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Less than a month after announcing it was partnering with Orchard to provide Power Buyer services to clients, home finance platform Lower is launching its own cash-offer program, MortgagePass, which will allow customers to work with their preferred real estate agent.
Lower is rolling out the MortgagePass program in the company’s hometown of Columbus, Ohio, and will expand into “a few other strategic locations” in the next 30 to 60 says — including Washington D.C., the mid-Atlantic region, Chicago, and parts of Florida, Lower co-founder and CEO Dan Snyder told Inman.
“We think the MortgagePass is going to be the go-to solution for Realtors, and we can’t wait to scale it and roll it out across every market in the country,” Snyder said.
Lower had previously offered Power Buyer services through a partnership with Orchard, announced in May. Lower’s HomePass program (for first-time homebuyers) and HomePass Move First service (to help existing homeowners buy before they sell) match clients up with Orchard real estate agents.
Snyder said Lower will continue to offer HomePass and HomePass Move First in markets where Orchard is active, as it introduces its new MortgagePass cash-backed offer program to markets nationwide.
“We’re huge fans of Orchard,” Snyder said, adding “we find a lot of customers don’t have a Realtor relationship,” and are therefore happy to be referred to an Orchard agent.
But Snyder noted that Orchard’s services are only available in a limited number of markets and many would-be homebuyers, who come to Lower to finance their purchases, are already working with a Realtor.
“The distinct difference of MortgagePass is that it’s Realtor agnostic,” Snyder said. “The customer that’s already been working with their agent trying to buy a home — maybe they’ve made multiple offers on different homes, and the agent’s working their tail off — we don’t want to decouple that.”
The HomePass Move First program, for homebuyers who want to buy their next home before they sell, is available in a dozen markets served by Orchard: Atlanta; Denver; Montgomery County, Maryland; Phoenix, Arizona; Portland, Oregon; Raleigh-Durham, North Carolina; Seattle, Washington; and Austin, Dallas-Forth Worth, Houston and San Antonio, Texas.
Like Orchard’s new “Buy with Orchard” program for first-time homebuyers, Lower’s HomePass program is available in Denver and four Texas markets — Austin, Dallas-Fort Worth, Houston and San Antonio.
Snyder said Lower currently serves about 91 percent of U.S. residents, and plans to make MortgagePass available in half of those markets in the next 90 to 120 days, and in all of those markets by the end of the year.
“If the customer already has a Realtor, then they can use MortgagePass,” Snyder said. “If they don’t, we think that they can use [Lower’s Orchard-powered Home Pass] program to partner with an Orchard Realtor.”
Qualifying for Lower’s MortgagePass service
Homebuyers who want to use Lower’s MortgagePass program get pre-approved for a mortgage through Lower.com, then place a contingency-free offer that’s backed by cash. If their offer is accepted but their financing is delayed, Lower pledges to purchase the house and resell it to the buyer for the original purchase price.
To qualify for Lower’s new in-house service, MortgagePass, buyers need a minimum credit score of 720, verified assets and property underwriting.
In addition to bringing a 5 percent down payment to the closing table, buyers must be prepared to cover an appraisal gap of up to 5 percent, putting that money into escrow to be used if needed. But instead of paying a percentage of the sales price, buyers are charged a flat $1,495 origination fee.
“Instead of charging 2 percent or 3 percent of the [sales price], we’re saying, ‘Look, you have to cover some appraisal gap, or be prepared to, in this current market,’” Snyder said.
Lower says MortgagePass provides access to a simple application and tech platform, extended rate locks, and “Free Refi for Life,” with Lower covering lending fees on refinancing if mortgage rates drop in the future.
Era Ventures Managing Partner Clelia Peters has predicted that by 2030, half of all residential real estate transactions could involve nontraditional financing like Power Buyer services that help homebuyers compete with investors making cash offers.
Some Power Buyers, such as Orchard and Flyhomes, are vertically integrated, providing services through in-house real estate agents and lending operations. Competing services include Knock, Homeward and Ribbon, an “open Power Buyer” that partners with real estate agents and lenders to allow homebuyers to waive mortgage, appraisal and home sale contingencies by making cash offers of up to $1 million with Ribbon’s backing.