Real Estate Report:
Wrap your head around this…a new start up company called Ribbon can help you make your real estate offer as strong as cash. Ribbon guarantees a closing—if a buyer has any hiccups in the lending process, they step in and buy, and “reserve” your home for you in case something goes wrong with your loan.
Ribbon is not a lender though. There is no extra debt or interest. They help buyers secure a home by being a guaranteed back up buyer. The process involves a buyer filling out an online application that takes about 10 minutes, and an answer is generated within 24 hours. Then, when the buyer is ready to make an offer on a home, Ribbon will work with the buyer’s real estate agent to help make the offer—and guarantees a closing even if the loan falls through or gets delayed. If the buyer cannot close their loan before the settlement date, Ribbon steps in and purchases the home.
If Ribbon needs to purchase the home, the buyer can move in and rent with a 1-year lease, and a 90 day right to purchase the home at the exact same price Ribbon bought it for. Once the buyer is able to secure their mortgage, Ribbon transfer title back over.
Ribbon itself is being backed, in part, by capital from NFX, an investment first headed by Pete Flint, who founded Trulia. Flint said Ribbon has secured real estate capital to enable over $2 billion in transactions this year, and they already launched in their first market, Charlotte, NC, and have developed a pipeline of $15 million in home transaction volume in the last 30 days.
"We're introducing the first ever platform that allows buyers, sellers and realtors to participate together to guarantee a home transaction," said Shaival Shah, founder and CEO of Ribbon. "Buyers can now compete effectively on the open market against institutional investors, Wall Street capital and very wealthy individuals."
Ribbon makes its money by charging the buyer a 1.95% transaction fee on the purchase price of the home. Ribbon will only back single-family homes with sale prices between $100,000 and $600,000, at least 1300 square feet and lot size of less than one acre. It will also buy some townhomes or condos that receive traditional financing and allow for rentals.
"We end up with a very small class of homes that we end up holding. In those cases we convey those homes to professional investors or landlords so that they can properly manage those homes on behalf of the consumer. That frees up our capital to be able to go help another consumer in the market," said Shah.
You can find more information on this new company online at ribbonhome.com.
Lauren Bunting is a licensed Associate Broker with Bunting Realty, Inc. in Berlin, MD.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
