Laura owned a condo in San Carlos, California, when she accepted a new job in Portland, Oregon. She was given a challenging timeline: relocate and start in six weeks. She believed her condo would sell quickly and for a great price, but the owner of her dream home in Portland wouldn’t accept her contingent offer. While Laura had an interested buyer, their timeline was off. The buyer needed weeks to secure a loan, leaving her in an impossible situation.
This is the catch-22 for homeowners. And Laura’s story represents millions of homeowners across the country who face the same frustrating dilemma:
Sell first, and you risk being temporarily homeless.
Buy first, and lose out to more competitive buyers.
Do both and it’ll cost you thousands of dollars.
According to the U.S. Census Bureau, households tie up an average of roughly $92,000 in home equity—holding the majority of their net worth in a non-liquid asset. Considering that 71% of recent homebuyers owned their previous residence, it’s surprising that even with decades of real estate innovation, people in this situation still face so much uncertainty and stress.
Most iBuyer programs exist for this exact reason—but there’s a catch. A recent study of iBuyer offers shows that they net their customers 11% less on average than owners who choose to sell their homes on the open market. With fees and other costs taken into consideration, that can translate to losing tens of thousands of dollars.
This has left the door wide open for innovators who can improve on existing iBuyer models. It begs the question: does a certain and satisfying transaction have to demand such a steep sacrifice from responsible consumers?
HomeLight is one company determined to answer that question. Their Trade-In solution, which purchases a seller’s home with a guaranteed offer, empowers clients to make an offer on their new home with no lending or home sale contingency. HomeLight lists the clients’ home and, if it sells for more than what they paid, gives clients the additional profit minus selling costs and program fees. The model is particularly compelling for sellers like Laura, who need immediate liquidity to make a successful offer.
With the clock ticking for her new job, Laura and her agent, Alex Lehr, turned to HomeLight Trade-In. HomeLight purchased Laura’s condo, enabling her to win her dream home with a contingency-free offer and close a full week before starting her new job. A few weeks later, the buyer’s loan came through as planned for her condo, which was listed at $995k. The offer came in $167,000 over asking, and Laura received the profit from that sale.
Trade-In has also proved to be a powerful tool in hot markets where sellers are pressured by events like COVID-19. Take Nancy, a retiree in San Jose, California. One hundred and twenty miles separated her from her daughter and grandchildren based outside of Sacramento. When the perfect house hit the market three doors down from her daughter’s family, Nancy thought the stars had aligned.
She made an offer on the home, only to be heartbroken when she lost out to an all-cash buyer. Nancy’s existing house in San Jose, while lovely, was holding her back. The owner of the Sacramento house saw nothing but risk in Nancy’s contingent offer, even when the original all-cash offer fell through.
Knowing she’d be more likely to win without a financing or home sale contingency, her agents introduced her to HomeLight Trade-In. Her home in San Jose was listed at $1.19m based on a $1.2m valuation, and received an offer after only two days on the market, giving Nancy the profit.
Nancy is now happily settled in her dream home, three doors down from her grandchildren, helping to babysit during shelter-in-place restrictions. Her agent, Kelly Baldwin, called the entire experience “a breath of fresh air.”
“We were able to safely sell, stage, and show Nancy’s property without putting her in danger of COVID-19 exposure because of HomeLight,” she shared. “We have done transactions before where clients also need to sell their home and purchase, and I can assure you it was not as easy as this one was.”