Power Buyers and their role in the current market

There are signs of cooling, but the real estate market is still hot. Although it’s been great for sellers, many buyers still face challenges, especially first-time homebuyers. This is why power buyers have been making a name for themselves in this current market, enabling buyers to compete against investors and cash offers.

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Here’s what you need to know about power buyers and how these services are a big benefit to both buyers and sellers in this market.

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What is a power buyer?

A power buyer is a home buying service that guarantees a customer's offer with cash. These cash offer services give homebuyers a significant advantage, allowing them to compete with investors and other cash buyers. 

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Cash options are growing in demand, and power buyers are expanding their services across the U.S. Power buyers have given many buyers and sellers a solution as we continue to face increasing home prices, rising interest rates, and low housing inventory.

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Real estate market predictions for summer 2022

Despite low inventory and interest rates passing 5% for a 30-year fixed-rate mortgage, the real estate market has remained tight. However, there are signs of cooling this summer.

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According to data from Redfin, more than one in five sellers dropped their price, the highest rate since October 2019, and pending sales reached their largest annual decline since the spring of 2020. The number of homes for sale also had its smallest decline since April 2020. Despite the cooldown, mortgage rates are beginning to stabilize and homes are still in short supply. Economists expect home price growth rates to decline but home prices won’t fall much at the national level.

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Still, it continues to be a tough market for buyers. Fifty-seven percent of homes sold above list price in May, up from 51% a year earlier, and 39% of homes that went under contract had an accepted offer within one week of going on the market. 

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Power buyers for buyers

In a competitive seller’s market, sellers are at an advantage. Few homes available mean that homes sell faster and buyers typically compete with one another to have their offers accepted. This can cause home prices to rise, pushing some buyers out of the market entirely.

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Power buyers enable buyers and their agents to remove contingencies and submit an all-cash offer, which is 3x more likely to win. All-cash offers also tend to close faster and can be less of a risk compared to offers attached with a financing contingency, which are prone to delays and rejections. This is why sellers typically prefer cash, even over higher offers.

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Simply having a cash offer can make a buyer’s offer stronger, which means that the buyer isn’t going to get caught up in a bidding war, possibly saving the buyer thousands of dollars.

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Power buyers for sellers

Power buyers also offer a variety of solutions for sellers, including buy before you sell, home sale guarantees, and sale-leaseback arrangements, which give sellers greater flexibility and control over the sale of their homes. 

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With buy before you sell, sellers can purchase and move into their new home and sell their old home at their own convenience. Many power buyers also guarantee the sale of a home within a certain number of days. This allows sellers to shop for the right home while giving them the extra time to get their current home ready for sale at the right price.

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Why you should work with a power buyer, like Ribbon

Despite signs of the housing market cooling, buyers are still facing challenges in almost every major real estate market across the U.S. Ribbon can help buyers turn their offers into all cash, which are more likely to win, and give them more time to secure financing from a lender or bank. Sellers benefit by buying their new home with cash before selling their existing one. Ribbon’s flexible move-in option also allows sellers to move in right away – no double mortgage and no finding a short-term solution while they search for their next home. 

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To speak with an expert about RibbonCash Offers and Buy Before You Sell, book a free consultation today.

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