In the USA, they created a startup that helps to buy housing if you do not have enough money

Across the country, many homes are selling within days or even hours of being listed for sale, at prices far higher than last year. In some cases, the buyers are investors who may pay in cash. It is becoming increasingly difficult for newcomers to compete. A startup called Ribbon helps such people. Writes about this Fast Company.

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A startup called Ribbon is trying to give ordinary buyers an advantage: if they can't afford to make an offer in cash, the company will do it for them and give the buyer time to get a mortgage.

“We founded the company with one mission and goal - to help ordinary families buy a home. When we studied the problems in the market, we constantly saw situations where home buyers wanting to buy a house were competing with large buyers in the market,” says the startup’s CEO and co-founder Shaiwal Shah.

The company was founded in 2018 (backed by NFX, Bain Capital Ventures, Greylock and NYCA). Now her task has become even more serious. This is partly due to the fact that people have switched to remote work and are moving to cheaper areas of the country.

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If, say, some people moving from New York to Nashville or from San Francisco to Charlotte can offer cash and others cannot, then the cash offer will likely win out. And this is in addition to investors who buy houses to rent out.

Ribbon starts by evaluating the buyer's pre-approval from the lender and then verifies the buyer directly. After that, he estimates the maximum value of the house and works with the realtor to make an offer. If the buyer does not have a mortgage at the closing date, Ribbon will buy the home and rent it out to the client for up to 180 days, after which the buyer can purchase the home at the original contract price.

According to Shah, the company's business has grown almost 10 times since the beginning of the year.

“What we're seeing right now is an unusually low supply of housing in the market and incredibly high demand from buyers,” he says. “And the combination of those two factors created a pretty big and significant shock to the housing market.” Prices are rising. And homebuyers are competing with dozens and dozens and dozens of other families. They need to act very, very quickly.”

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Shah expects the current hot market to last for at least a couple of years. The expert noted that he was moving in this direction even before the pandemic lowered interest rates and made many more people become interested in buying houses.

“This is a national problem. It is not localized. And this is probably an issue that is being discussed very, very actively in Washington: what to do about the housing shortage?” - he says.

The company's service will not solve this shortage. But this is one way to give potential home buyers with less savings the opportunity to make a successful bid and purchase a home.

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