Editorial note: This post is not sponsored nor commissioned by Zigzy. I literally just wanted to give you an honest breakdown of the company and service.
No rich uncle to front your home purchase in cash? Real estate startup Zigzy wants to change that.
Its mascot, “Uncle Zigzy” plays the part of “your rich uncle,” who will buy the house for you in cash and let you move in while the mortgage is finalized.
Furthermore, if you already own a house, you don’t have to sell it before buying another one.
Sound too good to be true? Well, there are already similar programs being tested, from cash-offer companies like Accept.inc and Knock.
Want to see if “Uncle Zigzy” can help you make a cash offer? Read on.
- What is Zigzy and how does it work?
- Is Zigzy legit?
- Using a Zigzy-recommended agent could get you a $2,500 closing cost credit
- You can buy a home before selling your current one
- Zigzy reviews
- Analysis of Zigzy (NAF) reviews
- Zigzy partnering with NAF is a benefit to the buyer
- Zigzy FAQ
- Zigzy vs other cash-offer programs
- Bottom line
What is Zigzy and how does it work?
Even as the market slows in 2023, it’s hard to buy a home in many markets using a traditional mortgage.
Sellers strongly prefer cash offers because little can go wrong with them, and they close faster.
This company buys the home cash for you. Here’s the process.
- Zigzy pre-approves you for the mortgage, which also approves you to make cash offers
- You notify the company of the home you’d like to make an offer on. The company makes a cash offer on your behalf.
- If the seller accepts, Zigzy buys the home.
- You move in.
- Zigzy finalizes the mortgage and sells the home back to you.
Zigzy’s mascot, “Uncle Zigzy”, is your virtual rich uncle who will buy the house for you in cash and sell it back to you after the mortgage is finalized.
Why the extra step of Zigzy buying the home in cash? Redfin says cash homebuyers are four times more likely to get an accepted offer. And, mortgage-reliant buyers pay 11% more for homes than cash buyers, a study by the Univerity of California, San Diego found.
“We can’t change what’s happening in the market,” said Zigzy CEO Rick Arvielo in a press release, “but we can level the playing field by equipping families with the resources they need to get the house of their dreams.”
A program that lets you beat other bids and potentially save money? Sounds interesting, but is it legit?
Is Zigzy legit?
Zigzy is a legitimate company. It was founded in 2019 as a software firm, providing real estate management platform Townify to real estate agents.
In 2020, the company partnered with New American Funding (NAF), a well-established mortgage lender.
In June 2022, Zigzy was re-launched as a cash-offer lender, with an emphasis on also finding the right Realtor. According to the Nationwide Multistate Licensing System (NMLS), it is licensed under the same authority as NAF.
NAF is licensed to lend in all 50 states, though Zigzy’s website says its cash offer service is available in every state except Hawaii and New York.
Using a Zigzy-recommended agent could get you a $2,500 closing cost credit
There are many cash offer programs to choose from in today’s market, such as Knock GO, Accept.inc, Ribbon, Orchard, and more.
Zigzy adds a twist, though.
Because it started as a platform for Realtors, it emphasizes the importance of an experienced, full-time agent when you’re buying a home.
The real estate agent must meet certain criteria to be recommended by Zigzy:
- Two years of experience in the buyer’s market
- “Superior neighborhood knowledge” and “proven track record” in the buyer’s market (although it doesn’t explain how it verifies these requirements)
- Knows about off-market or “pocket listings” (although, any agent could know of a pocket listing by chance, so this isn’t much proof of agent quality)
- “Expertise matched to your needs”
The agent requirements are not very concrete. Besides the 2-year requirement, any agent could meet Zigzy guidelines. They should add “Full-time agent” to the requirements, since they tout the importance of such an agent in its marketing materials. But no mention of it here.
The major advantage of using a recommended agent is the potential lender credit for using one. The buyer is eligible for a $2,500 credit toward closing costs, which is offered by NAF for loan amounts above $50,000.
So, if you don’t already have an agent lined up, you might consider finding one on Zigzy’s platform.
Here’s what “Uncle Zigzy” has to say about finding an agent.
You can buy a home before selling your current one
As a homebuyer who is selling and buying, your job could be even tougher than for a first-time buyer.
That’s because sellers can’t stand offers that are contingent on you selling your home. There’s too much that can go wrong with a home sale.
So, Zigzy also offers a service similar to ones like Knock Home Swap and Ribbon Reserve. You can use Zigzy’s cash offer service, move in, then sell your current home within 90 days.
It comes at a price, though. You must rent back the new home from Zigzy’s real estate arm. You are charged for each day you live in the home before the loan is finalized. The rent is due when the sale is finalized.
There’s no guidance on Zigzy’s website about what happens if you’re not able to sell your existing home within 90 days. However, under NAF’s similar program, Buyer Accepted, you may have to forfeit your 3% earnest money if you’re not able to complete the new home purchase.
I’ve reached out to Zigsy to clarify. If its program has different rules than NAF’s, I’ll update this article.
The cash-offer rebrand is so new that this particular service has no reviews from actual customers yet. Likewise, there are few if any reviews for the parent company NAF’s own cash-offer program, Buyer Accepted.
But we can at least get an idea of the mortgage process itself by looking at NAF, through which all Zigzy mortgages will be processed.
Zigzy reviews: Parent company NAF on Zillow
NAF has 4.91 out of 5 stars from 8,787 reviews on Zillow. Most comments are regarding individual loan officers and are highly positive. Favorable reviews highlight great responsiveness and guidance through the homebuying process.
As with any lender, your experience depends on the loan officer handling your loan, not necessarily the company itself. Still, it’s good to see that the company has so many reviews from happy customers.
Zigzy reviews: Parent company NAF on Trustpilot
NAF didn’t do as well on Trustpilot as it did on Zillow, with just a 2.4 out of 5 rating with 61 reviews.
About one-third of reviews were one-star, and most of the rest were five-star. Some issues expressed are:
- Requesting the same documents over and over
- Taking too long to close the loan
- Lack of communication and follow-through
- Asking for more information the day before closing
The five-star reviews praise the great service received. Many customers have used NAF three or four times. Most of the compliments are directed to the loan officer. Again, the loan professional you work with can mean the difference between a good or bad experience.
Zigzy reviews: Parent company NAF on BBB
The Better Business Bureau rates NAF as an “A+” company. It has 3.72/5 stars with 474 reviews. But let’s be honest, most people only leave bad reviews. Most good reviews are there because the loan officer coached their client.
Nonetheless, NAF has a consistent flow of positive reviews on the BBB site. The reviews seem short – a little too short and generic – but I won’t speculate on whether they are legitimate. All I’ll say is that they are too generic to analyze.
The negative reviews seem authentic, probably because people are more passionate about a bad experience, and therefore leave more detailed reviews. Lack of communication, long closing times, and inexperience were some common themes. One customer stated, “Communication isn’t this company’s strength.” That politely sums up many of the complaints.
Analysis of Zigzy (NAF) reviews
After working directly in the mortgage industry for more than 10 years, I can say that mortgage lending is an insanely complex process, as much as companies and loan officers try to tell you it’s a snap.
For instance, chipping paint on the side of a house can derail an entire home purchase.
With a company NAF’s size, it’s expected to have complaints and bad reviews. It’s had 165 complaints on the BBB site in the past 3 years versus 105,000 loans completed in 2021.
I would hope, however, that NAF sets up a dedicated team to handle Zigzy loans. They should put their top loan officers on it. They need to start off on the right foot and not jeopardize the new brand with bad or even mediocre service.
Zigzy partnering with NAF is a benefit to the buyer
Mortgage lending is tough. It’s a big benefit that Zigzy has partnered with a lender that’s been around nearly 20 years.
A recipe for disaster would be starting up a mortgage operation, and, at the same time, working out the bugs of the cash offer program.
Despite the expected bad reviews on various platforms, NAF handling the mortgage aspect is a benefit to the buyer.
According to the website, Zigzy charges a one-time service fee that varies by state which will be disclosed during the process. The fee can be rolled into the new loan. There is no fee to use its real estate agent matching service.
It’s available nationwide except New York and Hawaii.
Yes, the company has partnered with established lender New American Funding which you will use for the mortgage if you choose to use Zigzy’s cash offer program.
Zigzy offers a wide range of loan products: Conventional, FHA, VA, USDA, jumbo, fixed, adjustable, low- and no-down-payment loans, 30-year, 15-year, and more.
Existing single-family residences only. No condos, manufactured homes, or new construction homes.
Zigzy vs other cash-offer programs
It’s difficult to compare Zigzy with other cash-offer services because Zigzy is so new and does not disclose a fee range on its website. I’ve reached out to get more information, but have not yet received a response. For reference, though, here is what other companies are offering.
|Cash Offer Program||Fees & Service|
|Zigzy||The fee is undisclosed. It varies by state and can be rolled into the loan. Service available to first-time and current homeowners who need to sell and buy again.|
|Accept.inc||Similar fees to any mortgage lender. Focuses on first-time buyers.|
|Better Cash Offer||A fee of 1.25%-4% of sales price is charged depending on lender/agent used. Can be used by first-time buyers and repeat buyers who own a home.|
|Ribbon||1% of sales price unless partner lender used.|
|Orchard||Fee is paid via real estate commissions.|
|Knock GO||$1,450 lender fee which covers typical lender charges. Its similar program, Knock Home Swap, can be used by repeat buyers who need to buy and sell.|
Zigzy has a lot of potential for new homebuyers and move-up buyers alike. A service that wants to fill the role of “your rich uncle” could come in handy for those of us without a rich uncle.
The company is backed by a top U.S. lender which brings with it the experience to manage a complex process end to end. And while New American Funding doesn’t have spotless online reviews, I believe NAF’s backing of this brand will be a net positive for buyers.
Since the company in its current form just began operations around June 2022, there are no public reviews yet. However, it could be a great opportunity for early adopters who are willing to take a chance on a potentially great service.
If you end up using Zigzy, place your experience in the comments below and help your fellow homebuyer determine if this is the right cash-offer program for them.