So you want to buy another home. But here’s the catch, you have to sell your other home first. But you’re scared of selling that home unless you know you have another home to buy. And you don’t want to be homeless in the middle or have to pay for moving twice. So what are you supposed to do? We’re going to break down an alternative solution that some of our buyers have been using called homeward. Homewards, an Austin based company that helps people solve that dilemma of I need to sell before I can buy.
So homeward is basically an alternative to getting a bridge loan, it’s a cheaper alternative. And it works more smoothly in our opinion. It was designed by a real estate agent here in Austin, Texas, and we’ve used it recently with one of our clients. It was a smooth transaction. But we’re going to break down the pros and cons of using homeward kind of give you an overall view of how it works to see if it might be the right solution for you. So with homeward basically, you can buy a property that you found without having sold your property first. And homeward steps in is a third party and buys the house for you using cash.
Now, the advantage of that is that by being a cash buyer, they can get a better deal. So recently, we had the situation there was a client that was from out of state, they flew into Austin, they just thought they were going to be shopping for the weekend kind of exploring neighborhoods, and they didn’t think they were going to buy anything. But sure enough, as it always goes, they found a home that they loved. And then it was like oh no, we can’t write an offer because we haven’t even listed our home out of state. So we told them about Homeward, they applied with the homeward rep and got approved.
And so homeward went ahead and made an offer on that property. We helped to craft the offer to make sure they were getting a good deal. And in this case, we got them $30,000 off the list price, it was a strong offer. And we got it because of the fact that their cash. Now once homeward had that property walked in under contract, our clients were able to fly back home, they have peace of mind. Now knowing that got a house in Austin that’s waiting for them. They went back listed their home with an agent out of state also got it under contract. And here’s the best part, they were able to close on the home here in Austin, and they have the option if they want to that they can move into it. Basically, homeward is letting them have this house until they can sell and pay for it back. So if you want to move into the home, and then sell your home while you’re already out, so you don’t have to deal with showings and all those things. That’s what this allows you to do. Now, once their house sells out of state, then they’re just going to buy the property back from homeward at the same purchase price.
Now there are some fees involved. So homeward has a convenience fee, that’s just under 2%. It’s about 1.9%. But if you use homeward lending, then you get a discount off that. And that can vary depending on your situation. And whether or not you’re an Austin resident or moving from other parts of the country. But just know that you work with their homeward lending, then you get an extra discount off that fee. The fees paid at the closing from when you buy your property back from homeward. There’s also a charge or a holding fee, think of it as like paying rent, to homeward for holding that property after after they purchased it. The rents on our client situation was very reasonable, it was less than 1% of the purchase price, it wasn’t some crazy outrageous rent, it was pretty normal, kind of what you would expect on the local market.
So by closing, they’re basically just paying that convenience fee, plus the rent for whatever that time period was that homeward owned it until then until when they purchased it back. For them it made perfect financial sense because remember, we save them ,000 And they’re only paying maybe ,000 and fees on the purchase side when they get that home back. So in all in all it made better financial sense for them to use homeward. They got the home that they loved, they had the peace of mind of being able to sell and knowing that they have a place to get into when they move to Austin. Now here’s one reason why you may not want to use homeward. If you have a unique property or you’re in a difficult market where you know it’s gonna be really hard to sell your property, then the risk would be you’re going to have to pay more in those rental fees. So let’s say you you know, buys with homeward but then you can’t sell your own property for like six months or so. Those fees could really stack up and you might be paying more out of pocket than what you were thinking you were going to pay when you make the purchase back.
So definitely work with a real estate agent wherever you are to make sure you’re pricing the home correctly when you sell, and that you’re staying in market value and that you have a realistic timeline on how quickly your home will sell just so you can better calculate those expenses. Another thing to keep in mind about homeward is their approval process can take a little while. So it could be two to three days before you get fully approved with homeward. So they’re not only going to just approve you as a buyer, just like a mortgage lender would but they also want to see like a comparative market analysis of your home, they’re going to want to come up with a reasonable purchase price on the buy side. So if you fall in love with a home immediately, just know you can’t write that offer right away, it could take two or three days before homeward gives you their blessing and their approval to make an offer on your behalf. So if it’s something you want to consider, definitely start that application process sooner than later. That way you’re ready to go if you see a home that you love.
Some other things to keep in mind is that even though you’re a cash buyer, they do require that you get an appraisal done when they purchase that property. They’re trying to protect themselves and just make sure that you’re not overpaying for the home and that this is a good transaction for them as well as for you know, homeward. Again, it’s not for everyone, but it has been a good solution from some of our clients. We overall had a good experience with it.
There’s always a client care specialist from homeward that communicates with us to make sure that everything’s going smoothly. Our clients overall were happy with the experience, and we would definitely recommend their services again. But as I mentioned, it’s not necessarily the right ideal situation for everyone. So if you want to explore it more and get more details, we can connect you with a homeward rep, and see if it’s the right solution for you.
