What is an iLender?
In a recent piece here on Millionacres, "How to Pay for a House in Cash -- Without Having the Cash," we highlighted start-up Accept.inc, which lets buyers who qualify for a mortgage submit an all-cash offer on a home.
The news about this fintech mortgage lender is that it just raised $90 million in debt and equity from SignalFire, Y Combinator, and DN Capital, which will allow it to both enter new markets outside of Colorado and double its team.
Another change is in how this company categorizes itself: Accept.inc is now defining itself as an iLender, or a technology-enabled lender, a whole new category in real estate technology.
How does an iLender work?
The way Accept.inc works is that, first, buyers get qualified using the Accept.inc platform. They can then shop for a home up to the amount they've been approved for. Once they find a home, Accept.inc buys it, closing within three days, and then sells the home to the homebuyer as soon as their mortgage is ready to close, typically within two weeks, for the same price Accept.inc paid for it.
Accept.inc makes money the way all mortgage lenders do: through mortgage origination and title. And that's how this company can do business without charging transaction fees like iBuyers do.
What makes an iLender different from a traditional lender is the focus: helping the buyer not just qualify for a home by being approved for a mortgage but by actually winning the home as an all-cash buyer.
With a traditional mortgage transaction, sellers and real estate agents don't know for sure whether the buyer will indeed get the loan. But with a cash offer, there are no such concerns.
iLenders level the playing field
In today's extreme seller's market, sellers typically prefer to sell to an all-cash buyer. There are no finance contingencies or appraisals to deal with that can bog down or kill a deal. Most homebuyers can't buy a home, however, using all cash like investors can.
By being a lender with a vision, Accept.inc can make regular homebuyers into cash buyers who can compete with iBuyers and other types of investors.
The Millionacres bottom line
Since its inception in 2016, Accept.inc has seen 1,000% growth in demand. Co-founder Nick Friedman says about his company, "We not only want to level the playing field, we want to create a new standard." Will this new business model, the iLender, be the future of mortgage lending? As long as cash buyers are king, it could be.