Who's behind the wave of all-cash offers for Denver homes
Unlike much of the country, metro Denver isn't seeing an influx in institutional investors buying up properties with cash and reselling them to turn a profit.
- Instead, the swell of cash offers over the last two years is coming from "everyone," including average buyers and deep-pocketed businesses, Bret Weinstein, president and CEO of Guide Real Estate, tells Axios Denver.
State of play: Startups are popping up across the state to capitalize on the competition and launch cash-buyer programs aimed at leveling the playing field for everyday buyers in red-hot markets.
- Some companies are fronting cash for buyers to purchase homes outright, while others are snapping up houses on hopeful homeowners' behalf before reselling to those buyers.
- Much of the profit stems from sales commissions and origination fees.
What they're saying: "We've started to see a lot of disruptors come into this market because this market has been so hot," Weinstein says.
- The result is that a record-setting 21% of all offers made in the metro area in March were in cash. Of those, roughly 13% are “legitimate,” but the remaining 8% are institutional programs that are showing up as cash buyers, says Weinstein.
Zoom in: Denver-based Accept Inc. is a fintech mortgage company that helps home buyers close cash home purchase loans within 10 business days and makes money off mortgages.
- Since launching in 2019, the company has completed over $1 billion in transactions and seen a "definite uptick" in cash-offer demand, co-founder Nick Friedman tells Axios Denver.
- And it's no wonder, "because [cash offers] give sellers certainty," he notes. "They can close quickly and they get buyers extra discounts off of homes."
What to watch: Denver's real estate market is beginning to cool off amid high interest rates and surging inflation, Weinstein says, and the slowdown could mean that cash-buyer programs decrease.
- As interest rates force people out of the home-buying market and into renting, the shift could propel more large-scale institutional investors to edge out traditional buyers and begin renting out those houses — a trend happening in other cities across the U.S.
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