What is an iLender?

Technology has revolutionized our world — making our lives easier and, dare we say, more fun. Modern technology has shaped the way we interact, do business and navigate life, including how we approach the buying and selling process in real estate. And now there’s a new player in town that’s making waves in the mortgage lending space – the iLender.

What is an iLender?

An iLender is a technology-enabled lender that empowers buyers who qualify for a mortgage to submit all-cash offers on a home.

The business category of iLender — the "i" stands for "instant" — was originally established in 2016 by Accept.inc and iLending is now a quickly growing category in real estate financing.

The term “Power Buyers” has also been used in conjunction with “iLender” to describe this new segment of real estate technology companies. The rapid rise of Power Buyers can be attributed to the low supply and high demand for housing – creating the need for products and services that’ll help potential home buyers stand out from the crowd.

How does the iLender process work?

iLenders like Accept.inc perform the underwriting process upfront, fully approving potential buyers for a loan before they ever submit an offer. This stands in contrast to the traditional mortgage offer, where the buyer isn’t fully underwritten until after a home is under contract.

After undergoing an iLender underwriting process, buyers can shop the housing market with confidence, speed and the power of cash in their back pocket. Once they’ve found that perfect home, the buyer’s agent will submit an all-cash offer with proof of funds. The iLender then purchases the home in cash on behalf of the buyer.

Once Accept.inc acquires the home, we immediately sell the property back to the buyer at the same exact price under a mortgage, allowing the buyer to pay back the money over time just as they would with a traditional mortgage. Note that unlike Accept.inc, some iLenders charge for their cash offer service in the form of a flat rate or percentage of the home purchase.

In the iLender model, the buyer purchases the home and secures the loan through an iLender, but the buyer remains in full control over the offer to the seller. This provides potential buyers with the advantage of making an all-cash offer, while still receiving a traditional mortgage at the end of the process.

iLenders make offers on homes more competitive, particularly in multi-offer situations, by providing buyers and their agents with more negotiation power. In both buyer's and seller's markets, the power of a cash offer isn't just about winning a bidding war — cash buyers can negotiate cash savings! How does paying 12% less sound? That's the hidden discount of an all-cash offer compared to bids relying on traditional mortgage financing.

From a seller’s perspective, cash offers backed by an iLender are highly attractive because they remove pesky financing and appraisal contingencies and offer a speedier close. Instead of the average 47 days to close through a traditional mortgage lender, Accept.inc offers typically close within 14 days.

iLender vs iBuyer: what’s the difference?

If you've been following the real estate market for the past few years, you may have heard the term "iBuyer" and read how iBuyers are driving up housing costs. So, what's the difference between iBuyers and iLenders? iBuyers are akin to institutional house flippers. They use a system of algorithms to determine a home’s value and use cash to purchase the house directly from the owner.

According to The New York Times, “On average, iBuyers offer 0.22 percent less than fair-market value for a home and charge the seller slightly higher fees, about 1.3 percent more than a conventional listing agent would. The trade-off is a faster transaction — the process takes days rather than weeks, as there are no extended escrow periods — and fewer of the hurdles that give sellers headaches, like open houses and multiple showings with strangers.”

Once a piece of property is purchased by an iBuyer, it’s turned around and listed for sale for immediate profit (in theory).

The challenge for home buyers is that they have to compete with these institutional investors when they are making offers in an already tight market.

In contrast, iLenders give buyers the opportunity to make all-cash offers — but with the flexibility of a mortgage. In other words, buyers can now compete on a more level playing field with other cash buyers — and also reap the benefits of speed, certainty, and convenience of an all-cash offer — while still having the ability to spread the cost of the home into affordable monthly payments over a 15 or 30-year term.

iLenders level the playing field

Let’s be realistic, the average homebuyer doesn’t have the liquidity to simply pay outright for a home using cash. And, even if you do have that type of cash on hand, obtaining financing is still the more strategic option when interest rates are favorable.

From building home equity and the tax-related benefits of a mortgage to freeing up dollars to invest in other areas, partnering with an iLender lets you enjoy the benefits of a cash offer and the advantages of having a mortgage (otherwise known as having your cake and eating it too).

That’s why we created Accept.inc: to level the playing field. We believe anyone who qualifies for a mortgage deserves the speed and competitive advantage that cash buyers are enjoying.

Sarah Frohnapfel, a Denver real estate broker on the Abell to Sell team at Compass Real Estate, has this to say about using Accept.inc instead of a traditional lender:

"It's our obligation as real estate professionals to provide all of the resources and options that are available to our clients. Being able to make a cash offer in this market will likely set your offer apart from others. Sellers in some areas of Denver Metro are receiving more than 10 qualified offers, and submitting a cash offer is a major advantage during a competitive buying process.

Having closed over a dozen deals with Accept, I know what to expect and can honestly say to my clients that we will find their home faster in this market by using their services. Former clients have also found the ability to close much sooner a true benefit of using Accept. It's fast and furious but with the right team in place the buying process can move very smoothly and much more quickly. “

Not only are cash offers through iLenders 4X more likely to win over traditional mortgages, and to do so at a lower offer price, but Accept.inc provides homebuyers with competitive rates with no additional costs or hidden fees. That sounds like a win-win to us.

Ready to take the next step in your home buying journey? Learn more about all the advantages of buying a house with cash. And once you’re ready to begin shopping the market with the power of cash, apply to become Cash Approved™ today!