New Mortgage Offerings Allow Disappointed Buyers to Bid Entirely with Cash

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Daniel Chelgren snuck into hot housing market earlier this year, and he quickly became disillusioned with the super-competitive playing field favored by cash buyers.

In one case, he and his wife offered $ 20,000 more than the asking price for a house in the Denver area. The winning bidder exceeded the list price by more than $ 100,000.

“We have seen some cases where there were 30-40 suggestions on the table,” Chelgren says. “It’s one thing to lose, but it’s quite another to find out that you’re not even in the top 15. We just felt that if we couldn’t offer cash, we wouldn’t even be in the game. “

The Chelgrens decided to change their approach. They started working with Accept.inc, a Denver-based mortgage company that makes offers on behalf of borrowers exclusively in cash, and the couple closed their home this spring.

“Consider us a rich uncle,” says Adam Pollack, co-founder and CEO of Accept.inc. “We want to turn every customer into a cash customer and every offer into a cash offer.”

In the hot housing market, money is king

During the housing market due to the coronavirus, rate wars have become commonplace in many areas. When sellers are weighing several offers, they tend to favor a confident cash offer over a slightly less definite funding-dependent offer.

As a result, cash buyers can often get a small discount over funding buyers. And cash buyers could get a tougher deal for inspection contingencies.

Accept.inc was launched in 2019, prior to today’s intense seller market. The company announced this week that it has raised $ 90 million from investors.

A new generation of power buyers

It is not the only startup that sees potential in cash offers. Another company, Austin, Texas-based Homeward, is also building its business around the concept of offering cash on behalf of paying buyers but not having $ 500,000 available to transfer to sellers. Homeward, which recently raised more than $ 370 million from investors, charges buyers a 1.9 percent commission.

Another player, Ribbon, also allows bidders to make money offers. It charges a commission ranging from 2% to 2.4%. Ribbon is available in North Carolina, South Carolina, Tennessee, Georgia, and Texas.

Mike DelPret, a real estate technician and advisor to Homeward, says the new generation of companies is different from iBuyers offering quick deals to sellers. “I call them ‘electricity buyers,’” he says. “They provide buyers with cash offers, bridge financing, and buy-before-sell.”

Homeward’s Buy Before Sale Offer allows homeowners to make cash offers before they sell their current homes. This is another way to give home buyers a slight edge in a market that is leaning towards sellers.

“Buyers are looking for every possible benefit,” says DelPrete.

How it works

Accept.inc advises that it does not charge any commission from buyers. Instead, he uses the money supply as a way to attract clients looking for a mortgage. Pollack says Accept.inc views cash rates as a marketing tool; he makes money by making loans and then reselling them.

When working with clients, Accept.inc assesses the creditworthiness of borrowers. Then, when a buyer wants to place a bid on a home, Accept.inc analyzes the property to make sure the offer is reasonable. If all is well, Accept.inc will bid in full in cash on behalf of the buyer.

“It’s like any other money supply,” says Pollack.

If the seller accepts the offer, Accept.inc closes in about two weeks. Then, two weeks later, Accept.inc resells the home for the same price to the buyer who closes the deal with standard mortgage financing.

Chelgren says the all-cash offer is not a panacea. He lost five homes through Accept.inc before finally winning a home in Englewood, Colorado.

But he says he is happy with the process. He received a mortgage at a rate below 3 percent and he paid no additional fees for Accpet.inc’s offer in full on cash filed on his behalf.

“It sounds too good to be true,” Chelgren says. “We were waiting for the catch, but the catch never came.”

At this time, Accept.inc is only offering all-cash offers on behalf of borrowers who receive regular, qualifying loans or VAA mortgages. Its service is not available for large mortgages or FHA loans.

And his services are only available in Colorado. While the Accept.inc team did not say where it plans to expand further, the company is licensed in a number of states, including California, Texas, Florida and Arizona under the National Mortgage Licensing System.

While Pollack sees his company as an innovator, Accept.inc is not aiming to undermine the mortgage industry. “We don’t approach this in terms of the mortgage industry being broken,” he says.

Tips for buying a home from the seller’s market

If you do not shop in a marketplace served by Accept.inc, Homeward, or Ribbon, you may not be able to receive an all-in-cash offer. Here are a few more ways to make your bet stand out:

  • Get pre-approved for your mortgage and get cash to cover the cost of closing the deal.
  • Get ready to move faster when you find a home you like.
  • Go through the complete underwriting process before making an offer.
  • Make sure your offer is aggressive enough to stand out, but not too expensive for you.

Learn more:

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