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Everyday people can buy a house with cash with this new type of loan


In this frenzied housing market, cash is king; meaning an all-cash offer is hard to beat. Now, it used to be only wealthy people and investors had the money to pull that off, but now maybe you can too. NPR's Chris Arnold reports.

CHRIS ARNOLD, BYLINE: Nicole Howson and her partner spent the pandemic cooped up in a small rental apartment with their two kids, so they decided it was time to buy a house.

NICOLE HOWSON: I did, I think, 27 offers. None of them got accepted.

ARNOLD: The family was looking to buy a place near Atlanta, and they bid on one that just seemed perfect.

HOWSON: I was, like, praying for two days. Like, God, please let this be the one. And no, that offer did not get accepted either

ARNOLD: Howson was hearing that often, the winning bids came from buyers who were offering cash.

HOWSON: Like, investors and stuff were putting in cash offers.

ARNOLD: Meaning that they can show they already have the money. They don't need to qualify for a mortgage. Howson has a job selling cosmetics and does not have a big pile of cash. But then she got a new realtor with a company called Better real estate, and he said that they had this new program that would let her make one of those strong cash offers too. The company would front her that big pile of money.

HOWSON: At first, I was skeptical. I was like, so you are telling me that if I want the house, you guys are just going to buy it for me, and I'm going to pay you back? He's like, yeah. I mean, you find a house, you put in the offer, and then we buy it, and we sell it back to you.

ARNOLD: This is a pretty new thing. Howson asked her sister-in-law, who's a realtor, and she'd never even heard of it.

HOWSON: She's like, I don't know. Be careful. That sounds a little fishy.

ARNOLD: But she read over the materials, and it turns out it's a real thing. What's happening is that about a quarter of all sales now are cash, and that puts regular people at a disadvantage because it can take a long time to go through the whole mortgage underwriting process, get an appraisal. Things can fall apart. That's why sellers love those cash offers.

So some companies have come up with this fix where they say they'll buy the house with cash and wrap up the loan part with you later. Tom Willerer is with Opendoor, another company that's doing this.

TOM WILLERER: Cash offers were traditionally reserved for the few that can afford to make a cash offer. And now, you can use our cash to back your offer. And that really democratizes access to cash offers.

ARNOLD: And it helps the companies, too. They make money in different ways - traditional realtor commissions or other fees. And the more people they help win bids, the more money they make. Christian Wallace is the executive in charge of the new cash offer program at Better real estate.

CHRISTIAN WALLACE: Buyers, when they are coming to the table with a cash offer, they are four times more likely to win the bid on the homes that they want.

ARNOLD: Nicole Howson says before she could make the cash offer with Better, the company wanted to make sure that she could really afford it and qualify for a mortgage.

HOWSON: They want your W-2s, your tax returns, your pay stubs.

ARNOLD: And the companies have another guardrail in all this - they don't let you offer more than they think the house is worth. Shaival Shah is the founder and CEO of Ribbon home, another cash offer company.

SHAIVAL SHAH: We have models and algorithms running in the background that will predict the value of the house. So same day, everything is fully approved, ready to make a cash offer. So it's really, really, really fast.

ARNOLD: So Nicole Howson found another house she really liked in Griffin, Ga. It's got a nice yard.

HOWSON: It's super cute; kind of reminded me of the home that I grew up in.

ARNOLD: Better real estate quickly approved her to make a cash offer for $170,000, just a bit above asking.

HOWSON: This house was the first cash offer that I put in, and it won. And I was like, oh, thank God. It was like this big weight lifting off of my chest. I was just so happy; very happy.

ARNOLD: Finance experts say you definitely want to look at the fine print. Different companies have different fees and rules. But for Howson, she got a good mortgage rate and no extra fees. And now, it's time to start replacing the bathroom and kitchen floors...


ARNOLD: ...Which her partner actually started doing during our interview.

HOWSON: Yeah. We've been doing a lot of renovations, so (laughter). But it's like, really? Right now you choose to start pounding on the bathroom floor?


ARNOLD: Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.

NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.