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US startup plans to enable homebuyers to make all-cash offers

2 points by 8bitsrule 5y ago

version_five 5y ago
There are a lot of interesting points about this. One thing that struck me is > applying to homes built after 1960 I wonder if that's just because they are more uniform and easy to underwrite? My experience is that older houses are generally better built, and e.g. a house in north America from before 1900 is liable to be in a better location and in better shape than something from 1970. Also, I recently had (minor) trouble buying a new car for cash. Everyone wants you to sign up for financing, I assume because there is so much money chasing returns there are big incentives to push loans. This service is actually a very smart way of getting (presumably subprime) loan signups - it's basically a value add over getting a traditional mortgage. And in the current climate of lots of cash chasing returns, I can see their angle as a good bet.
quantified 5y ago
Isn’t a bank mortgage all-cash anyway from the perspective of the seller? When buying, and when selling, a check for the full amount was pushed across the table, even though a traditional mortgage was in play every time. Once the bank has approved your loan, it’s cash. This is just shifting certain key moments around.
- codefreeordie 5y ago
  At closing time, a bank mortgage is all-cash from the perspective of the seller. However, at offer-writing time, mortgages aren't actually really approved. They're "pre-approved" which basically just means the bank will eventually approve a loan, maybe, if they like the deal still when you get to closing. If you're a seller and you have two offers -- one from someone with the full cash value in-hand and will close in 10 days guaranteed, and one from someone who intends to get the money from the bank, and will close if and only if that actually happens, probably in 30 days, and they're at the same price, which do you choose?
  - quantified 5y ago
    Right, so the naming is a bit hypey, that’s all.

2 points by 8bitsrule 5y ago

There are a lot of interesting points about this. One thing that struck me is > applying to homes built after 1960 I wonder if that's just because they are more uniform and easy to underwrite? My experience is that older houses are generally better built, and e.g. a house in north America from before 1900 is liable to be in a better location and in better shape than something from 1970. Also, I recently had (minor) trouble buying a new car for cash. Everyone wants you to sign up for financing, I assume because there is so much money chasing returns there are big incentives to push loans. This service is actually a very smart way of getting (presumably subprime) loan signups - it's basically a value add over getting a traditional mortgage. And in the current climate of lots of cash chasing returns, I can see their angle as a good bet.

quantified 5y ago

Isn’t a bank mortgage all-cash anyway from the perspective of the seller? When buying, and when selling, a check for the full amount was pushed across the table, even though a traditional mortgage was in play every time. Once the bank has approved your loan, it’s cash. This is just shifting certain key moments around.

codefreeordie 5y ago
At closing time, a bank mortgage is all-cash from the perspective of the seller. However, at offer-writing time, mortgages aren't actually really approved. They're "pre-approved" which basically just means the bank will eventually approve a loan, maybe, if they like the deal still when you get to closing. If you're a seller and you have two offers -- one from someone with the full cash value in-hand and will close in 10 days guaranteed, and one from someone who intends to get the money from the bank, and will close if and only if that actually happens, probably in 30 days, and they're at the same price, which do you choose?
- quantified 5y ago
  Right, so the naming is a bit hypey, that’s all.