If you have tried to buy a house recently, you may have noticed the rules of engagement have changed.

One out of every three homes in the country today are bought with cold hard cash, and yet 99 percent of everyday households need a mortgage to secure their home.

Doesn’t quite add up does it?

But it’s true. Hundreds of billions of dollars in cash is being used to purchase homes, but it is not coming from the typical American family. So, where are these homes going?

Most of them are being sold to Wall Street investors who have stepped into Alabama and other states as well, with a single motivation of turning as much of the housing stock as they can possibly accrue into rental properties in which they are the landlord, reaping all the returns from the housing market.

According to Realtor.com, two cities close to home top the list of metros with the highest share of investment buyers. While Memphis and Birmingham top the list, Huntsville too is in the crosshairs according to Shaival Shah, founder and CEO of Ribbon, a real estate concept new to Huntsville that gives everyday Alabama homebuyers a new competitive advantage – turning every homebuyer offers into a cash offer to fight back against the corporate takeover of the U.S. housing market.

Shaival Shah, Founder and CEO of Ribbon

In early December, Shah said a memo crossed his desk from a Wall Street investor stating they had $5.2 billion set aside to buy up housing inventory in Alabama. They were looking for markets with three recession-proof qualities: a military base, universities, and a strong hospital system.

Sound familiar?

“I brought Ribbon to Huntsville because it is one of the fastest growing markets in the country right now and it is a place where Ribbon can step in and support everyday families, making them more competitive in the home buying process.”

Ribbon officially launched in Huntsville with launch partner Crye Leike Realtors on December 7. Ranked the third largest independently owned real estate company in the nation, Crye-Leike agents have a powerful tool in RibbonCash to help everyday buyers compete – even in the most competitive market conditions – head-to-head with investors.

“We’re excited for our agents and customers in North Alabama, because using Ribbon as part of the Crye-Leike Advantage program will give them a better chance of being successful when making offers,” said Steve Brown, president of Residential Sales at Crye-Leike. “By making offers not contingent on appraisal and the equivalent of cash, they can compete with investors. It’s a win for the buyer, the seller and our agents who show fewer houses to get an accepted offer.”

Alabama homebuyers continue to face steep headwinds in purchasing their dream home. The statewide median sale price increased 11.3 percent and the average days on market decreased from 71 days to 45 days, year-over-year, according to the Alabama Center for Real Estate.

“There are three communities of investors out there putting pressure on the average homebuyer,” Shah said. “They are big Wall Street institutional investors, who are not buying a couple of homes, they are buying thousands of homes.

“The second are high net worth individuals who have been living in places like New York, Boston, and Chicago, who because of the pandemic are working remotely and migrating into Charlotte, Atlanta, Nashville, and yes Huntsville, where they are bringing in a lot of assets to scoop up homes, they are used to paying $2 million dollars for in New York and Boston, for $225,000 in Huntsville.

“And the third group are high dollar individuals still living in New York and Boston, buying second, third, and fourth homes all around the country as investment properties.”

Zelda Freidman, a broker with Crye-Lieke said, “I am excited to see Ribbon in Huntsville because the housing market is so competitive right now, anything that helps our buyers compete with cash offers is welcomed by all of our realtors,” said.

“We are crazy busy with multiple offers and a lot of investors buying in Huntsville, making it really difficult for some buyers to be able to get their dream home.

“A home is the biggest purchase you make, building equity, cherishing it, taking care of it, raising a family in it,” Freidman continued. “Once we submit your pre-approval letter to Ribbon, it gives that homebuyer the advantage of making a cash offer. It is just that easy.”

Real estate is a $30 trillion dollar market and the number one driver of the U.S. economy. Everyone looks at it like a pot of gold, and Shah admits that one of his concerns when he formed Ribbon is that the U.S. is beginning to see the gentrification of the middle class in America. That is the deliberate displacement of the middle class by a wealthier class.

“We believe in home ownership,” Shah said. “Every other industry has faced disruption – look at retail with ecommerce, Walmart and Amazon. But real estate has been the last frontier and the question is, what does that disruption look like in housing?

He said Ribbon is taking a difference stance, one in which they help the everyday household and family to be much more competitive in the process of buying a home.

“We have reconstructed the entire transaction in partnership with realtors and lenders, where now the family can secure their mortgage before or after they move into the new home.”

With a sizable balance sheet of their own and credit facilities, Ribbon will back the homebuyer up by turning pre-approved buyers into cash buyers.

“The average person who wants to buy a $300,000 house will typically get a mortgage. But if you put yourself in the place of the seller, the only thing they care about is the certainty the home transaction will close,” explained Shah.

“With a mortgage you must worry about financing contingencies, appraisal costs, and if you have an existing home, you must sell it before buying a new one, and all that has to happen in a tight window of 30 to 60 days.”

He said one out of every three offers backed by a mortgage gets delayed or falls through. The seller tries to minimize risk and optimize for cash offers.

“Just prior to Ribbon coming in this month, we had a first-time homebuyer struggling because some sellers won’t look at a mortgage-backed offer because it will cost the seller more time and money,” said Freidman at Crye-Lieke. “It’s been challenging but with Ribbon, we can present their offer as a cash offer. It is an easy process accessible to any pre-approved homebuyer.”

According to Shah, once the buyer is pre-approved and the mortgage bank says the buyer can secure a mortgage, the buyer can add Ribbon to your offer, giving them an automatic upgrade to an all-cash offer with a guaranteed close.

“That moves you from the bottom of the stack to top of stack and gives you a 40 to 80 percent higher likelihood of winning the offer,” he said. “Once the offer has been accepted by the seller, if your mortgage isn’t ready in time or there are unavoidable delays, which happens every day, Ribbon steps in and buys the home and reserves it for you for up to six months, transferring the home to you at the original purchase price when your purchase closes.”

What happens if the entire deal falls through or the family decides suddenly not to buy the house?

“The risk we take is that if we buy a home for someone and they choose for one reason of another they cannot or do not want to get the mortgage after Ribbon has bought it, they have the ability to freely walk away, and we put the house back on the market.”

He said for every 100 families Ribbon enables, less than five do not eventually go through.