Bridging loans offer a quick solution for purchasing a second property but come with risks, including dual mortgage payments if the first home doesn’t sell within the set timeframe. In contrast, iBuying services like Homeloop provide a faster alternative by buying properties directly, offering sellers a guaranteed sale without lengthy processes. However, this convenience typically results in a sale price of about 85% of market value, reflecting the costs and risks involved in the quick transaction.
The Allure of Bridging Loans
Bridging loans may seem enticing at first glance, especially for households eager to acquire a second property swiftly. This financial arrangement functions like an extensive authorized overdraft, allowing potential homeowners to purchase a new residence without having to wait for their current property to sell. However, the allure comes with significant caveats, such as increased costs and the risk of being unable to sell the existing home in the designated timeframe.
Typically, the time frame for selling the first property is set at 12 months, with a possible extension of an additional year. Should a homeowner fail to sell within this period—especially in regions where housing demand is tepid, or if substantial renovations are required—they may find themselves in a precarious position, facing the burden of two mortgage payments. This scenario can be financially unsustainable for many property owners.
Innovative Solutions with iBuying
To combat these challenges, innovative solutions like instant buying, or “iBuying,” have emerged. Since 2016, Homeloop has been at the forefront of this movement, providing homeowners with a viable alternative to traditional sales methods. “We purchase properties with our own capital, eliminating suspensive conditions and the need for a withdrawal period,” explains Florence Matheossian, the company’s communication head. This approach allows sellers to secure a transaction in a timely manner, with approximately 2,000 individuals utilizing their services each month.
By bypassing the need for financing, Homeloop can facilitate rapid sales—often completing the process within three months from the initial estimate to the transfer of funds at the notary. Once an offer is accepted, the agency is committed, unable to withdraw or challenge the sale based on hidden defects. This system provides sellers with the confidence of receiving their funds promptly, allowing homeowners to establish a clear budget for their next purchase, although some smaller municipalities may impose an additional two-month preemption period.
However, this peace of mind comes at a price. Homeowners can expect their property to be sold for approximately 85% of its market value, as the company needs to secure a profit margin. “We charge fees similar to any real estate agency, which typically amount to around 15% of the sale price. This fee covers the risks we take in not reselling the property immediately, as well as all associated costs, including property taxes,” Matheossian clarifies.
Since its inception, Homeloop has seen considerable growth, particularly after its acquisition by the real estate agency Benedic in September 2022. The company has expanded its employee base from 15 to 40 and increased its operational footprint from 6 to 15 cities, demonstrating the rising demand for quick and reliable property transactions.