HomeLight Cash Close: Make All-Cash Offers and Trade-In Your Old Home for a New One

Posted on February 10th, 2020
HomeLight Cash Close:  Make All-Cash Offers and Trade-In Your Old Home for a New One

Real estate agent matchmaker HomeLight has launched two new programs for homeowners in California that make it easier to buy and sell by leveraging the power of cash.

The new initiative, known as “HomeLight’s Cash Close program,” includes HomeLight Trade-In and HomeLight Cash Offer.

They can be utilized by both first-time home buyers and existing homeowners who may be looking to buy before they sell in a competitive market.

The new offerings flank HomeLight’s iBuyer service known as Simple Sale, which generates all-cash offers in 48 hours or less.

How the HomeLight Cash Offer Program Works

  • Get pre-approved to determine home purchasing power
  • Tour properties with a real estate agent and make your offer
  • HomeLight will either guarantee you are clear to close or purchase the home on your behalf
  • Cash offers can be 3X more likely to win and 5% cheaper vs. financed offers

Just about everyone knows that cash is king, and it’s no different in the real estate game.

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A home seller is much more likely to go with a cash buyer versus someone who must get approved for a mortgage, given the uncertainty with the latter.

With HomeLight Cash Offer, you can make an all-cash offer using funds from HomeLight, then secure your financing after the fact.

Here’s how it works. First, their subsidiary HomeLight Home Loans verifies your income and assets to determine your purchasing power, similar to a mortgage pre-approval.

Then you tour homes with your agent (or one recommended by HomeLight), and when ready, make your all-cash offer that comes with a “speedy guaranteed close.”

HomeLight either guarantees that you are clear to close or they’ll purchase the property on your behalf, then transfer ownership once financing is completed.

HomeLight notes that cash offers are 3X more likely to win, and can generate savings of 5% on average versus financed offers.

In other words, you can bid less for a property and still beat out other buyers, thanks to the certainty of cash.

But in this case, you’re doing it with another company’s money, instead of your own, similar to the Reali Cash Offer or BoardRE.

How the HomeLight Trade-In Program Works

  • Existing homeowners can trade in their current home for a new home
  • Don’t have to deal with buying/selling at same time or related contingencies
  • HomeLight provides a guaranteed sales price for your existing home
  • When you make an offer on a new home they provide funds to make that purchase
  • They will then attempt to sell your home for more than the guaranteed price and let you keep the upside

If you’re already a homeowner, but want to sell your old home and purchase a new one, it can be tricky to do so.

No one loves contingencies, and if anything, they can hurt your negotiating power on both ends of the deal.

To avoid them, you can turn to HomeLight Trade-In, which allows you to bid on a new property without worrying about unloading your existing one.

First, you apply for a HomeLight Cash Close and the company will provide you with a guaranteed offer to purchase your home.

At the same time, you’ll need to determine how much you can afford to spend on the replacement property.

When you find a home and your offer is accepted, HomeLight will purchase your existing home at the guaranteed price, freeing up funds to use for the new home purchase.

To sweeten the deal, HomeLight will let you keep the upside if they sell your old home for more than the guaranteed price.

What Does It Cost?

While both these features sound pretty sweet, there is a cost involved.

The HomeLight Cash Offer fee is 0.5% of the purchase price, assuming you use HomeLight Home Loans to finance the purchase.

For example, on a $500,000 purchase the fee would be $2,500.

However, if you do not use HomeLight Home Loans to obtain your mortgage, the HomeLight Cash Offer jumps up to 2% of the purchase price.

Using our same example, the cost is a whopping $10,000.

In other words, they want you to use their lender division to complete the transaction.

For HomeLight Trade-In, they charge a fee to purchase, hold, and sell your current home.

Again, there is discount pricing if you use HomeLight Home Loans. If you do, the HomeLight Trade-In fee is 1% for the first 30 days that HomeLight owns the property, then 0.5% for every 30 days thereafter.

If you use a different lender, the HomeLight Trade-In fee is 3% for the first thirty days that HomeLight owns the property, then 0.5% for every 30 days thereafter.

They calculate the HomeLight Trade-In fee by using the final sales price of your existing home.

So you’ll want to unload the property quickly to avoid being hit with lots of fees, but the idea is you’ll save money by avoiding contingencies.

HomeLight Cash Close is only available in California, but the company expects to launch in additional states this year.

HomeLight Home Loans

  • Purchase-only lender available in 8 states
  • Offers 5/1 and 7/1 ARMs and 30-year fixed
  • Apply in 30 minutes and get a full underwrite in 24 hours
  • Has never missed a closing date (21-Day Close Guarantee)
  • Doesn’t charge any lender fees

In July 2019, HomeLight acquired digital mortgage lender Eave, creating HomeLight Home Loans in the process.

HomeLight notes that the Cash Close products highlighted above are powered by HomeLight’s Home Loans and Closing Services divisions.

Essentially, their “Full Upfront Financial Underwrite” allows you to make cash-like offers because they determine exactly what you can afford, not just a ballpark estimate.

It apparently takes just five minutes to get pre-approved, 30 minutes to submit a complete loan application with the help of a dedicated loan officer, and 24 hours to receive a fully-underwritten approval.

You don’t have to be under contract to get a complete underwrite, helpful if you want certainty before house hunting.

And they say they’ve never missed a closing date, with their 21-Day Close Guarantee in place if they do.

In short, they’ll reimburse lost earnest money up to $100,000 if you don’t close on-time and it’s their fault.

At the moment, they only offer home purchases loans – they plan to offer refinance loans in the future. They offer two ARMs, a 5/1 and 7/1, along with the 30-year fixed.

The company doesn’t charge any lender fees, including no origination fee, application, or processing fee.

HomeLight Home Loans is currently available in Arizona, California, Colorado, Florida, Oregon, Pennsylvania, Texas, and Washington, with more states expected to launch soon.

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