Home Partners of America Creates New Homeownership Opportunities for Consumers While Creating New Business Opportunities for Agents
Not surprisingly, renting skyrocketed in the U.S. in the wake of the housing crisis—and whether it’s due to continued financial restrictions, misinformation about options or other reasons, a decade later, a large swath of the population is still choosing to rent.
However, many of today’s renters would likely opt for homeownership given the proper guidance and the right circumstances—and this is exactly where Home Partners of America comes in. Founded in 2012 with the ambitious yet simple mission to make homeownership a reality for more people, the Chicago-based firm offers a simple solution to put people on the path to buying a home.
“When the company was formed, we were seeing many creditworthy people who still didn’t have access to mortgage credit,” says Home Partners Senior Vice President Ayoub Rabah. While credit standards were loosening, many were still falling slightly short when it came to qualifying for a home loan. That’s where the Home Partners Lease Purchase Program was born.
Through the program, a creditworthy renter can work with a local real estate agent to identify a home listed for sale, and if the home meets certain eligibility requirements, they can lease it from Home Partners with the right to purchase. Home Partners buys the house—at which time the agent earns a sales commission—and then rents the home to the tenant. The tenant signs a one-year lease agreement that’s renewable for up to four additional one-year periods (an additional two years in Texas), and at any point in that timeframe, the renter can buy the home. The price to buy the home is established upfront, as are set annual increases in rent if the lease is renewed—full transparency is a key part of the process. Should the home appreciate in value over the pre-agreed sales price in that timeframe, all the upside goes to the renter turned homebuyer.
According to Rabah, the Home Partners program is designed to help turn renters into buyers. “It’s not easy being a renter today,” he explains. “So many renters sign a lease and love the house, but when they go to renew the lease, the landlord says, ‘Sorry, I’m selling the house.’ Our program is trying to solve this problem for the consumer by giving them more transparency, more control, more choice and more flexibility.”
In addition to not being able to satisfy strict mortgage loan criteria, would-be homeowners are also stuck in the rental cycle due to a fair degree of post-housing bust caution, as well as a lack of knowledge about unique programs like Home Partners’ Lease Purchase Program. These factors and more have contributed to a swelling rental population, and Home Partners believes many of these renters would become homeowners if given just a little more time…and the right options.
That’s exactly why the Home Partners program is experiencing such great success. Working exclusively with real estate professionals to reach consumers, at press time, Home Partners has helped more than 19,500 people (and 9,000-plus pets!) find residence in over 10,000 homes in 40 markets across the country. The firm has formed relationships with an increasing roster of A-list real estate firms, including nearly 800 of the Coldwell Banker offices owned by NRT LLC, one of the nation’s largest residential real estate brokerages; Berkshire Hathaway HomeServices; and Leading Real Estate Companies of the World®.
According to Rabah, NRT LLC President and CEO Ryan Gorman was one of the first to really see the vision of the Home Partners program when it was launched in 2012.
“We thought Home Partners was a wonderful idea for consumers who might not understand that there was a path to homeownership that may be available to them,” says Gorman, but it still took some convincing to get him onboard. “I thought the idea sounded too good to be true. I kept thinking, ‘What’s the catch?’ Home Partners understood my skepticism and I met with the founding team and asked a lot of questions. They were very receptive and actually found our discussion quite helpful in further developing the program. At the end of the meeting, I was convinced.”
Rabah attests to the fact that what you see is what you get with Home Partners, where transparency is central to the program’s effectiveness and success. “We’re a cash buyer, we’re quick to close—typically 21 days or less. There are no hidden fees and no non-refundable deposits. Our rents do go up 3.75 percent a year, but that is all spelled out upfront so the renter knows exactly how much the rent will increase if they choose to renew the lease. The seller wins by selling to a qualified cash purchaser, the resident wins by renting a home they choose with the right to purchase the house at a predetermined price, and the agent wins by representing Home Partners in the purchase of the home and receiving a sales commission as they would on any other home purchase.”
Gorman agrees that the Home Partners program benefits all parties involved, but most importantly, it provides renters with an opportunity to fulfill their American Dream of homeownership…a cause at the heart of NRT’s mission.
When working with Home Partners, explains Gorman, “You’re not convincing someone to buy one house over another; you’re creating an opportunity for homeownership for those who may not have had one without this program. Our agents are trusted advisors, and they need to be able to offer solutions for everyone, no matter where they are in their lifecycle of real estate needs. Within every agent’s client database, there are people for whom homeownership is out of reach, whether due to credit constraints, job uncertainty or many other reasons. This program is designed to fill that gap. For us as a broker, the Home Partners program enables us to empower our agents with the best tools to serve consumers better.”
Rabah concurs. “Home Partners is aligned with the local agent’s mission of helping promote homeownership and being a solutions provider from a housing perspective,” he explains. “Some people are renters by necessity, and some by choice. Many agents and brokerages have focused on buyers and not renters because of the economics of the transaction. Now, the agent has the opportunity to earn a full sales commission on the Home Partners purchase and, at the same time, give that renter a potential path to homeownership.”
As renters look for ways to move into homeownership, embracing this market segment is a wise idea for real estate professionals—many just need the right guidance. As Gorman explains, “There’s a fair bit of misunderstanding and fear about homeownership. A lot of younger people watched what happened a decade ago, and homeownership looks scary from their vantage point. There’s a lot of apprehension, and beyond that, a lot of misperceptions. Things have changed so much in terms of who qualifies for a mortgage and the number of different products and programs there are that can help someone achieve their goals. A combination of fear and a lack of education are causing a lot of people to choose to rent for a period of time prior to homeownership.”
But this is where the real opportunity lies for savvy real estate professionals—an opportunity for them to truly shine as trusted advisors. And, according to Gorman, it’s up to brokers to help agents achieve that ultimate status.
“As a broker, our role is to make sure our agents are the most educated and informed,” he says. “It’s to our advantage to make sure our affiliated agents remain the trusted advisor by providing them with education, awareness and technology support.
“The fact that we’re making a program like Home Partners available to all affiliated agents, where we’ve done all the legwork and are making sure everyone understands it, shows that we’re truly trying to serve agents and make sure they’re equipped with everything they need to better serve consumers.”
While a lot of factors go into making the Home Partners program successful for real estate professionals and their clients, Gorman stresses that the people behind the program are a critical part of the equation. “They have their heart in the right place and are creating homeownership opportunities by making the program more efficient, more affordable and more accessible.”
Ultimately, early recognition of and involvement with innovative programs like Home Partners is critical for brokerages that want to stay relevant with both agents and consumers in today’s rapidly changing real estate environment. “We need to be looking over the horizon and staying ahead of what’s happening next,” says Gorman.
Home Partners: What You See Is What You Get
A rarity in today’s complicated, technology-centric business world, the Home Partners Lease Purchase Program is clear-cut, easy to follow and actually delivers on what it promises…with no catches! In a nutshell, here’s how it works:
- Agents sign up to become a Home Partners agent and invite prospective residents to apply for approval at homepartners.com. To qualify, prospects must have an annual household income of $ 50,000+ and stable employment, and pay an application fee of $ 75 per household.
- Once approved, agents help applicants find a Home Partners qualified home. Qualified homes must: be a single-family home or free-standing townhome; be located in an approved community; be priced between $ 100,000-$ 450,000 (although the maximum may vary in select markets); have a minimum of two bedrooms; be on a lot of three acres or less; and meet certain program criteria.
- Once a qualified renter chooses a home, Home Partners purchases the home and then leases it to the renter; leases are initially for one year, with renewal options for up to an additional four years (two in Texas). The renter has the right to purchase the home at any point in that timeframe. Home Partners provides the resident with a pre-set price to purchase the home during each year of the lease term. There are no hidden fees or non-refundable deposits. If the home value appreciates above the agreed purchase price, the resident benefits from the appreciation by purchasing at the lower purchase price. If the value of the home doesn’t appreciate—or it declines—the resident can choose to simply continue renting by renewing the lease for the remaining years, or move out at the end of any lease term.
- Home Partners and its subsidiaries serve as the property management company and handle all transactions and needs with the tenant.
For more information, please visit www.homepartners.com.
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