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Price of Paradise: Cash-to-purchase companies leveling house-buying market

Sellers seeking up to 50% cash payment
Cash-to-purchase real estate companies helping home buyers
Posted at 9:18 PM, May 26, 2022
and last updated 2022-05-26 23:22:37-04

CARROLWOOD, Fla. — A widening gap in the middle of Tampa’s hot housing market is one local home buyers are on the wrong side of.

"They think, ‘Man, I can’t get a house. I’m putting in full price or over asking offers and over and over again and I'm not getting it.,'" Tampa area real estate agent Michael Notbohm said.

Notbohm knows cash is king in the current housing market. The almighty dollar rules all home buyers and the more green you have, the more favorable your offer becomes.

“The sellers like the cash offers, because they’re not dealing with an appraisal having to come in at the price that they’re getting," owner of Lombardo Team Real Estate Julia Lombardo said.

Lombardo said sellers are seeking as much as half of their home’s payment in cash.

It’s a seller’s market, and the high value placed on upfront cash tips the scales in favor of outside investors.

"You’re seeing a lot of cash buyers which is having anyone with like a loan really struggling to compete with the cash offers," she said.

"It's soul crushing," Cara Dozier told ABC Action News about navigating the Tampa housing market as a first-time home buyer.

Right now, Dozier is still renting and chipping away at student loan debt. A true underdog story in the tale for home-buying against big money investors that, according to Florida Realtors, own one-third of recently purchased homes in the Tampa market.

"It makes me mad," Dozier said. "It makes me mad that there are so many people that are either here already or are moving here that just have an abundance of cash that are going to buy these homes and sit on them or rent them for too much money.”

"You put in offer after offer and they’re like, they went with a cash offer, they went with a cash offer, and it’s frustrating, I mean, it really is," Notbohm said.

But frustration turned into triumph earlier this month when Notbohm caught wind of a new player in the housing market.

Homeward is a real estate company from Austin, Texas that expanded to Tampa in early may. The company shells out cash for a buyer to secure their new home, and then offers the buyer a mortgage to purchase the home right back.

“I was training and kind of going through the nuts and bolts of it, and it was like man this is the perfect scenario for Laura,” Notbohm said. “It now puts you on the same level playing field as the big money that comes in and swoops up properties left and right.”

The cash service concept is a newer one in Florida. Lombardo works with Ribbon Real Estate, another cash to purchase company, that moved here in August 2021.

"We’re actually seeing multiple companies come in and say, ‘Hey, we’re going to go ahead and offer a full cash offer for you and then we’ll go ahead and work out an agreement behind the scenes once it’s closed,'" Lombardo said.

Thanks to some help with quick cash, Notbham's client, Laura, closed on her first house after striking out five times before.

"To be able to help somebody solve a problem and really get them the home that they’ve always dreamed of, to me it’s super rewarding," Notbohm said.