as a team at our All-Hands this afternoon (invite to be sent shortly). I recognize that this news may come as a shock and will mean changes to how you work. We’ll share more about our path forward in org-specific town halls tomorrow, along with details about changes to teams and reporting relationships. We will also hold another All-Hands next Friday (August 19th) to address any questions that arise as you digest the news. It will take time to get everything right – and we want you to feel supported in the months ahead.

Closing thoughts

It is especially difficult to share this news at a time when I feel so proud of this organization. Everyone here has contributed to helping agents and their customers achieve their dreams of homeownership. You all have embodied the “One Team, One Dream” value and brought so much joy and purpose to work here at Homeward. I’m grateful for your contributions and your spirit.

For those of you staying, I want you to feel assured that I have full confidence in our team and in the future of our business. This is an incredible team that can lead us through the coming years. I remain enthusiastic about Homeward’s promise and ability to make real estate more accessible, and a better experience for the homebuyers and sellers of the future. We have a strong foundation to build on. And customers are still seeking us out to help guide them on their home ownership journeys. Your continued partnership will help everyone’s efforts live on as we build the Homeward of tomorrow.

For those of you leaving, I am sorry. I know that you put your faith in us by joining our mission. And I let you down. Please know that your time here mattered and that your contributions will continue to serve as the groundwork for the next chapter of Homeward. We are so grateful to you.

Thank you for believing in us.

Tim

Agents: take advice from someone who’s been there. The 2022 housing market does not compare to 2008

Brian Gubernick
August 2, 2022
15
 min read

As Chief Real Estate Officer for Homeward, I’ve fielded a lot of questions lately about the state of the 2022 housing market. Specifically, agents express concern about the market cooling. Many of these questions come from agents who have only ever worked in a hot market. More experienced agents are still haunted by the ghost of the 2008 housing crisis. And even real estate agents who were literally children in 2008 have voiced their concerns with me over the cooling market and whether we’re heading into 2008: The Sequel.

Yet when I ask agents around the country about the state of their local market, they all say the same thing: they’re still selling. No, they’re not getting twenty offers on every property anymore, but they still have two or three. No, they’re not massively overbidding, but they still overbid. And they don't get offers on a property within an hour, but it still sells within five days.

Which begs the question: if people are still buying and selling homes at a solid rate, why are we still talking about the market crashing?

Our fearful conversations about the housing market keep scaring us about the housing market

A quick look at the Google results for “housing market,” and it’s clear to see why everyone is panicked. Here’s some of what I found lurking in the search results:

  • “A housing bubble requires 3 elements. The 2022 housing market has hit 2”
  • “The 2022 Housing Market Is Different Than 2008. Will It Still Crash?”
  • “The 2022 Housing Market Crash.”
  • “Rising interest rates are crushing the US housing market”

There are plenty of even-keel takes on what’s happening floating around the internet, but it’s the doom-and-gloom articles that too often dominate the headlines. I get it: clickbait gets page views! But I can’t help but feel that the real crisis amongst real estate professionals is that we keep scaring the pants off ourselves. The market likes a sure thing, and agents like a sure thing, and we’re all a bit jumpy when things start showing the slightest signs of friction.

So let’s cut the clickbait and face the music: the market is definitely cooling. But that doesn’t mean agents need to ration food, bury their life savings in the backyard, and start new careers. The causes of this correction could not be more different than those that triggered the 2008 housing crisis. And those agents who calmly anticipate and prepare for the market shift will find themselves in a terrific position to guide their clients through the challenges to come.

2008: A housing bubble fueled by bad mortgages

Make no mistake: 2008 was rough. I was there. I started flipping houses in the Phoenix area in 2005, right at the height of a massive market incline. Housing prices appreciated so quickly that it was hard not to make money as an investor.

Lenders, borrowers, and even Wall Street were making bets that the incredible price appreciation would last forever. Economists call this practice speculation. Speculation can lead to terrific returns when the market’s hot, but even marginal dips in the market can wipe out entire investments. Out-of-control speculation helped lead to the 1929 stock market crash. It’s just not a sound strategy.

But lenders were approving everyone for mortgages — and I mean everyone. There were three types of mortgages that were popular at the time:

  1. Subprime mortgages. These loans were offered to those who couldn’t qualify for a standard “prime loan.” They carried high interest rates to offset the high risks the lenders were taking on.
  2. Stated-income mortgages. I could walk into a bank, tell them I made $500,000 a year without a lick of proof, and they’d loan me the money for the entire property’s value.
  3. Adjustable-rate mortgages. Borrowers paid less in the initial years of the term and more as time went on. (If that sounds a bit like kicking the can down the road — don’t worry. We’re getting there.)

This mass approval of high-risk mortgages quickly became absurd. I remember being in a general education class when a sponsoring lender came to visit. He was promoting his — I kid you not — “One Day Out of Bankruptcy” loan. The idea here was that there was no one better to lend a fistful of cash to than somebody who just had all of their liabilities cleared. That might sound ludicrous by today’s standards, but at the time, no one had a problem with it. Obtaining financing was simple — too simple, as we’d quickly come to find.

The bottom falls out

Like so many others at the time, I wasn’t prepared when the market crashed in 2008. I found myself owing more money on the properties I held than they were worth. The bill had come due on all those high-risk mortgages that banks had been cutting for years. People started defaulting on mortgages they should never have been approved for in the first place. There were more than 2.3 million foreclosures in 2008 alone.

The collapse of the housing market in Fall 2008 brought Wall Street to its knees as well, resulting in a full-blown recession. Recessions have a funny way of dragging down housing prices as incomes plateau or shrink and fewer people seek to move. 2008 was no exception. Those still barely paying on their high-risk mortgages suddenly found they owed more on their houses than the houses were worth.

2022: Yes, the housing market is cooling — back to normal

Flash forward to 2022, and now the housing market is cooling again. But let me be clear: the current market is nothing like 2008.

The difference is that what happened in 2008 can’t happen again because of safeguards put in place in its aftermath. The high-risk mortgages and speculation that fueled 2008 are history. Lenders operate far more conservatively now, both out of their own interest and because of increased government regulations and oversight. Long gone are the days of blanket mortgage approval. For instance, nowadays, you actually have to prove you make a certain amount of money before lenders let you borrow their money (Go figure).

A recent Fannie Mae report shows just how much has changed since the rock bottom that was 2008. You must maintain a 620 FICO score for a bank to approve you for a conventional loan. The average FICO score of American home buyers currently sits at an impressive 754 as of March 2022. Plus, the total mortgage debt in the United States is less than 43% of current home values.

So I get why agents feel nervous about the current cooldown. It looks similar at first glance: several years of rapid appreciation followed by a sudden market slowdown. But if bad mortgages and speculation aren’t bringing the market down, then what is?

An unsustainably hot market

“The average price of a house in the U.S. jumped from $403.9k to $497.3k between Q4 2020 and Q4 2021.”

To answer that, we need to identify what caused the hot streak that dominated most of the 2010s. I’d argue three things primarily caused our extended seller’s market:

  1. Limited housing supply. When people stopped buying houses during the 2008 crisis, companies stopped building them. Demand outstripped supply for most of the last decade, which drove up housing prices.
  2. Record low interest rates. Interest rates hit a downward trend throughout the 2010s, making mortgages extremely affordable. The average interest rate in 2021 was 2.96%, which is about as close to a net neutral interest rate as you’ll ever see. This all-time low was due largely to the fact that the Fed was worried about the pandemic fueling a recession.
  3. External factors. No one could have predicted that a pandemic would strike in 2020. Even fewer people could have seen that what at first appeared to be a nightmare scenario for agents would actually superheat the market.

It’s hard to overstate just how hot the market was heading into 2022. House prices have historically risen over time, but we’re talking double-digit appreciation. The average price of a house in the U.S. jumped from $403.9k to $497.3k between Q4 2020 and Q4 2021. That’s a difference of more than $90,000 in just 12 months! There is no historical precedent to compare that jump to. It’s simply never happened before.

Welcome to course correction

All of that’s to say that the market has long been overdue for a correction. You can't sustain 20% to 25% appreciation in certain markets like South Florida year-over-year indefinitely. It just doesn't happen. Most bull real estate cycles last six to eight years at the most, and the post-2008 crisis cycle ran for eight to 10 years even before the pandemic hit — and then it got even hotter!

There are a number of factors currently putting the economy through the wringer, but it’s the end result — inflation — that’s having the biggest chilling effect on the market. The Federal Reserve board has increased interest rates to fight inflation. The Fed’s interest rate changes don’t directly impact long-term investments like 30-year mortgages, but they do have a ripple effect that impacts mortgage pricing. Generally speaking, when the Fed raises the interest rate, mortgage rates spike. The latest rise in mortgage rates means homeowners pay a decent amount more on a mortgage now than they would have at this same time last year.

Truthfully, historically low interest rates have spoiled us these last few years. Interest rates were at 2.68% in December 2020 — literally the lowest they’ve ever been. But reaching back to the 1970s, the historical interest rate averages closer to 7.7%. Mid-July 2022’s interest rate for a 30-year fixed-rate mortgage sits around 5.3% — still well below the historical average.

What real estate agents should expect from the 2022 housing market going forward

Single-digit appreciation and a climbing interest rate might freak out homebuyers, but I have to tell you: this is the “real” normal. The last decade outperformed historical trends, and things have started to calm down. Given the economic outlook, you can expect a cooler market to continue for some time. Through the coming year and potentially beyond, agents should expect:

Continued supply issues

This is the chief reason agents shouldn’t fret about a market correction. Demand still outweighs housing inventory and likely will for several years. The rate of new home builds dropped in recent months in response to inflationary pressures, supply chain issues, and increased cancelations. And if higher interest rates discourage some segments of potential buyers from upgrading to a new home, there will be fewer homes on the market, further exacerbating this shortage.

Ultimately, simple economics plays in real estate agents’ favor here. Until the number of homes built outpaces demand, the housing market has an attractively high floor.

Normalized appreciation

Again, double-digit appreciation is simply unsustainable. Even with the market starting to cool, Austin saw 19% year-over-year appreciation this past May. 19%! Markets like Austin that have overperformed in the last two years may chill to the point where they see house prices drop slightly. But this isn’t a “crash” — just a return to sanity.

Most other markets are more likely to see a slowing rate of appreciation — somewhere closer to the 4-5% you’d expect to see on average. An important thing to remember is that looking at short-term trends in the real estate market doesn’t reveal what to expect down the line. The market can be volatile month-to-month, and the current economic situation is only likely to make it more erratic than usual. It’s not worth panicking over pricing stagnation or depreciation in any given month when the long-term trends are still friendly. (If we’re seeing either of those things across the board come 2023, I’ll have to write a new article.)

Decreased competition

Newsflash: 20 bids in a day isn’t “normal” real estate. We’ve been spoiled, and we’re regressing to the means. The sort of competition you’ll see in the next few months is more akin to what you’ll see over the course of your career than the windfall of the last few years.

Your sellers can’t be as picky as the market swings back in favor of buyers. Many would-be buyers will look at the rising mortgage rates and say, “I refinanced last year at 3%, and now the interest rate’s almost 6%. Why would I pay more money over time for that house than I’m paying for the house I’m in?” The buying power is just not what it was a year ago, and it’s going to prevent people from moving.

And remember: prices are still mostly appreciating. People will still pay a premium for a new house in an economic climate where their dollar doesn’t go nearly as far. Higher interest rates mean even fewer people will be able to compete for a house, further reducing the number of offers on a property.

3 things every agent can do to weather uncertain housing markets

There’s no need to fear a sudden market crash, but that doesn’t mean everything’s smooth sailing from here. Inflation’s not slowing, and the external conflicts fueling it show no signs of subsiding anytime soon.

The cooler market will test the skills of every agent out there. Sales are no longer automatic. Commission checks will shrink. Clients will ask more of you at a time that you stand to make less. You can’t just show up with a lockbox key, show a property, and cash a check 30 days later.

That said, agents who understand the current climate will be okay. In fact, most agents who buckle down and prepare themselves for selling in this cooler market will come out the other side better at their jobs. I did back in ‘08 — though I certainly took my lumps as I figured things out along the way.

My advice for agents? Spare yourself the pain of figuring things out the hard way and prepare yourselves for new normal with these three strategies:

1. Scale back your expenses

The glory days of oversized commission checks are over (or, at least, they’re on a temporary hiatus). You’re still going to bring in revenue, but you need to run a lean operation to ride out an uneasy market. I’ve seen too many agents go out of business because they're overwhelmed with expenses when revenue dips.

Make sure your expenses are controlled and that you have your cash reserves in a position where even sudden market shifts can’t sink you. This means making some difficult decisions around cutting overhead or tools you love but don't really need. Also consider shifting your marketing to focus on more cost-effective lead generation methods like social media, email newsletters, or video—with an emphasis on converting to a face-to-face appointment!

2. Expand your offering to improve customer experience

While agents should function as consultants in any market, it’s especially important in a market downturn. Agents looked like heroes in the latest hot streak for just showing up, listing a property, and receiving an offer an hour after it went on the market. 

But it won’t be enough to “just buy or sell” in a market downturn — any ol’ realtor can do that. You need to provide a suite of services to your customer beyond facilitating home sales. The consummate agent in today’s market will:

  • Educate clients on the state of the market
  • Walk clients through the ins and outs of the home purchase/sale process
  • Meet regularly with clients to review strategy and make necessary adjustments
  • Use PropTech tools to improve meet clients in digital spaces and make more competitive offers

The idea of the “agent as a consultant” is at the heart of what we do here at Homeward. Imagine showing up at a prospect's house and being able to show them a menu of services you provide. Do they want to buy a home before they sell the one they’re presently in? Hey, you have a Homeward solution for that. Is the local market still competitive and your prospects need a cash offer to get a seat at the negotiating table? Of course you have a solution for that, too!

3. Learn from those who came before you

If I had to hazard a guess, I’d say 80% of agents out there right now have never been through a substantial market shift. That means 20% of agents did make a living during the 2008 crisis. Since they’re still out there making money, I have to assume they have countless nuggets of wisdom about how to weather a cooler market.

If I were a young agent, I’d come to the table with a willingness to learn and network and engage with any agent who’s been through it before. I’d be picking their brains clean of any tidbit that can help me strengthen my business in the long term. Believe it or not, many agents didn’t just survive during 2008. The ones who dug deep and adapted found a way to thrive.

If thriving sounds good to you, start here:

  • Connect on social media. Facebook groups like the Homeward Agent Network are goldmines for helpful tips and anecdotes. Meanwhile, if you’ve ever been on LinkedIn, you know people love to give advice freely.
  • Find trusted blogs. We’re smack in the middle of a glut of terrific real estate content. (Case in point: You’re reading an article on real estate advice right now.) You know there’s great information out there just waiting to be unturned.
  • Pick up a book. News reports are reactionary. The market dips, and they report on it. Agents or other experts who lived through 2008 have had the time to sum up their experiences and give actionable tips removed from what’s happening right now.

It’s time to earn that commission check

The most critical thing to remember while working in a cooling market is that your clients are anxious, too. They read many of those same news articles and think-pieces that predict nothing but storm clouds for the housing market over the next year. Your customers have their entire lives invested in their homes and the prospect of finding a new one — and they’re depending on you to provide some stability amidst all the uncertainty.

So be honest with them. Tell them the truth about the current climate and temper their expectations — but also provide them with the tips, resources, and support as you guide them to their new home. The wins (and commission checks) are still out there. It’s time to prove you can earn them.

9 hidden costs of buying a home — and ways to avoid them

The Homeward Team
August 1, 2022
7
 min read

The most expensive investment a person makes in their lifetime is most often a house. Many lenders require 20% down on a home before they’ll offer their more favorable mortgage rates. As of July 2022, the average house price in the U.S. hovers around $428,000. That means homeowners hoping to put 20% down will have to fork over a whopping $85,600.

Your down payment and subsequent mortgage are the obvious costs of purchasing a home, but hidden costs sneak up on buyers who already feel financially strained. Mortgage lender requirements, closing costs, and other lesser-known fees add up for homebuyers, especially those with little to no experience navigating the real estate market.

You’ll want to study the potential hidden costs of buying a home to better budget for your next home purchase. You won’t be taken by surprise when a hidden cost comes knocking — and you may even find a way to avoid certain unnecessary costs entirely.

Process costs

It takes an average of 45 days to close on a house. Several costs pile up within that nearly two-month window, including:

Earnest money

Earnest money acts as insurance for the seller in case you back out of the deal. It’s typically 1-3% of the home's total sale price and is due within three days of the seller accepting and signing your offer.

You forfeit your earnest money if you change your mind about buying the house. However, you’ll keep it if the seller backs out. You’ll also keep the money if the sale falls through due to a reason covered by a contingency. For example, if the home inspection fails and you have a due diligence contingency in place, your earnest money will be returned.

The good news: Your earnest money counts toward your down payment on your closing date.

Read more: Four common types of homebuying contingencies

Home appraisal fees

Your lender will want to ensure that the home you purchase is actually worth what the seller says it is. This requires a home appraisal, and (surprise!) you get to pay for it.

A designated appraisal management company (AMC) will appoint an appraiser to perform this duty, so it’s not something you can price shop. The total cost of your appraisal will depend upon several factors, including:

  • The size and value of the property
  • The type of mortgage you’re applying for
  • The property’s geographical location

Expect to pay at least $300 for an appraisal, but it could be closer to $1,000 depending on your situation.

Home inspection

Your lender won’t require a home inspection, but 85% of homebuyers still get one to avoid purchasing a house with serious structural issues. Home inspections save homeowners money on repairs in the long run, but scheduling one will cost you money upfront.

The factors that affect the cost of a home inspection mirror that of a home appraisal — namely, square footage, cost of living, and the state of the housing market. The costs between the two are similar as well, with prices averaging $300–$400 but often costing more depending on where you live and what you’re buying.

Closing costs

There’s nothing quite like sitting down to officially take possession on your closing date — and then finding out you weren’t prepared for the litany of closing costs. ClosingCorp pegs the average price of closing at $6,837 including taxes, which is a hefty bill if you’re not expecting it. These costs must be paid before you can take ownership of your house, so come to the table with your checkbook.

Loan origination fee

Your lender undergoes an intensive process to review, underwrite, and approve your mortgage — and the loan origination fee is what they charge for the work involved. Most loan origination fees cost 0.5% to 1% of the total loan rate, meaning you’ll owe a sizable $2,000-$4,000 on a $400,000 house at closing time. 

Homeowner’s insurance 

During your closing meeting, you’ll need to prove that you’ve protected your investment with a homeowners insurance policy. Lenders typically require you to have paid for a year of insurance before signing off on your mortgage. NerdWallet figures the average cost of homeowners insurance in the U.S. to be $1,784 a year, but the rates are higher in states with consistent rates of severe weather and natural disasters.

Property tax

You’ll also be expected to pay the property taxes on your new home as part of your closing costs. The amount you’ll pay is prorated based on how many months you’ll own the house for the current calendar year. For instance, if you close on May 1st, you’ll likely be on the hook for eight months-worth of property tax.

Your property tax bill will depend on two variables: the value of your new home and the going tax rate. The city, county, and state you live in all impact your tax rate. (For curious minds: as of 2020, Hawaii has the lowest property tax rate at .37%, while New Jersey ranks highest at 2.2%.) 

Escrow fees

Your escrow account is where your earnest money is held while all parties hash out the sales process. Down the line, your lender will use the account differently. They’ll put money into escrow from your mortgage every month and periodically use the funds to pay off your property taxes and homeowners insurance premiums. 

Your lender pulls funds from your escrow account, but a third-party escrow company manages and operates it. They don’t set it up for free, though, with companies usually charging 1-2% of the total sales price for their services. This cost is often split between the buyer and the seller, though these terms may be negotiated in favor of either party as part of the initial offer.

Situational costs

Other situations add to your overall homebuying cost depending on where and how you’re buying your house. These costs don’t apply to every purchase situation, which is why they often take homebuyers by surprise.

Homeowners association fees

You have to do more than join the club and follow the rules if you buy a house in a neighborhood governed by a homeowners association (HOA). You must also pay HOA fees to enjoy its benefits. 

There’s an additional cost that often catches homebuyers off guard: the HOA transfer fee. The HOA charges this fee to cover administrative costs whenever a home within the association changes possession. Most HOAs charge around $200-$250 for this fee, and the seller typically covers the cost. However, it’s become increasingly popular for the buyer to cover this fee to make their offer more attractive. Keep this fee in mind as a negotiation tactic if you’re buying in an especially hot market — and prepare to shell out for it if you include it as part of your final offer.

Mortgage insurance

Mortgage insurance offsets some of the risks a lender takes when it allows people to buy a house without substantial money down. Mortgage companies know that not everyone can afford a sizeable down payment for their homes, but small down payments equal more considerable risks for lenders. Lenders charge a small premium in the form of mortgage insurance instead of denying mortgages for cash-lacking prospective buyers.

Lenders usually require you to purchase private mortgage insurance (PMI) on a conventional mortgage loan when you put down less than 20% on your house. It shows up as a premium in your monthly mortgage cost, and you’ll typically pay it until you’ve paid off at least 20% of your home’s value. Meanwhile, those taking out Federal Housing Administration (FHA) loans without putting at least 10% down will pay a mortgage insurance premium (MIP) for their mortgage term. 

Most annual PMI and MIP rates average between 0.22% and 2.25% of your total cost spread out over monthly mortgage payments. NerdWallet has a handy tool that allows you to estimate the cost of your PMI based on factors like your total home value, down payment, and interest rate.

Lower the hidden costs of buying a home with Homeward

Homeward helps eliminate one of the highest costs of homebuying: buying a new house before selling your old one. When you find a new home on the market, waiting to sell your old one before making an offer is risky. Someone could snap up the home you want while you wait for your home to sell, but most people can’t afford to pay the mortgage on two houses simultaneously.

Additionally, many people simply can’t afford to purchase a new home until they’ve sold their old one. Their liquidity is locked up in their existing house, making it impossible for many homebuyers to put down 20% on a new home without selling first.

Buy before you sell allows you to buy your dream home and gives you time to sell your old home — without paying two mortgages. Once pre-qualified, Homeward will buy your new home for cash and let you move in for a low rental rate. Meanwhile, you can work to put your old house on the market and purchase your new home back from us once it sells. It’s that easy to save yourself stress and money as you make one of the most significant purchases of your life.

Simplify the homebuying process with Buy before you sell.

Customer story: How Karin realized her dreams of Colorado with Buy before you sell

The Homeward Team
July 29, 2022
4
 min read

Karin Esterhammer had called Los Angeles home for forty years. 

As a long-time resident and a journalist for the L.A. Times, she knew the city well. Despite her history with L.A., Karin dreamt for years of moving to Colorado. She wanted mountains. She wanted fresh air. She wanted to experience more of the world’s natural beauty. 

Colorado dreaming

But like most of us, Karin couldn’t simply pack up and leave. She had children and grandchildren in L.A. and couldn’t just walk away from them. Being near her family was more important than her own desire to relocate.

Years went by. Then, in the middle of the pandemic, Karin’s daughter and her family decided to move to the Denver area. After helping her daughter move into her new home, Karin’s dream solidified into a plan. She’d had enough of the noise, traffic, and pollution in Los Angeles. She’d been waiting for a good reason to get out of L.A. — and she finally had one. 

She began searching for homes in Colorado while on the flight back to Los Angeles.

A chance connection

Moving over a thousand miles is no easy feat. Karin knew she’d need help finding a home in the Denver area. But where to start? 

Karin had friends who had moved from L.A. to Colorado decades earlier. She thought they could help. After some internet sleuthing, she found someone named Kelsey Long. Her old friends’ daughter was named Kelsey, but she was only a few years old when Karin had last seen her. Could this be the same person? Karin sent an email to Kelsey, hoping she wasn’t bothering a stranger.

Karin was surprised to get a quick reply. Yes, this was the same Kelsey, but there was more to it than that: Kelsey was also a realtor in the Denver area. She could connect Karin to her parents, but she’d also be delighted to help her find the perfect new home.

The stars had aligned. All signs pointed to Colorado.

Forming a plan to buy and sell

Kelsey helped Karin understand the state of the market in and around Denver. It was the summer of 2021, and like many other markets across the country, Denver real estate was booming.

“The market was moving so fast. It was scary,” says Karin. “After an hour, a new home would have a dozen people bidding on it. The thought of selling our home in L.A. and moving to Colorado in those circumstances was really scary. Before I heard about Homeward, I pictured myself moving into my daughter’s basement and driving them crazy for a few months. I really didn’t want to do that.”

Although Kelsey knew the Denver market well, it was Karin who proposed using Homeward’s Buy before you sell solution. Her daughter had used Homeward when she moved to Colorado and had raved about the experience. “It seemed brilliant,” remembers Karin. “I’d never heard of a program like this before then. Having to sell and buy at the same time is so stressful because you’re caught in the middle and you don’t know how things are going to work out.”

Kelsey quickly saw the benefits of using Homeward:

“When you’re in a seller’s market, you know you’ll make money selling your home. But for me, I don’t want my buyers to feel the pressure of needing to find a new home quickly. That pressure forces them to make hasty decisions, and the last thing I’d want is them to buy a house and regret it a few months later. Homeward really seemed like it could ease your mind during the process.” 

Karin got approved for The Homeward Cash Offer and began house-hunting in earnest. She was a thousand miles away from Denver, so when they found a promising home, Kelsey and Karin’s daughter would visit and do video tours of the property. After seeing about ten homes, they found a home that seemed perfect for Karin. It was early September 2021. 

“When we found this house, it felt so good to know we could put in a cash offer,” remembers Karin. “We knew we’d be in a strong position so nobody would beat us out.” 

There were at least four other offers on the home, but after some brilliant negotiating by Kelsey, the seller accepted Karin’s offer. Her dream was coming true. She was finally moving to Colorado. 

Living an “exquisite experience”

After purchasing their new home with the Homeward Cash Offer, Karin and her family moved to Colorado in October 2021. They spent a few weeks repairing their old home, then quickly sold it and used the funds to repurchase their new home back from Homeward. 

Reflecting on her experience, Karin is so glad she used Homeward.

“Dustin, the person I worked with at Homeward, was just amazing. He took care of everything right away and was so prompt. It made this scary process so much easier and it was well worth the reasonable convenience fee.”

Karin says that getting out of Los Angeles was the best thing that ever happened to her. “It’s just been the most exquisite experience. Our house is beautiful and has a fabulous view. It’s perfect for our needs. Every day, I wake up and smile because I can’t believe we live here!”

Agent story: How Reisha uses Homeward to modernize her real estate business

The Homeward Team
July 28, 2022
5
 min read

“When I started in real estate, Austin was just a town. Now it’s a full-blown city.”

Reisha Lacey has seen a lot of change during her eighteen years in real estate. 

Although she’s originally from Chicago, Reisha has called Texas home for over twenty years. She’d always been interested in pursuing a career in real estate, but friends or relatives had talked her out of pursuing her dream multiple times while in Chicago. After moving to Austin, she decided to make her dream her reality. 

Eighteen years later, she’s carved out an award-winning career as a realtor at Realty Austin. Given her experience moving across the country, Reisha is particularly passionate about helping clients relocate from one area to another. While the process can be overwhelming, she’s living proof that a change of scenery can sometimes make a world of difference.

Serving clients in a booming metro

The market Reisha works in today is almost unrecognizable compared to the market she started her career in nearly two decades ago. 

In the past twenty years, Austin has solidified itself as a legitimate hub for American tech companies. Other cities in Texas have seen similar success, but Austin has managed to stay true to its unique vibe as a city. The impact on the real estate market has been profound. 

“The influx of tech workers, particularly people relocating from California, has led to super high demand and low inventory,” says Reisha. “Prices have doubled and tripled since I started working with clients. Builders just can’t build new homes fast enough.”

Many markets across the country experienced a surge in demand over the past few years, but Austin’s has been unbelievable. “Each home was getting 30-60 offers over their first weekend last year,” says Reisha. “With interest rates going up in 2022 it’s slowed down a little. It’s still a seller’s market, but buyers now have a bit more time.”

Helping clients buy and sell houses in a red hot market brings unique challenges. Fortunately, Reisha’s been well-positioned for success.

Leveraging technology and continually learning

“I’m at a company with superior technology now,” explains Reisha. “With this market the last few years and such low inventory, I’ve had to adapt and learn different ways of doing my job.”

When competing with dozens of offers, speed and flexibility are both critical. If you can’t make a compelling offer quickly, your client will never win the home they want. For Reisha, adapting her approach has meant rethinking her entire team: 

“For example, I’ve always had one go-to lender. But he hasn’t seen much business from me in the last two years, because he doesn’t have a solution that fits my client’s needs in this market. I’ve virtually changed my entire team.”

Although she still leverages her long-standing relationships where possible, the demands of the past few years have forced changes. Reisha’s goal as an agent is to guide her clients through every step of their homebuying journey, which means she has to stay on top of trends and have a wide variety of tools at her disposal.

Discovering Homeward

Reisha’s willingness to try new approaches led her to Homeward. Her agency started exploring Homeward in early 2020, right as the pandemic kicked off. After some due diligence, she quickly realized that Homeward’s services stood out from what typical lenders were able to offer. 

“Many of these lenders can help buyers, but they don’t have a full program where they can help my clients sell their existing homes,” she explains. “They don’t have the ability to help my clients buy the house they want with cash, sell their old home, then buy back the new home.” 

Reisha has used Homeward’s Buy with cash and Buy before your sell solutions over the past few years, but she’s found it to be a perfect solution for clients looking to sell existing homes. 

“Without Homeward, a typical experience would be listing a home and getting it under contract. After the option period, we’d go out and look for a home, but it would be contingent on the sale of their existing home. That contingent offer just isn’t as strong. But with Homeward, Homeward puts a cash offer in for my client. It’s more competitive and far more appealing, especially if you’re in a multiple offer situation.” 

That’s a compelling advantage, but it’s not the only reason Reisha relies on Homeward as a strong option. She works with Homeward because it creates a better experience for her clients. “No one wants to move twice if they can help it. Using Homeward alleviates a lot of stress for my clients because they don’t have to be in their home when they’re trying to show it.” 

Reisha’s found Homeward to be such a good fit for many clients that she’s even recommended Homeward to clients moving out of Texas.

“I had a client who was an advanced skier, and she was moving to Colorado. I referred her to an agent in Colorado, and since Homeward operates in Colorado I also recommended Homeward to her. That agent had never used Homeward before, but she used a Homeward Cash Offer.”

Although this client’s offer was one of eight on the property, the strength of her cash offer made it the most appealing option. She won the property and moved in a few weeks later.

Winning homes and growing her business

Buying a home in Austin within the past few years hasn’t been for the faint of heart. Reisha has found that her years of experience and her diverse toolset have enabled her to serve clients and grow her business in every market.

“I’ve used Homeward with over a dozen clients in the past two years,” says Reisha. “Most of the time, I suggested Homeward because we were submitting offers and we weren’t winning the bidding war. Homeward’s cash offer made us more competitive. It made all the difference, especially for the many first-time homebuyers I’ve worked with.”

Helping her clients succeed in purchasing a home is rewarding. But Reisha has also seen the benefits in her own life and business.

“The last two years were especially hard with the low inventory and high demand. I don’t know if I would have gotten even half of those clients under contract and into new homes if I hadn’t been able to use Homeward.”

As she thinks about the future, Reisha is confident that she’ll continue to rely on Homeward as a critical tool for clients. “It will still be attractive to take your time, find a home to buy first, then turnaround and sell your existing home. It’s always going to be a more appealing option. It really takes the pressure and stress out of the experience.”

How Homeward's solutions can strengthen your next offer

The Homeward Team
July 14, 2022
7
 min read

Signs that the housing market is cooling are here. The news may dampen the spirits of real estate agents and home sellers who have taken advantage of sky-high housing prices. However, the news is likely to come as a relief to would-be homebuyers who have had a tough time in an ultra-competitive market.

However, a cooling housing market comes with its own set of problems for buyers. Interest rates have climbed substantially from the historic lows of late 2020. Housing prices may not be skyrocketing, but they may not come down anytime soon. And as competition shrinks, the likelihood that buyers can purchase a new home at the same time as they sell their current home becomes more unlikely.

Your clients will need help buying and selling their home in an increasingly volatile market. Your client may need to buy a new home before selling their current one, or they may need to make a cash offer to eliminate deal-stalling contingencies. Luckily, Homeward’s innovative homebuying and selling solutions address both, adding a sense of calm and stability to the process–and all while keeping agents directly at the heart of the transaction.

Homeward empowers cash-strapped buyers to Buy before they sell

A cooler market means homeowners are likely to experience difficulty lining up the sale of their home with the purchase of their new one. Homeward solves this tricky conundrum with our Buy before you sell solution. The process is surprisingly simple:

  1. Your client gets approved for a set amount, enabling them to make an offer as soon as they find a suitable house.
  2. You work with us at Homeward to make a cash offer on the house.
  3. You win the offer, we finalize the sale, and your client moves in as soon as the title is ready.
  4. Your client purchases the house back from Homeward as soon as their mortgage is ready.
  5. Your client pays a small monthly fee as they wait for their former home to sell.
  6. If approved ahead of time, Homeward will buy their old house from them if it doesn’t sell within six months.

All Buy before you sell offers are made in cash. Cash offers grew in popularity over the last few years in the hot seller’s market as ways to make offers more attractive to homebuyers. While homebuyers are likely to find the current market more buyer-friendly than it was at the height of the pandemic, cash offers remain attractive to sellers in any market.

Homeward solves a problem common to many people wishing to make a cash offer: Most people’s wealth is often tied up in their current home. This makes it difficult to unlock the liquid cash needed to make a cash offer. The median value of assets in the average American’s bank account only totaled $5,300 as of 2019 per the Federal Reserve. Meanwhile, the National Association of Realtors estimates the median price of a house in May 2022 at just over $407,000.

This issue was one all-too-familiar for Tim Heyl, founder of Homeward. As a former real estate agent, he saw how difficult it was for his clients to purchase a new home while their equity was trapped in their current home. He saw that this lack of liquidity coupled with the need for cash created the following catch-22:

  1. A homeowner needs to sell their house to raise enough cash to make a cash offer.
  2. They need to buy a new house before they can sell their current one.
  3. Sellers keep rejecting their offers in favor of cash ones …
  4. … but they need to sell their house to raise enough cash to make a cash offer.

Eventually, Tim used money from his own savings account to purchase the house for his clients. Once his clients were approved for a mortgage, they purchased the house back from him — and the idea for Homeward was born.

Homeward’s Buy with cash provides stability for the seller

Sellers prefer cash offers over traditional ones because cash supports a stable, easy, and expedient closing process in any market. Signs indicate the market is cooling, but competition will remain as demand exceeds supply. The National Association of Realtors estimates that four offers are placed for every residential property sold. Supply issues fuel this competition, with Realtor.com estimating that 5.8 million homes need to be built to bridge the gap between supply and existing demand. 

Your clients will always need to find ways to make their offers stand out to sellers — and Homeward can help. The biggest advantage of cash offers to sellers is that they eliminate potentially deal-breaking contingencies. Sellers enjoy Homeward Cash Offers specifically because:

  • Most traditional transactions include a “financing” contingency that allows buyers to back out if they can’t secure a mortgage. Homeward approves your clients for a certain amount ahead of time, so sellers know the money is guaranteed.
  • Most traditional home sales include a “house sale” contingency that allows buyers to back out if their home doesn’t sell within a set time. Buy before you sell eliminates the need for this pesky contingency.
  • Sellers know eliminating contingencies not only reduces the risk of a sale falling through, but it also speeds up the closing process.

Denver homebuyers Austin and Lewis experienced issues with contingencies as they tried to upgrade from their starter home. The couple saw 20 to 30 houses and made numerous offers before realizing that their home sale contingency proved a non-starter. Per Lewis:

“The home sale contingency really hobbled us. We’d put together a good offer, but when the seller saw the contingency, our offer would go to the bottom of the stack.”

After their real estate agent recommended Homeward, Austin and Lewis decided to give it a try. They were approved for a Homeward Cash Offer and soon made an offer on a home. Despite being one of 24 offers, their offer was the one that was accepted — an outcome aided by their lack of a house sale contingency. 

Homeward keeps agents at the heart of the transaction

Homeward was founded (and is currently operated) by real estate agents, so we’re keen on building a tool that supports agents. PropTech tools too often grant assistance at a great cost to real estate agents. Sometimes they aim to cut real estate agents out of the equation entirely. Other times, a product will give real estate agents great insights or assistance — but for a chunk of their commission.

The experience with Homeward is altogether different. We’ll work closely with you during the home sale process to ensure everything goes according to plan, but it’s ultimately your client who transacts with us. Meanwhile, you get to keep 100% of your commission while getting credit for suggesting Homeward in the first place.

Homeward’s agent-friendly focus makes it an indispensable tool for agents looking to get a win for clients who’ve been having a hard time closing in the current market. Grant Rothberg, a celebrated Houston-area realtor, appreciates the added value Homeward brings to his already formidable real estate skills:

“I recommend Homeward whenever possible because I know it gives my clients the very best chance to land the house they want the first time. I wouldn’t be doing my job if I knew there was a tool like Homeward and I didn’t advise every client to use it.”

After helping her client close on a house in just 14 days using Homeward, Atlanta-based realtor Jezell Griffin agrees:

“It’s a really great tool. I mainly work with first-time homebuyers, and it helps to have Homeward available. It builds a lot of trust when I can say, ‘I’ve got this option that I guarantee can give you better odds of getting the home you want.’”

Use Homeward’s pain-free cash offers to seal the deal

You know too well what it’s like to lose out to a cash offer. Now imagine this: Your clients discover the house of their dreams. You suggest Homeward as a way to sweeten their offer. Despite a dozen competing bids, your clients win out, close quickly, and live happily ever after. You get the credit — and you keep every penny of your hard-earned commission.

As cash offers continue to create unique solutions in an increasingly complex market, the choice is clear: Use a Homeward Cash Offer to win for your clients and avoid losing out to homebuyers who started using it first. Your clients will thank you.

Schedule a call with a Homeward advisor to find out how the Homeward Cash Offer can help your clients

The agent’s guide to real estate social media posts

The Homeward Team
July 7, 2022
16
 min read

Social media is a real estate agent’s best friend. Ninety-seven percent of home buyers use the internet to aid in the homebuying process, and 43% of them search for available properties before contacting a real estate agent. Eighty-two percent of Americans use at least one social media platform, meaning a strong social media presence better positions agents to become a part of homebuyers’ increasingly digital purchase process.

However, not all social platforms are created equal. An engaging real estate social media post on Facebook might languish on Instagram or TikTok. Agents don’t just need to create high-quality and engaging social media content to grow their brand and attract leads. They also need to grapple with the unwritten rules and best practices of each individual platform.

Fear not: social media for real estate agents doesn’t need to be a headache. Here are the whys, wheres, and hows to creating real estate social media posts that build brand awareness and drive in leads.

Why building a social media presence for real estate agents is a must

Agents who have invested time into cultivating a social media presence speak highly of its benefits. Fifty-two percent of agents identify social media as the tool that brings in the highest quality leads, and 60% argue that maintaining social media pages is more important than having a dedicated real estate website.

People of all ages use social media, but it’s especially popular with millennials. Eighty-eight percent of the generation use social media daily, and 79% of them use it more than once a day. Meanwhile, millennials comprise the largest homebuying cohort in the country, making social media presence a must for agents looking to appeal to increasingly tech-savvy homebuyers.

The importance of social media to the modern real estate agent can be boiled down to four major components:

1. Real estate social media posts establish credibility

You’d be leery of doing business nowadays with a company that doesn’t have a website, and consumers have begun to feel the same way about businesses without social pages. The homebuying process is a complex undertaking, and social media helps prospects see that your business is legitimate.

2. Social media posts increase visibility

More people use Facebook than platforms like Google Reviews or Yelp to discover new businesses. Additionally, 77% of real estate agents have social media pages. If you’re not on social media, prospects in your area won’t have a hard time finding an agent who is.

3. Social media posts express your brand

Even in an increasingly online world, real estate remains an incredibly personal business. Clients want to work with agents who represent their interests, exude confidence, and have a wealth of experience and expertise. Social media enables agents to differentiate themselves and show their value before ever having a conversation with a prospect.

4. Social media posts don’t cost a dime

You won’t find a more cost-effective or versatile channel for reaching your audience than social media. It’s free to create and maintain social media pages, and you can change your message and target audience with each individual post. Yes, you need to spend time planning and creating posts, but a couple of hours a week of planning is enough to craft high-performing posts.

Dozens of social media platforms exist, but you only need to build an online presence on a select few to build awareness and drum up traffic. The three best social media platforms for engaging real estate prospects are Facebook, Instagram, and TikTok.

How to use Facebook to engage real estate prospects

Facebook remains the most popular social media platform in the United States. In the US alone, 190 million people have a Facebook account. Younger generations are the most avid social app users in general, but Facebook has managed to build a strong Gen X and baby boomer user base as well. An impressive 35% of the platform’s users are older than 45. This makes Facebook the best social media channel for appealing to potential buyers of all ages.

Facebook’s algorithm dictates which posts your page’s followers see in their “home” view — or, as Facebook calls it, their Feed. Posts that gain likes, comments, and shares positively signal the algorithm, which in turn increases the post’s visibility amongst your followers. Imagine posting a link to a listing right now on your Facebook page. Only just over 2% of your followers would find the post in their Feed. However, once your followers start reacting to your post, the visibility percentage will slowly increase.

Ultimately, your success on Facebook and other social platforms depends upon your ability to create posts that encourage audience engagement.

Best practices for creating engaging Facebook real estate posts

The tone and messaging you use in your real estate business posts on Facebook will differ based on how you want to represent yourself to your audience. As a real estate agent, people respond positively both to your vibrant personality and your authority in the field. It’s beneficial to craft posts that reflect a playful but professional tone that broadly appeals to your prospects across demographics.

Several other factors influence whether users find a post engaging or not. The most successful Facebook posts:

  • Use images or videos. Research shows that images encourage users to click through to your website. Furthermore, Facebook’s own algorithm favors posts that include video, viewing the format as more engaging than both video-free posts and static images.
  • Stick to short, punchy copy. Any time a user logs into Facebook, a staggering 1,500 posts could appear in their Feed. Images and video help a post stick out, but long, word-heavy posts are likely to get scrolled over by fast-scrolling users. You only have a few seconds for your post to stick out to a user, so distill your message down to as few words as possible.
  • Go out daily. Unlike some other social platforms, one post a day on Facebook encourages better engagement than multiple posts a day. Businesses with fewer than 10,000 Facebook followers see a drop in engagement if they post 60 times a month (roughly twice a day). It’s also easier to create higher-quality posts when you’re only aiming to send one out a day.
  • Get boosted. Your posts on Facebook only go out to users who follow your business page — unless you want to pay to boost a post. Boosted posts can be customized to target users outside of your followers. The more you’re willing to pay, the more users will see your post. If a particular post has gained a great deal of engagement from your followers, it might be worth throwing a few dollars behind it and targeting non-followers within your market.

Read more on how to use paid Facebook advertising to generate leads

The 3 best types of posts to use on Facebook

It pays to create imaginative and diverse types of posts on Facebook, but there are a few social media post ideas that play to Facebook’s strengths, including:

1. New listings. These are the bread and butter of your business. Highlight the most attractive features of your home in the listing and add your voice and flair to the proceedings to capture attention and foster engagement.

This listing includes the essentials: home highlights, location, pricing, and an attractive image. (Source)


2. Client testimonials. It can turn users off to hear businesses talk about how great they are — so let your customers do it for you! A quote or screengrab from a positive review adds credibility to your business. And don’t forget: Facebook loves video posts. Bonus points if you manage to get the customer on video for a more personalized, authentic testimonial.

The inclusion of the agent’s face in this testimonial personalizes the post. (Source)



3. Advice & tips. People seek out real estate agents for a reason: you help make a complex process less stressful. Post videos, information tidbits, or blog posts describing common home buying, selling, or owning conundrums and your professional advice for overcoming them to show off your hard-earned real estate knowledge. This also positions you as a continuing resource for customers you’ve already helped in the past.

This tip post is highly readable due to its use of bulleted lists, short paragraphs, and simple sentences. (Source)

How to use image-centric Instagram to boost your brand

Facebook’s parent company Meta owns Instagram as well, which means that many of the same algorithmic rules apply when posting to the site. Engagement is still the name of the game. However, Instagram is designed as a far more visual platform than Facebook. The text in an Instagram post supports the visuals, not the other way around.

This intensely visual medium attracts a younger audience, namely millennials and Gen Z, who make up more than 70% of users. It’s the millennial audience that makes Instagram worth pursuing for real estate purposes. The generation is now the largest homebuying cohort in the US, and they make up nearly half of Instagram’s estimated 123.1 million US users.

Instagram is all about persona and aesthetics. Instagram users are invested in the people behind the accounts they frequent. A Facebook post of a listing could include an image of the house in question. On Instagram, you’re better off taking images or videos of yourself touring the house. Agents who figure out how to visually convey their brand and personality are the ones who see the greatest post engagement on the platform.

Best practices for creating engaging Instagram real estate posts

A key component to success on Instagram is the concept of influence. An Instagram influencer is someone who has built a reputation amongst users as an expert in a certain field and commands a sizable following. Many companies end up paying influencers to market their products for them because 49% of people find the recommendation of influencers more reliable than that of a business.

Real estate agents are already experts in their fields, and selling houses is already a visual experience. This enables agents to lean into the “influence” side of Instagram instead of the pure “business” side. Posts should feel more relaxed and less “business”-y than those on Facebook. Additionally, real estate agents should post images and videos that position themselves as a focal point just as much as the house they’re trying to sell.

Engaging real estate Instagram posts should also:

  • Include great aesthetics. Eye-catching visuals are a critical component of Instagram success. Make sure you’re taking good pictures with a quality smartphone camera and use Instagram’s default filters to achieve visually appealing results.
  • Focus on first-time homebuyers. Not every millennial will be a first-time home buyer, but a study by the National Association of Realtors found that 81% of younger millennial homebuyers were purchasing for the first time.
  • Include the phrase “link in bio.” Instagram doesn’t allow for hyperlinks in the body of posts. However, you can add a link back to your website in your bio that appears at the top of your Instagram profile. Subsequent posts can then include the phrase “link in bio” at the end of the body text to drive users back to your website. Pro tip: Instagram only lets you include on link in your bio. Use one of several “link in bio” tools to link out to your social pages, website, and any other platforms you’d like to send your users to.
  • Use hashtags. The symbol formerly known as the pound sign (#) allows you to categorize your posts. You could include a “#realestateadvice” hashtag in a post where you spill secrets about the homebuying process. A user browsing Instagram under the same hashtag could then find your post through the platform’s search function, thus increasing your post reach.
  • Embrace video. Again, Instagram and Facebook are owned by the same company. The algorithm prefers video, and 88% of users want to see more video content from brands they engage with.
  • Post frequently. When you crank out quality posts, your followers can’t get enough of your content. Research indicates that accounts with up to 250k followers see maximum engagement when they post at least 14 times a week, or roughly twice a day.


The 3 best types of posts to use on Instagram

Unsurprisingly, the best types of posts to use on Instagram focus on two things: quality pictures and an emphasis on YOU. These posts include:

1. Virtual tours and open houses. Don’t just include a static image of a listing. Take your camera around and show off a listing both inside and out. This allows you to highlight both the house you’re selling and your own skills as a real estate pro.

Note that the actual text of this video tour is concise, allowing the video to remain the focal point. (Source)


2. Wins.
Successful Instagram influencers focus on results. The best result an agent can achieve for their client is a successful close. Snag pictures or videos of your clients on close days to capture their joy and show your followers that you get the job done. It never hurts to get a picture in front of the house in question or to throw yourself in the picture, either.

“We closed!” posts are especially effective when an agent frequently posts them to their account. (Source)


3. Introduction videos.
There are hundreds of real estate agents Instagram users could follow — so show them what makes you unique. Quality real estate content is important but giving your followers a peek at what makes you you will help you stand out on a crowded platform and maintain interest from your followers.

An example of an agent highlighting her local knowledge, fun facts, and work ethic with a personable tone. (Source)

How to use video to appeal to young homebuyers on TikTok

TikTok takes the increasing preference for video on social platforms and takes it to its logical extreme. You can only post videos on TikTok, though you can embed text within your videos to support them. The platform is younger than both Facebook and Instagram and also attracts a younger user base than both. Twenty-five percent of TikTok’s 78.7 million US users are between the ages of 10 and 19, which often leads to businesses dismissing the platform as a marketing resource.

This is a critical error for real estate agents, as 44.1% of TikTok users fall between the ages of 20 and 40 — the prime age range for first-time homebuyers. TikTok also grew an incredible 40.8% in 2021, and marketers who dismiss its relevance today will find themselves having to catch up in the future.

TikTok celebrates authenticity and humor over the glossiness and hyper-stylization of Instagram. People take to Instagram to show an idealized version of themselves, their lives, and their jobs. Meanwhile, TikTokers take to the platform to joke about customer interactions or admit to embarrassing mistakes they’ve made throughout their day.

Fortune favors the bold, the creative, and the comical on TikTok. Real estate agents who generate serious business on the platform understand the need to remain vibrant, unique, and friendly even while discussing drier or more serious topics.


Best practices for creating engaging TikTok real estate posts

TikTok’s algorithm is unique compared to that of Facebook. It doesn’t factor in the number of followers an account has when it comes to how many people see a post. This benefits real estate agents starting on the app, most of whom will only maintain a small following in the first several weeks or months of use.

In other words, you don’t need 10,000 followers to be seen on TikTok — you just need good, engaging content that includes:

  • Hashtags. Like Instagram, hashtags help categorize videos and make them searchable by the broader user base. You have to spend money on Facebook to run geographically targeted campaigns, but simply including city hashtags in TikTok will help get your videos in front of users from that area.
  • Individuality. People on TikTok expect something unique in a post, whether it be humor, a unique take, or mind-blowing facts. Not every post has to be gut-busting but find something that intrigues people looking to be entertained. Talk about a real estate fail you recently experienced. Talk about the craziest feature of a house you’ve sold.
  • Memes. TikTok allows you to embed music, audio, and even video clips from other posts in your own content. Certain clips trend from time to time. If you find a way to include these trending clips in your videos, you can piggyback off the trend and gain traffic by association.
  • Consistency. Post at least once a day. If people are engaging with your videos, it’s worth posting more! But posting a half dozen videos a day with little engagement is time that could be better spent doing other lead engagement activities.
  • A niche. Did your “5 things I wish someone told me before going into real estate” post rack up views? Consider turning it into a series that users keep coming back for.

Discover what real estate professionals say about marketing on TikTok


The 3 best types of posts to use on TikTok

1. Insider knowledge. Divulge your “secrets” to warn or advise fellow TikTokers on a complex topic that you can explain simply (and charismatically).

Grab a user’s attention with engaging text and then thrill them with your expert knowledge. (Source)

2. Day in the life. Post a funny, relatable story about something that went right (or wrong!) with a listing. These posts help soften your business persona and allow you to appear both relatable and knowledgeable in your field.

Humor helps agents reveal the harder aspects of their jobs to buyers in an entertaining way. (Source)


3. Local posts.
Show viewers you’re a local pro — and signal to the algorithm where your target markets are. Some examples: tour a neighborhood, throw in some local real estate facts, show users a great local vista, or highlight a historic home.

TikTok is visual-centric, so it pays to show off great views and beautiful neighborhoods. (Source)

Best practices for creating engaging real estate social media posts

It pays to create unique posts for each social media account that speaks to each of your unique buyer segments. However, there are a few universal tips that will help you take your social media game to the next level:

  • Choose the right platforms for your target audience. Identify who you intend your message to reach and who will respond best to it. For example, your comical post aimed at millennials is likely to see far more success on TikTok than on LinkedIn.
  • Create a social media content calendar. Yes, it will take time to plan and schedule posts, but creating a calendar will help you create a cohesive strategy for your posts well into the future. Social media management tools like Buffer and Hootsuite make content planning a breeze.
  • A little time investment goes a long way. You’re already busy enough maintaining client relationships and managing other social media marketing channels. Don’t sink a huge chunk of your week into cobbling together the perfect social post. Fifty-seven percent of realtors spend 1–4 hours a week on social media.
  • Drive visitors back to your website. Include CTAs to an appropriate landing page to drive users further down the marketing funnel and ultimately get their contact info.


The first step to creating real estate social media posts: Make a plan

With so many nuances to each social media platform, it pays to take a step back to brainstorm your plan of attack before ever typing out a single word. You want to use social media to build your brand — but what is your brand? What tone works best with your personality? What kind of posts will best represent who you are and how you can help homebuyers land their dream homes?

Social media projects users’ ideas, messages, and opinions to the world at large with the click of a button. Make sure the persona you project into cyberspace aligns with your business goals and your personal credo. From there, start mapping out the platforms and content that you know your audience is looking for and grow your business with your brilliant social media posts.

How long it takes to close on a house in 2022 (+ how to speed it up)

The Homeward Team
July 7, 2022
8
 min read

Real estate professionals commonly estimate that the house-closing process lasts between 30-45 days. However, data from Ellie Mae shows that it takes homebuyers 50 days, on average, to close on a new house as of September 2021.

The nearly three-week difference between the lower 30-day estimate and the actual national average boils down to theory versus practice. Your home close could take 30 or even fewer days if everything goes smoothly. However, the closing process consists of many moving parts. A single delay at any point in the process could delay your close by days or even weeks.

Many homebuyers assume a long closing process is just part of doing business in the modern housing market. However, short closing periods are possible for any homebuyer who takes the time to understand the process and implement a few simple tips.

What are the key steps in the closing process?

The oft-cited “30-day” minimum figure stems from the average time it takes to complete the following tasks:

1. Application process and documentation requests: 1 week

Well-prepared homebuyers can complete these tasks within a matter of days. First, you need to formally apply for your mortgage. Your mortgage lender will then need to see documentation pertaining to your identity and finances, such as:

  • Tax returns and W2s
  • Proof of assets, such as retirement account and bank statements
  • Debt statements
  • Your credit report

2. Appraisal, the underwriting process, and conditional approval: 1-2 weeks

These tasks occur in the middle of the closing process. Your bank first completes an appraisal to ensure the loan money you’ve applied for aligns with the actual value of your house. Then, the underwriters get to work verifying the information you provided to ensure you are capable of paying back the lender. Your lender may conditionally approve your loan while waiting for additional closing documents from you.

3. Clear-to-close and final closing review: 1 week

Your mortgage company will issue a closing disclosure detailing the terms of your mortgage once they’re satisfied with your application. Your lender is then legally required to give you three days to read over the disclosure before you can sign off on the mortgage. Finally, you’ll meet with a closing agent to seal the deal, and your new house will be officially transferred into your name.

Total time to close: 4 weeks, or roughly 30 days

What obstacles affect how long it takes to close on a house?

The fact that the average home takes 50 days to close instead of 30 reveals just how often the closing process hits a stumbling block. Certain seller-related obstacles — like title concerns — are out of your control, but there are many (often avoidable) ways you may delay closing times as a buyer.

1. Financial changes

Lenders don’t make money by loaning money to borrowers who can’t pay them back. Your lender deeply scrutinizes your current financial situation before making a determination as to whether they’ll approve your mortgage. Any major financial development occurring during the evaluation stage may force the underwriter to start back from square one with your application.

Most borrowers understand a good credit score and stable employment situation help make a better case for approval. Severe financial issues that impact you in these areas may even cause a mortgage company to reject your application outright.

Those looking to avoid prolonging their closing process should avoid:

  • Changing jobs
  • Missing a bill payment
  • Bouncing a check
  • Making a major purchase, like a new car

2. Contingencies

Contingent offers force sellers to satisfy certain conditions before closing can move forward. This protects buyers from completing a problematic transaction, but meeting certain contingencies takes time and extends the time it takes to close.  

Contingencies are an important means to protect a homebuyer’s interests during a home sale. For example, a title contingency gives homeowners a way out of a sale in the event of title issues, such as if a title search produces evidence of liens against the house. 

However, the more contingencies that are included in a home offer, the longer the closing process can take. Additionally, sellers may choose an offer with fewer contingencies over one with more in hotter housing markets.

Some of the more common contingencies include:

  • Financing contingencies. This contingency guarantees that buyers will have a set amount of time to find a way to finance their new home purchase. If they cannot do so within this time, the buyer can walk away without having to pay a fee to the seller.
  • Home sale contingencies. These force sellers to grant buyers a certain amount of time to sell their own house. If the home does not sell by the end of this period, the buyer can walk away from the sale without penalty.
  • Appraisal contingencies. Your lender will require a home appraisal of the new home to ensure that the amount you’re asking for aligns with the home’s determined market value. If the appraisal comes in lower than the purchase price, the sales price will need to be renegotiated, or the buyer will need to provide the difference themselves. Otherwise, this contingency allows the buyer to walk away from the sale.

Read more about the most common homebuying contingencies

3. Delayed response times

Your lender will contact you constantly throughout the closing process to ask for documents, documents, and more documents. Many first-time homeowners especially don’t realize the amount of communication required to get a mortgage approved. Any delay in the returning of even a single email or phone call stands to increase the amount of time it takes the underwriters to sign off on your loan.

4 ways buyers can speed up the closing timeline

Certain aspects of closing on a home are out of your control, but there are a few steps you should take to streamline the process. Homebuyers who manage to close quickly, often:

Get pre-approved

Before you even start searching for a home, find a lender to work with on getting pre-approved for a mortgage. Pre-approval allows your lender to estimate how much they’d be willing to loan you based on your income, assets, and credit score. Pre-approval doesn’t guarantee formal approval for your mortgage once you find a home to buy, but it gives you a sense of what price range your lender is likely to approve you for. 

Pre-approvals minimize the risk that a homebuyer will attempt to buy a house that they ultimately cannot afford. No one wants to spend weeks in the closing process only to find out that their deal has fallen through due to financing issues. Sellers prefer offers from buyers with pre-approvals for this same reason.

Additionally, a pre-approval forms the basis of your eventual home loan application. Your lender will have the documents you submitted for pre-approval on hand, saving you from wasting time looking for tax returns and Social Security numbers during the closing process. You’ll likely have to submit additional documentation for your official mortgage application, but a pre-approval will still save you from a good deal of back-and-forth at closing time.

Schedule the appraisal ASAP

Work with your lender to schedule the appraisal as soon as your loan application is accepted. As mentioned, your lender will most likely require an appraisal of your new home to make sure what you’re approved for coincides with the value of the property. 

The actual appraisal only takes a few hours, but a busy appraiser may not be free for days or weeks. They’ll also require time to write the actual appraisal report and deliver it to your lender, so be sure to make yourself available for the appraiser’s first open appointment.

Come prepared on closing day

It’s easy to assume smooth sailing once your lender approves your mortgage, but there’s still one potential cause for delay: your closing date. Your home sale becomes official at this meeting, but you’ll need even more documentation to finish the job. The lack of final paperwork may only push back your close by hours or even a couple of days, but any delay that close to the finish line is sure to frustrate.

Anticipate this potential roadblock and bring these items to your closing meeting:

Use cash offers to eliminate contingencies and close faster

A little forethought and a good deal of preparation will help you minimize the amount of time it takes to close on your house. Thirty days may be on the low end of the average estimate, but some homeowners are able to close on their homes even faster.

Take Kyle Donald. Kyle managed to close on his new house in just 14 days in a hot Atlanta market — 36 days faster than the national average.

Kyle and his real estate agent used an increasingly popular method to get the win and speedy close: the cash offer. He showed up to the bargaining table fully qualified for an all-cash offer through Homeward. He proved he had liquidity upfront with our Buy with cash solution, eliminating the need for a financing contingency. He also didn’t need to worry about a home-sale contingency because Homeward allows customers to Buy before you sell.

Cash offers have become hard to beat, with almost a quarter of home sales involving all-cash transactions. Kyle had the right idea: using Homeward as a means to sweeten his offer and facilitate a quick close. For those tired of waiting on their next home, it’s hard to find a better tool than all-cash offers with help from Homeward.

Use Homeward to close on your house — and fast

Why cash offers win out in a hot Miami real estate market

The Homeward Team
June 30, 2022
8
 min read

Miami’s famous for its steady sunshine, beautiful beachfronts, and vibrant nightlife. Lately, the entire South Florida region has gained attention for another reason: its sizzling and hyper-competitive housing market.

Real estate agents across the country face serious challenges in the current market — challenges especially difficult for agents working in the greater Miami metro area. Low supply and skyrocketing demand combine with Miami’s attractive locale to make the area especially difficult for agents assisting local home buyers.

And so Miami agents are faced with a dilemma: they can make serious money from soaring housing prices — but only if they can close sales amidst fierce competition. Agents must retain a competitive edge to win in the Miami real estate market — and a cash offer is sure to sweeten the pot.

The Miami real estate market is growing hotter — and real estate agents are getting burned

(Source)

You’d be hard-pressed to find a region where the housing market isn’t hot, but Miami’s is especially difficult for anyone looking to buy a home. Median home prices leapt 17.4% since April 2021 to $430,299. This isn’t an issue that just impacts luxury homes on the beach, either. Prices have jumped across the board, as the median price of even a one-bedroom home in Miami-Dade County rose more than 27% between April 2021 and April 2022.

Several factors have contributed to this surge in Miami-area housing prices and created a headache for local real estate agents and their customers.

A low supply and an increasingly crowded market

Mortgage rates climbed to start the year, but only after a decade of staying consistently low. This long run of attractive interest rates helped fuel the current demand for homes in the Miami area. Now demand far exceeds supply. Miami-Dade saw a 10% decrease in available homes just between March and April of 2022.

Increased demand and high housing prices may at first appear like a windfall to agents, but the limited supply of available houses puts them in a difficult position. Dozens of offers on homes stream in as soon as a home is listed, and most of the offers come well above the asking price. An agent in Boca Raton hosted an impromptu open house just one day after listing the property and received a whopping 40 offers. Each was a contingency-free cash offer that was significantly above the asking price.

And it’s not just your average buyer that Miami agents compete against. Hedge funds and investment firms use their considerable resources to snap up homes and sell them for a tidy profit. These organizations have more flexibility in how much they can offer and often make cash offers to make their bids more attractive. Their maneuvering leaves locals in the lurch too often, driving prices sky-high and out of the range of the typical Miamian.

Customers expect their real estate agents to produce results

An agent’s customers may be understanding of a rejected offer or five. Most people understand the competitive nature of the housing market in 2022. However, this goodwill won’t last as rejections continue to stream in. Hot market or not, eventually, customers tend to blame their agent for repeated rejections.

And there’s no shortage of alternatives for customers dissatisfied with their agents. Housing availability may have decreased over the course of the pandemic, but the number of real estate agents in the country has exploded over the last few years. Over 156,000 people became real estate agents over the last two years, and the National Association of Realtors now counts more than 1.5 million agents as members.

The number of US real estate agents has sharply increased over the last decade. (Source)

This places enormous pressure on Miami agents to use whatever means they can to close deals — which is why the most successful agents have turned to cash offers.

Cash offers get real estate agents a seat at the table

Homebuyers have historically used cash offers as a way to strengthen their bid. Cash offers are four times more likely to beat out non-cash offers, which explains why 23% of all home sales in the US were cash (as of July 2021). This ability to differentiate an offer from others is vital in a market like Miami’s. Homeward’s own Chief Real Estate Officer Brian Gubernick sums it up:

“In March alone, 64% of properties in Miami received multiple offers. Sellers aren’t just looking for the highest offer — they’re looking for the strongest offer that they can rely on not to fall through.”

Last year in Palm Beach County alone, an incredible 40% of home sales involved cash offers. The involvement of investment firms and hedge funds and their formidable cash flow has only emphasized the importance of cash in transactions. The increased likelihood of a listing receiving multiple cash offers means cash is no longer just a competitive advantage. If a listing receives 30 offers and yours is the only one that’s not cash, you’re not likely to have the seller seriously consider your offer. Make a cash offer to earn a seat at the bargaining table.

However, an agent’s average client doesn’t have hundreds of thousands of dollars tucked away to make cash offers. Homeowners often need to sell their current home to come up with the funds to purchase a new one. This lack of available cash and inability to move quickly on a listing hinders agents’ ability to close for their clients.

Homeward gives agents (and homebuyers) a path to cash offers

A few short years ago, a lack of cash on hand would have sunk deals in such a competitive market. Luckily, Homeward empowers real estate agents and their clients through our innovative cash offer solutions: Buy with cash and Buy before you sell. Homeward can help, whether your client doesn’t have the cash upfront to make an offer or needs to sell their current house first.

Homeward takes a traditional real estate transaction and breaks it into two separate parts. First, we buy the home for cash. Then, your clients buy the home back from us. This simple process allows us to turn conventional offers into cash offers for agents and their clients. Here’s how it works:

Buy with cash

Imagine your customer has found their dream listing, and they want to make the strongest possible offer. They’re willing to forego contingencies, but they don’t have the liquid assets to make a cash offer.

This is where Homeward’s Buy with cash comes to the rescue. You fill out an application on behalf of your clients. Once we accept it and approve them to make a Homeward Cash Offer, we’ll work with you to make a cash offer on the property. We’ll purchase the house if your offer wins, and your client can move in the day after the title is ready. They pay rent until their mortgage is set, and then they buy the home back from us with the money from the bank.

Use Homeward to facilitate cash offers for your clients in five easy steps.

Homeward is founded and largely staffed by real estate agents, so we’ve built Homeward to keep real estate agents at the center of the transaction. Our focus on helping agents extends to our fees, as well: agents get to keep every penny of their hard-earned commission.

Buy before you sell

Imagine this: Your client purchases their new home now before its sell price climbs any higher. In the meantime, they hold onto their existing home a bit longer, wait for it to appreciate further, and sell it for a higher rate. You’ve just used Homeward to make your customer more money on their move than you could have in a traditional transaction.

Homeward’s Buy before you sell takes the cash offer to the next level. We approve your clients for a set amount of money. You work with us to make a cash offer on a listing, we purchase the home, and your client moves in ASAP. Meanwhile, your clients list and sell their former residence and pay rent to us until the house sells and their new mortgage is finalized.

Be a hero to your clients and close on their homes before they sell their current ones.

The ability to make a cash offer before you’ve even sold your home eliminates roadblocks that too often slow down the homebuying process. New Miami listings often receive countless offers, making the ability to make a cash offer without needing to sell your current home first critical to winning for your clients. In most cases, we can also purchase your home after six months if it doesn’t sell, so you’re not stuck with two houses indefinitely. However, it’s unlikely you’ll find difficulty selling your house in Miami anytime soon.

Use Homeward’s cash solutions to win for your clients in Miami

The increasing level of competition in the Miami housing market only confirms the desirability of selling in the region. Everyone from local agents to foreign investors knows there are buckets of money to be made for those who can close — and everyone who can close knows to use cash offers.

Success in South Florida starts with giving your clients every possible means of making a strong offer. Add the Homeward Cash Offer to your existing toolset and carve out your niche in this hot Miami market.

Win big for your clients in Miami with Homeward.

9 essential real estate terms to teach first-time homebuyers

The Homeward Team
June 22, 2022
7
 min read

Have you ever attended a professional game for a sport you don’t watch, play, or know the rules of? If your answer is yes, you can likely relate to first-time homebuyers.

While experienced agents understand and take complex real estate terms at face value, it can feel like a whole new ballgame for someone buying their first home. Every mention of addendums, contingencies, or escrow leaves them feeling left out.

Educate your clients instead of leaving them to Google terms or learn as they go (and probably miss valuable information along the way). Here’s a list of nine essential real estate terms to teach your first-time homebuyers, so they can approach the process with the confidence of a seasoned pro.

1. Addendum

An addendum is any additional requests your buyers have that weren’t built into the original offer, like furniture, appliances like a washer and dryer, or any built-in features like fixtures, bookcases, and desks. Typically, they’re written as additions to the sales contract and require the seller’s signature. Understanding addendums helps your buyer know exactly what they’re getting with their purchase. It also empowers them to ask for any extras they want within their contract’s format.

2. Agent

Agents help interested prospects navigate the often complex homebuying process. (Source)

Real estate agents. Real estate brokers. Mortgage agents. Who really understands the difference between these different roles? You do, obviously … but your clients probably don’t. Share who does what in the purchasing process and when to separate each of these distinct roles.

For example, a real estate broker has passed the state broker’s exam, has some successful transactions on their record, and can work independently. This is different from a real estate agent (or realtor) certified through the National Association of Realtors (NAR) and from a mortgage broker who secures a funding source for the deal.

Your client is likely to get frustrated if they don’t understand these differences and will waste their time (and yours!) trying to get the answers they need from the right agent.

3. Appraisal

Appraisals are run through city inspectors to determine how much market value a home has. They’re typically done before listing the house, so sellers know how much they should list it for. However, buyers also have access to the report and the opportunity to argue it during negotiation.

Making your buyers aware of appraisal value and its power encourages them to dig deeper into the information they’re provided and determine whether or not a property is worth the price. For example, your client might discover that the homes on either side of their potential purchase have similar square footage and finishers, yet appraised for $10,000 less than their intended property. Understanding how these appraisals work and why appraisal gaps exist helps them navigate the eventual contract more confidently.

4. Cash Offer

Cash makes an offer more attractive to sellers and thus more competitive. (Source)

Most first-time homebuyers don’t know that these are the magic words to get any seller’s attention. And as of July 2021, 30% of all home sales in the US were completed as cash. A cash offer means the potential buyer has a lower risk of falling through during financing and is ready to purchase ASAP, instead of dealing with contingencies, a loan, or other financing options. Knowing about cash offers could win them their first-choice home while others are still jumping through necessary hoops to find the money.

Not every buyer can afford to make a cash offer. Luckily, Homeward can help you with our Cash Offer solutions. Buyers who use our Buy with cash program allow Homeward to purchase the new house for cash. You can move in as soon as the title is ready and purchase the home back from us once your mortgage is finalized.

Our Buy before you sell solution works similarly. Buyers who need to sell their home first to afford their next home allow Homeward to buy the new home on their behalf and move in once the title is ready. The buyers then only pay a small rental fee while waiting for their old home to sell. Once it does, they buy their new home back from us!

5. Contingencies

Contingencies are if/then conditions that allow either the buyer or seller to cancel the contract if they are not met. Not understanding how to navigate them could unintentionally cost your client their dream home. Imagine your client has found the perfect new home. It’s in a great neighborhood with a great school system. The streets are calm enough for the kids to safely ride their bikes. Everything is perfect … except for the rotting floorboards ruining the living room. An interested buyer could say, “I’ll purchase your home if you refinish the wood floors.” While this example may seem silly, contingencies ensure your clients get exactly what they want from the transaction.

6. Disclosure

It’s easy to walk into a new home without understanding what could be hiding underneath the fresh paint … until it’s too significant to ignore. Disclosures, or significant things the seller should share that may impact a potential buyer’s interest in purchasing the property, prevent this!

Though not every for-sale home will have disclosures, a buyer should take them seriously. Deaths in the home, upcoming eminent domain, and foundation issues are just a few required disclosures that might impact your first-time buyer’s willingness to put in an offer.

7. Escrow

This term means that a mortgage lender has set up a mortgage loan account to collect monthly payments from the buyer. Multiple checkpoints (credit check, bank information, insurance, etc.) are required to get into escrow, and it’s a key stage every buyer needs to go through in the home buying process. Understanding this real estate term lets your clients know they’ve passed a significant hurdle.

If your home is “in escrow,” it means your sale is pending but isn’t yet official. (Source)

8. Mortgage Insurance

Most first-time buyers know about homeowners’ insurance but making them aware of mortgage insurance can impact their decision-making and help them save money. Mortgage insurance is a surcharge that brokers add to monthly payments when a buyer cannot provide the standard 20% of their new home. The closer to that 20% they get, the more affordable the insurance is.

However, this information is a gamechanger for a client who is either financing their entire purchase or has less than the required funds. It’s vital to help them make the best decision — both for their finances and their future — and understanding is key to helping them make a confident purchase.

9. Under Contract

Many first-time homebuyers rush to celebrate when they hear this term … without understanding what it means. While going under contract means their offer was accepted, it doesn’t mean that their purchase is complete. If an offer has contingencies on either side, your buyer should see going under contract as motivation to meet them or renegotiate so the sale can be finalized. If contingencies aren’t solved, the deal is likely to fall through, and both your buyer and seller will have to start the process all over again.

It’s crucial to satisfy contingencies to help a home go from “under contract” to “officially closed.” (Source)

Serve first-time homebuyers better with new technology

Today’s first-time homebuyers are rushing to get under contract. They’re young, tech savvy, and unafraid to explore homebuying solutions that ease the process and help them get into their first home faster and more efficiently. Buying with cash removes contingencies from offers and leads to faster closes. However, many first-time millennial and Gen Z homebuyers think this option is beyond their reach.

Thankfully, new resources help you better serve your clients and bet against the competition by playing smarter. In this case, using Homeward’s Buy with cash solution lets you help homebuyers negotiate their purchase with the confidence of a seasoned home buyer.

Think our Buy with cash solution is exactly what your clients need? Or, are more of your clients looking to buy before they sell? In either case, learn more about Homeward and talk with a Homeward Advisor today.

What is a Preliminary Title Report?

The Homeward Team
June 10, 2022
8
 min read

What is a Preliminary Title Report?

Congratulations on finding that perfect house! After months of effort, you’re excited about finally opening escrow and getting the keys to your new abode. But is that perfect house really that perfect? Before proceeding, you should look into getting “title insurance.”

Title insurance provides you (and your lender) protection against losses you may incur from issues with the title of the real property you’re about to purchase. A common example of such a loss is a legal fee resulting from ownership claims made by an unknown heir. The company that provides this insurance is known as a “title company.”

However, getting title insurance isn’t as simple as paying a premium. Your title company will first need to create a “preliminary title report.” While it may seem like another unnecessary formality in an already wearying task, getting a preliminary title report will help protect every party involved in the real estate transaction.

What is the purpose of a preliminary title report?

A preliminary title report is a document that provides details regarding the title and the background of a property. It helps ensure that the home you’re about to purchase legally belongs to the seller and not an unknown heir who may try to claim the property. The report also lists any encumbrances — such as tax liens, mortgage liens, and easements — on the real estate. If left unresolved, these encumbrances and potential conflicts regarding ownership of the property could affect you after you’ve bought the house.

Your title company is responsible for creating the report before issuing the title insurance policy. They do this by checking public records and official documents. Any issues that are discovered and reported in the report — known as “exceptions” — are excluded from title insurance coverage. The buyer, lender, and the seller are then liable for any losses arising from these exclusions.

Who is responsible for requesting the preliminary title report?

Lenders ask for preliminary title reports and title insurance coverage as one of their requirements. In a typical real estate transaction, it’s customary for the seller to initiate the process with a title company after escrow is opened. The seller then presents the preliminary title report as a part of their disclosure packet, which consists of important documents the buyer and the lender are interested in.

The seller also usually pays for the prospective owner’s policy once all the details have been ironed out. This may vary based on the customs of the real estate market in your region. However, the buyer is always responsible for bearing the cost of the lender’s title insurance.

What to look for in a preliminary title report

The first thing you want to look at is the extent and nature of the ownership of the seller. First, it will help confirm the identity of the real owner. Second, it will tell you what adequate rights they have over the property and how that could affect your future ownership of the house.

There are different types of property ownership in the U.S. The most common one is “fee simple,” which gives the owner the complete right to sell the property. However, there might be certain conditions set by a former owner that the current and all future owners must adhere to. For instance, the owner may state that the property may not be turned into a hotel or an inn.  Work with your real estate agent and attorney to understand the type of ownership stated in the report.

Also, look for liens resulting from owed mortgage amounts, property taxes, or construction/repair payments. All of these debts, along with any limitations and interests of a third party, will be listed in your preliminary title report as numbered items. Review them carefully before you purchase the property to avoid any surprises later. In the sample preliminary title report below, the property has a lien on its solar equipment — if the debt isn’t repaid, the creditor could claim that asset:

A sample preliminary title report with a lien on solar equipment listed as an exception. (Source)

A preliminary title report could also list any standard exceptions that aren’t specific to the property- but relate to the general laws of a region or municipality. Examples of these exceptions include any laws surrounding construction work and the use of the property. For instance, you might not be allowed to extend the garage in certain geographical regions. The title insurance policy would not cover any costs resulting from the violation of such rules.

Why you need a Preliminary Title Report as a buyer

A preliminary title report raises any red flags regarding title ownership and any outstanding debts and liens before you purchase a property. It’s essentially a get out of jail free card that gives you a chance to address those issues before it’s too late or back out from the deal. Here’s why it matters.

Reassurance there’s no other current owner of the property

First and foremost, a preliminary title report will help confirm who actually owns the property and whether they have the right to even sell it.

A preliminary title report will also reveal any other existing owners or heirs. A third party with interest in the property may try to sue you and claim it as their own. With the report revealing everything, there’s no way for the seller to conceal the identities of any co-owners or heirs.

Find out about any liens on the property

The preliminary title report will tell you if any creditor has placed a lien on your dream house. A lien is a legal notice sent by a creditor to ensure they get their money back from the borrower. They can result from unpaid taxes, mortgages, and repairing/renovation costs, among other things. Liens can even lead to foreclosure, in which a creditor will forcefully sell the property to collect their debt.

Naturally, you’d want to know if the property you’re about to purchase has a preexisting lien on it or not. If there is one, you should either have the seller agree to pay it off or demand a lower price to offset the cost of paying back owed debts.

Discover restrictions and easements

Chances are that you’ve imagined how you’d like to remodel and use your future home. Maybe you want taller fences. Or a completely different garden. Or perhaps you wish to bring a certain number of pets with you.

You might not be completely free to modify or use your new house however you want. It’s actually dictated by the covenants, conditions, and restrictions (CC&R) set by the Homeowner’s Association and the zoning laws of the local government. The preliminary title report will help reveal such restrictions and rules (if any) that apply to the property. Keep in mind that CC&Rs and zoning laws are non-negotiable. Hence, the report will give you the choice to either compromise on how you intend to use your house or reconsider the deal.

Furthermore, the preliminary title report will reveal if there is an easement on the property, which would give a previous owner the right to access it anytime they want for a specific purpose. For instance, a power company could have an easement to fix or maintain an electric poll installed on a piece of land that falls within private property. This would be a deal-breaker, so make sure to factor that in when evaluating your real estate deal.

Benefits of a Preliminary Title Report for sellers

A preliminary title report will also help you if you’re planning on or are currently selling your existing house to buy a new one. As a seller, the report can help you:

Gain the confidence of your prospective buyer

Sharing a preliminary title report with your disclosure packet will show the prospective buyer you don’t have anything to hide. That way, you’ll earn their trust. And the faster that happens, the sooner the deal is likely to close. From there, it’s only a matter of negotiating and working with the buyer to address any potential issues with the property’s titles and encumbrances.

Without preliminary title reports, buyers and lenders can take ages to run background checks on properties. They provide an instant way to check for title defects, which helps sellers close deals quickly.

Avoid potential lawsuits

A preliminary title report will also help you reveal any existing encumbrances on your listed property to the buyer. That way, the buyer can’t sue you for failing to disclose a lien or a restriction that would have initially been a deal-breaker.

It would also potentially reveal restrictions or conditions set by a former owner or the local housing authorities that you weren’t aware of. That way, you do your due diligence in informing the buyer about everything that may affect them if they proceed to purchase the house.

Once you have a Preliminary Title Report, what’s next?

The next step is to carefully evaluate all the numbered items and standard exceptions in the preliminary title report with the help of your real estate agent. If there’s anything that might affect you financially (like a lien) or your dream home (like a CC&R), talk to the seller.

Negotiate until all the parties involved reach a middle ground. Remember that you can still back away from the transaction if you feel like you’re walking into an unfair or shady deal.

At this point, you’ll probably be closely involved with a title company. If you’re interested in learning more about their role in a real estate transaction, check out this guide.

Customer story: How Kyle used the Homeward Cash Offer to beat the odds in Atlanta

The Homeward Team
June 9, 2022
5
 min read

Growing up as a military kid often means moving around a lot. 

For Kyle Donald—the youngest of three boys—military life meant bouncing around between Virginia and Tennessee for most of his childhood. As he grew older, these regular moves gave Kyle a strong desire to buy a home of his own one day. He dreamt of a place to call his own. 

Kyle relocated from Tennessee to Atlanta in the summer of 2020. Even with a stable career in healthcare, moving in the middle of a pandemic was scary. “I’d wanted to buy a house in Tennessee, but I decided to move to Atlanta for work and started out by renting. COVID has slowed everything down, and it just seemed best to stay put for awhile.” 

After renting for six months, Kyle recognized that he wasn’t doing himself any favors. He wasn’t building any equity, but even more importantly, he wasn’t being honest with himself. “I eventually realized I needed to follow my heart and start looking for a home,” he remembers. “The stressful part was that it seemed like everyone else had the same dream I did.”

An unreal market

Kyle was new to the Atlanta area and a first-time homebuyer, so he knew he needed help. He connected with his realtor, Jezell Griffin, through mutual friends. Jezell was also a transplant from Tennessee and a military kid. It felt like a perfect match. 

“Sellers here are literally overwhelmed with offers.”

What wasn’t so perfect was the real estate market in Atlanta. Markets were heating up across the country, but Atlanta was in a league of its own. “Sellers here are literally overwhelmed with offers,” says Jezell. “I remember a house going on the market on Monday. We scheduled a showing for Tuesday morning, but it was canceled late Monday night because the sellers already had 30 offers and couldn’t handle any more.”

Part of the challenge was COVID’s impact on supply chains. New homes weren’t being built as quickly as normal, which meant existing homes were going fast. The other challenge was Kyle’s budget. “I was approved for a high number,” Kyle remembers. “That sounded great, but I didn’t want to spend that much money. I didn’t want to be living paycheck to paycheck.”

Houses in Kyle’s ideal price range were relatively rare and very competitive. “One house I put an offer in on had 60 total offers. How do you compete with that?”


Changing up the approach

They kept up the hunt for nearly nine months. It was a grind, but Kyle describes himself as an eternal optimist. He knew he’d eventually find the right fit. “I just knew I needed this for myself. Rent was going up on my apartment, and I just couldn’t keep living there and be happy.” 

“It was obvious the traditional mortgage wasn’t working. I realized I couldn’t be too scared to try something new. Most of the time when we weren’t winning our offers, it was because a cash buyer had swooped in.”

After a number of rejected offers, Jezell suggested changing up their approach. Nearly 70% of homes purchased in the market were cash offers, and she thought that a conventional mortgage might be the reason they were losing out. Her mentor had worked with a number of clients who used Homeward, and she thought it might be a good fit for Kyle. 

He was initially skeptical, but eventually agreed that they needed to try something different. “It was obvious the traditional mortgage wasn’t working. I realized I couldn’t be too scared to try something new. Most of the time when we weren’t winning our offers, it was because a cash buyer had swooped in.”

Working with Homeward was a new experience for both Kyle and Jezell, but they found plenty of support. “Having a Homeward advisor was really helpful,” says Jezell. “We were learning the process together, and they were always available for questions.” 

Kyle agrees: “My Homeward rep had a real estate background, so she could speak to Jezell and I about what she thought would work best for me not just as a Homeward rep, but as a realtor.” 

Testing the waters

Armed with The Homeward Cash Offer, Kyle and Jezell got back out there. 

Nothing had changed in the market, but at least the playing field felt a bit more level. In October 2021, Kyle put in his first Homeward cash offer on a house. Two other agents were touring the house with clients at the same time, so they knew speed was important. After submitting the offer, Jezell immediately followed up by calling the listing agent to introduce herself and to discuss the cash offer Kyle was bringing to the table.

It was their very first cash offer, and to their shock, it was accepted.

“Afterwards, the listing agent told me it was the easiest transaction she’d ever done,” says Jezell. “Cash really is king, but the other part that was important was how fast we were able to close. Closing within 14 days is a huge deal.”

After the quick closing, Kyle moved into his new home in early November. He used Homeward Mortgage to secure his financing, and then bought the home back from Homeward in December. It was the best Christmas gift he could have hoped for.

Reaping the rewards

Reflecting back on her first experience using Homeward as a realtor, Jezell says, “It’s a really great tool. I mainly work with first-time homebuyers, and it helps to have Homeward available. It builds a lot of trust when I can say, ‘I’ve got this option that I guarantee can give you better odds of getting the home you want.’”

“I’ve got this option that I guarantee can give you better odds of getting the home you want.”

Kyle moved into his new home a few months ago. He still can’t get over the impact being a homeowner has had on him. “It’s very rewarding waking up and realizing this place belongs to me. It makes me value myself a lot more. I’d say it’s even had an impact on my job—I’m more motivated and driven to do even more. It’s given me a new level of confidence and responsibility.”

Owning a home comes with responsibility, but it also brings a lot of fun. “My family is so excited for me. My older brothers are ecstatic. They bought me a new washer and dryer when I moved in, and just last week they bought me a new grill for the summer.”

Kyle’s looking forward to many, many years of family parties and entertaining in his beautiful home. 

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