Mortgage startup Accept.inc announced Thursday it raised $90 million in debt and equity. Led by venture capitalist firm Signal Fire as well as existing seed investors Y Combinator and DN Capital, Accept.inc said it plans to use the funding to scale its platform, double its team size and enter new markets.
Similar to iBuying firm Opendoor, startup Ribbon and a host of other new companies, Accept.inc provides cash to buyers so they can submit a competitive offer, or buy a new property prior to selling their existing home.
“The pandemic has fundamentally changed the meaning and importance of ‘home’” said Adam Pollack, CEO & co-founder of the Denver-based startup, which currently only operates in Colorado.
If a homebuyer can’t close on their mortgage in time to buy the home they want, instead of losing out on the house, Accept.inc will buy the property with its own funds and reserve the home on their behalf. As of right now, Accept.inc only operates these services in Colorado, but the company is declaring itself the first “ilender.”
The process requires a pre-approval that once passed allow buyers to submit an all-cash offer with Accept.inc’s proof-of-funds. If the all-cash offer wins, the home is purchased from the seller and reserved until the loan is ready to close. The home is then sold back to the buyer at the same price that it was purchased for. The all-cash contract signed between Accept.inc and the seller is still contingent on a satisfactory inspection that can be negotiated between the buyer and agent.
We’re a year into the pandemic, and while smart policy has delayed a default wave, the threat still looms large. Servicers must be powered by nimble technology to be heroes to borrowers, stalwarts to investors, and stewards of consumer protection to regulators.
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Opendoor, the top iBuyer, will buy a new home on behalf of customers, charging a 0.02% daily fee after the first 120 days it holds the property. Accept.inc claims its services come with no additional costs or markups beyond the fees of a traditional mortgage offer.
In a fiercely competitive market with limited inventory, a cash offer is hugely appealing to sellers, who can typically close faster than they would with a mortgage-contingent offer. According to a report by Redfin, buyers who offer all cash improve their chances of winning a bidding war by 290%, making it one of the most effective strategies to win a home in a competitive situation.
Accept.inc was founded in 2016 by Pollack, Nick Friedman and Ian Perrex. It was originally launched under the name BoardRE before its rebranding in 2020. The trio closed a $7 million seed round in 2019.
“The current system dramatically favors wealthy individuals and investors who can offer sellers the speed and certainty of a cash offer,” said Pollack. “Accept.inc has built a cash offer product for anyone who qualifies for a mortgage, ensuring no one is locked out of the best homes, school districts, or neighborhoods just because they don’t have hundreds of thousands in their bank account to make a cash offer.”