Orchard offers cash offers to first-time home buyers


Orchardwhich operates a home buying and selling platform, wants to expand its customer base of first-time buyers by helping them make an offer with cash collateral.

Buy with Orchard is the company’s first product for first-time buyers that provides homebuyers with the cash needed to compete with homeowners and equity-rich investors, the company said.

Cash buyers accounted for 28% of all home purchases in March, up five percentage points from the same month in 2021, according to the National Association of Realtors.

“It has never been more difficult for first-time buyers to buy a home,” said Court Cunningham, managing director of Orchard. “People are facing rising interest rates and a low inventory of affordable homes for sale, and competition from equity-rich homeowners and investors vying for the same properties.”

After customers find a home using Orchard’s home finder, the company prepares a cash offer and helps buyers negotiate an offer backed by Orchard’s money. If there is a delay in closing, Orchard buys the house for the user so they can move in. Orchard then resells it to the customer free of charge. The company’s commission is paid by the seller, and buyers do not pay any additional fees to use Orchard’s money.

Cunningham says the goal is to reduce the “friction and cost” of the home buying process, like Amazon has done for e-commerce. The company’s Move First product gives buyers an all-cash offer and move-in before selling their original home.

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Clients first go through an intake process to tell Orchard about their home and their goals. Orchard prepares a cash offer and a contingency-free cash offer is made by Orchard. Then customers can move in after closing. The company offers a minimum security price on their old house, which it uses a machine learning algorithm to determine.

Homebuyers are prequalified for a mortgage and can work with any lender they choose. The client uses the mortgage to finalize the purchase of their new home. When their old house sells, the owners then start paying the mortgage on their new property.

Orchard then transfers the new home on behalf of the client and charges a one-time fee of 6% on the sale of the previous home.

In September 2021, the New York-based company raised $100 million in Series D funding at a valuation of over $1 billion, achieving unicorn status. Since then, Orchard said it has doubled its geographic footprint by offering services in nine states, including Colorado, Texas and Virginia.

Lenders have also taken notice of cash-backed products to create more home loans in the booming real estate market. In May, Attachment point rolled out “Homepoint Cash Compete” to provide homebuyers with cash to help them secure lower wholesale mortgage rates.

Once the cash purchase is complete, the buyer will refinance. He or she will apply for a conventional loan and complete the underwriting process with their loan originator — turning the cash home purchase loan into a permanent traditional mortgage, according to Homepoint.

At the time of the rollout, the company said borrowers can save an average of $8,000 over their loan term with the Homepoint offering compared to big banks or direct-to-consumer lenders.


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