Have you heard of Ribbon Home yet? Chances are if you are going to be a home buyer or a home seller in the future, you will.
I wanted to share my personal experience with Ribbon Home, but first, I realized there needed to be a context of who Ribbon home is and the service they provide to home buyers who are also selling. Ribbon Home claims to create a level playing field and improve the experience for consumers and realtors in the home buying process. I laid out all the background in an earlier blog.
Now that we have laid that context I would like to share my experience from a Buyer’s/Selling agent.
My clients are small business owners. They own 2 coffee shops to be exact. Like many small business owners, the Covid-19 pandemic greatly impacted their livelihood and put the life of their business in the balance.
The backstory
To understand the current situation, let me provide some background. I met Jose and Lisa through daily coffee visits to their shop (my favorite coffee shop in Charlotte). I loved their coffee. They needed to buy their first house. They did just that. They lived in their first home married with no kiddos for those first few years. They concentrated on building their business. Soon one coffee shop turned to 2 and a baby was added to the mix. They were ready to upgrade.
Finding a new home
Jose and Lisa found, in their words, their dream home. New construction, 4 bed – 3 baths, great neighborhood yard for the cat, a garage – everything a family needs especially when baby 2 comes along. Life was progressing perfectly for Jose and Lisa. Then Covid 19 swept over the world. They decided to close their coffee shops earlier than most to err on the safe side for their employees and customers. When restrictions began to ease they opened back up but with limited capacity. Obviously, their profits suffered mightily.
Fortunately, Jose and Lisa were able to save their business but drastic measures needed to be taken to keep their livelihood going into the future. They called me to discuss selling their dream home, pulling out the equity, and moving their young family to a less expensive area.
The trick with this scenario is; purchase their next house, get the family settled then put their listing up clean, empty, and staged. It was going to be “go and show” ready (this is a showing status where there is no time limitation on showings).
This is the fastest way to sell a house and the expediency of offers is synonymous with a seller’s highest price.
Jose and Lisa checked with their lender learning that there was no way for them to support 2 mortgages even temporarily. Then I learned about Ribbon Home. It really seemed like a perfect solution for Jose and Lisa. They decided to give it a try. We would all learn Ribbon together.
Here is how it worked.
First Ribbon’s Fee is 3% of the sale price and Jose and Lisa would rent back the house Ribbon purchases for them for up to 6 months while they sell their house. Once they sell their house they turn around and buy the house they are living in back from Ribbon. The 3% fee we negotiated in a couple of ways. Jose and Lisa were given some seller paid closing costs and we negotiated the cost of the home down. Which means the 3% was covered by these negotiations.
Jose and Lisa and I went shopping for a house that met their family’s needs and fit the budget. We found the house. Jose and Lisa had already contacted Ribbon, spoken with a rep, and signed up with their service. I would like to take a minute here. I also talked with the Ribbon rep. The Ribbon team is very helpful, knowledgeable, and accessible. However, there was something that wasn’t mentioned while we were initially learning about the process and asking questions. Ribbon will request certain repairs be done, we will get back to that later. It seemed straightforward forward and we couldn’t think of anything else to ask.
Jose and Lisa provided Ribbon a pre-approval from their lender Movement Mortgage. This pre-approval amount is based on the presumed sale of their house. Once we found a house they wanted to make an offer on, we let Ribbon know. Ribbon does its own price assessment and provides an amount they will offer for the house. Their offers are all cash and very competitive. Jose and Lisa’s names are on the Offer to Purchase and the Contract as though they are the buyers, even though Ribbon is the buyer of the home.
Under contract
We went under Contract and conducted home inspections. Jose and Lisa paid for all of the inspections. Ribbon reviews the home inspection. They are looking for any repairs they deem health and safety-related. They require these repairs to be done prior to closing. The closing of the house is contingent upon these repairs. Jose, Lisa, and I were not aware of that before receiving a list of required repairs from our Ribbon team.
Now, usually, the seller would be responsible for these repairs. In our case we had negotiated with the seller a lower contract price for no seller made repairs. The repairs were smoke and carbon monoxide detectors, open junction boxes needed to be covered, and the big one Mold remediation in the crawl space. We knew when Lisa and Jose agreed to As-Is it was a risk but we were willing to take the deal. This was a little stressful for Lisa and Jose to spend a few thousand dollars on a house they didn’t own yet, but they went forth and conducted the repairs.
A mad scramble
Once we got through the repairs, we were on to closing. The day before we were due to close I received a call from our Ribbon rep. They had found a caveat in the HOA by-laws for Lisa and Jose’s new house. The by-laws stated a house could not be rented for less than a year lease in this subdivision. Well, remember part of Ribbon’s service is they rent the house back to buyer’s for no more than 6 months. Eek, this was a scramble and very stressful for a few hours on a Wednesday afternoon before we were due to close the next morning. After conversations with the HOA rep, Ribbon people, and the seller we worked it out.
Jose and Lisa are now in their new home and we are just about to sell their home. We are 1/2 way through this process as we now need to sell their old home and buy their new home back from Ribbon.
The assessment so far is overall solid with a few notations. Ribbon is still very much a business looking after its own bottom line. If there are surprises, and there are always surprises, Ribbon will not be flexible. Jose and Lisa were not made aware upfront of the repair requirements because Ribbon assumes the seller will conduct repairs that they deem necessary. Well, as we know real estate is never predictable.
Stand by, once we get through the next phase I will report our experience.