In today’s competitive market, more buyers are turning to a cadre of relatively new companies that help them submit an all-cash offer.

MIAMI – Luis Alberto and his wife made an offer on a home in Miami they were hoping to buy, only to have another buyer beat them by offering cash. Over the next five months, they would lose out on three other homes, some because they were competing with buyers who could throw cash at the deal.

The Albertos are among many South Florida buyers relying on financing and, in today’s competitive real estate market, losing out on their dream home. One solution might be a relatively new crop of companies, such as HomeLight and Better, that are helping middle-income buyers offer cash for homes.

Typically, these companies purchase the home using their funds, then sell it back to the buyer using a mortgage.

It’s an option that makes more and more sense for some middle class buyers – the South Florida real estate market has soared in the past two years, and so have cash offers, which are appealing to sellers, who often turn to cash as a quicker and more definitive way to close a deal.

Cash sales jumped 40% in November compared to the year before in Broward County, while cash offers in Palm Beach County jumped 28%, according to numbers from the Broward, Palm Beach and St. Lucie Realtors. For Miami-Dade County, cash sales shot up 41%.

When the Albertos made a cash offer through Better, they were able to buy in less than a month. They paid a pro-rated rental fee of $100 a day until Better approved his mortgage for the home. The company sold the house back to him with a mortgage rate of 2.65%. “It was a simple process,” Alberto said.

Are cash-offer programs risky?

Ken H. Johnson, real estate economist at Florida Atlantic University, said these programs could be a good thing for local buyers, who have been crowded out by cash-slinging out-of-state buyers.

“I don’t see any collateral damage coming from these programs,” said Johnson.” As long as they are conservative with their lending practices, this could be a good thing. It allows other people to be competitive in a market where it’s almost impossible to buy when it’s contingent on having financing.”

 

 

 

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