Real Estate Tips & Resources
Home Selling Resources
3 Benefits of Accepting a Cash Offer When Selling Your Home
We get it: selling a home takes the cake as one of the most difficult (and stressful) financial experiences we can face over the course of our lives. From having to navigate challenging contingencies to worrying if your sale will close quickly and seamlessly, the selling process can be pretty overwhelming...to put it lightly. Whether you’re anxious about the possibility of a long, drawn-out process or you’re worried about the costs associated with selling a home, you’re not alone. As you know, when a deal falls through, you have to re-list your home. And when you relist your home, prospective buyers often assume there’s something wrong with the home, which can make it take even longer to get a new offer and, ultimately, cash in your bank account. As a seller, there are three major benefits to accepting a cash offer on your house. There are a number of advantages to accepting a cash offer instead of working with the approximately 86% of buyers who pursue a traditional mortgage. And in a hot real estate market, an all-cash offer doesn’t necessarily mean having to accept an offer below-asking price or dealing solely with institutional buyers. It’s a common assumption that all-cash home purchases are a rarity. However, they account for a pretty healthy portion of property sales – representing 36% of home sales in 2020 alone, according to Realtor.com. From a speedier close to cost savings, here’s a look at the three biggest reasons to consider an all-cash offer on a house. Benefit #1: Cash Offers Close Faster Maybe you’re relocating for an employment opportunity. Or perhaps you’re expanding your family and upgrading to a larger home. Whatever the case may be, by accepting a cash offer on a house, you’ll speed up the process of getting your house sold. Sellers prefer cash offers because selling a home through a traditional mortgage lender is time-consuming, taking an average of 47 days to close (according to Ellie Mae). The culprit? Lenders require a lengthy underwriting process at the end of the sales process. With an all-cash offer, the average time to close is approximately 2 weeks. Between the initial pre-approval and the loan finalization, if a buyer’s financial picture changes, or they fail to satisfy certain requirements, the lender can decide to decline their loan. The result? Your deal will fall through and you’re left back at square one of the selling process.Benefit #2: Cash Offers Eliminate the Risk of Financing Falling Through Month over month, NAR’s Realtors® Confidence Index continues to list “issues related to obtaining financing” as the primary cause of delays or terminations of real estate contracts. From buyer financial troubles to third-party appraisals, several things can cause lender financing to be at risk. If the buyer is unable to secure a traditional mortgage at all — or for the amount they "pre-qualified" for — they won't be able to purchase your home. As a result, you'll either need to pursue the next offer in your pipeline or place the house back on the market. Best case scenario: it's a hot market and the whole process starts all over. Worst case scenario: the market softens and it takes longer AND you need to lower the listing price. But if you're presented with a cash offer, you don't have to anxiously chew down your fingernails, worrying that the deal could collapse at the 11th hour because of financing problems. Benefit #3: You Won’t Lose the Deal Over an Appraisal Contingency Another way a traditional mortgage lender can kill your sale is via an appraisal contingency. An appraisal contingency is a clause that states the contract can be terminated if the seller’s asking price isn’t consistent with the assessed market value of the house. An appraiser’s evaluation combines tax records, prices of comparable homes recently sold in the local area, a personal assessment of the property’s condition, amenities and features, location in the neighborhood and several other considerations. If your home doesn't appraise at the list price or higher, the lender can refuse to approve the buyer’s mortgage loan. Or, the lender may agree to finance the home, but the buyer would be responsible for fronting the difference. Oftentimes, buyers don’t have the financial means or are unwilling to cover the difference. If that's the case, the buyer can rescind their offer. When you receive an Accept.inc offer, however, you'll have confidence the house has already been offer-checked and the sale is approved for the amount of the offer. Enjoy the Benefits of a Cash Offer on Your House From neighborhood parties to engagements to a baby’s first steps, your home is not only a reflection of you, but it’s also where priceless memories are made. What it shouldn’t be: a source of stress and anxiety when it comes to the home selling process. We founded Accept.inc as a way to introduce a better kind of mortgage lending to the market – one that gives everyday homebuyers the power to buy a house with cash. As a seller, this translates into a streamlined process that solves many of the problems associated with the old way of getting mortgages. Helping you sell your home 3x faster than the national average and avoiding deals from crashing and burning is what we’re all about. Because having to relist a home is certainly not our definition of fun, and we’re guessing it’s not something you want to experience either. All you’re responsible for is accepting the strongest all-cash offer in real estate! To learn more about the benefits of partnering with Accept.inc, download our free Seller Information Packet today.
Kelly K. | Jul 27, 2021
All-cash offers and contingencies: what you need to know
As Elvis Presley infamously sang, “Home is where the heart is.” The line often resonates deeply for both home buyers and sellers who are on the cusp of taking the next step in their homeowner journey. But, did you know even after an offer has been made and accepted, a contingency can extinguish the entire deal at the last minute? That’s certainly heartbreaking for all parties involved. In real estate, a contingency, also known as a “walk away” clause, refers to the conditions that must be met in order for the purchase or sale of a home to become legal and binding. For instance, in NAR’s monthly Realtors® Confidence Index report, “issues related to obtaining financing” continually leads the pack as the primary reason for the delay or termination of a real estate contract When buying a house with cash, however, there’s no financing contingency baked into the contract – eliminating the risk and heartache of the deal falling through. So, what common contingencies should you know about? In what ways can they protect you? In what ways can they increase the risk of a deal falling through? And how do cash offers impact real estate contingencies? Here’s what you need to know. Financing contingency A financing contingency states that the home sale is dependent on the buyer securing the expected mortgage. No financing approval, no contract. Closing a loan traditionally is a lengthy process, taking an average of 47 days to complete, according to Ellie Mae, the software company that processes 35% of U.S. mortgage applications. During this window, a deal can fall through due to financing at any time. Buyers and sellers alike can think the sale is a done deal, only to be notified of a financing problem on day 46 under contract. When instances like these occur, the financing contingency allows buyers to retract their offer without facing any penalties. No one wins when the buyer's financing falls through. For sellers, the challenge of the financing contingency is having to wait to find out if the deal will fall through, in which case, the seller will be forced to start from scratch and find a new buyer all over again; placing their home back on the market and fielding added expenses that arise from the failed sale. Often, the home also has to be listed at a lower price due to a stigma placed on homes that fall out of contract, regardless of the reason. Buyers aren't immune to wasted money and time either, facing their own frustrations of losing out on their dream home. And real estate agents can't get paid until their clients make it all the way through the sales process. Using an all-cash offer, however, there’s no financing contingency on the table. That's because a cash offer means the buyer has full proof of funds ready and loaded when they make the offer. Buyers who are Cash Approved™ -- not just "pre-qualified" or "pre-approved" -- pose no risk of falling out of a deal due to a financing contingency. Home sale contingency When a buyer’s offer is contingent on successfully selling their existing home first, that means the offer has a home sale contingency. Like the financing contingency, a home sale stipulation can stall the entire purchase process from moving forward. This type of contingency can be found in both financed and cash offers. In a hot market, home sale contingencies may not be as common since buyers don’t want to risk making their offer less attractive and have fewer concerns about being able to sell their current house. However, if you're a buyer who needs to include a home sale contingency, making a cash offer -- by getting Cash Approved™ for example -- is often a good way to go because cash gives you more negotiating power than a traditional financed offer. Appraisal contingency Another condition that can sour a deal is the appraisal contingency. After a seller accepts an offer, a traditional mortgage lender will require a property appraisal to ensure the asking price coincides with the market value of the home. From the condition of the property to renovations to tax records, if an appraiser’s assessment determines the market valuation is below the asking price, the lender can deny a buyer’s loan application after the offer is already made. If the mortgage lender agrees to move forward with financing in this particular scenario, the buyer would be accountable for paying the difference out-of-pocket. Most buyers don’t have the liquidity to front the difference, and the appraisal contingency allows them to terminate their offer without forfeiting their earnest money. Similar to the no-financing contingency, appraisal contingencies can be removed in an all-cash offer. But you don't need to be a billionaire with deep pockets to make a cash offer on a reasonable home. At Accept.inc, we want the mortgage process to work for everyday people -- what a radical concept! To speed up the closing process, we perform a value check on a home at the beginning of the home buying process – before an offer is made – rather than in the final hour like a traditional mortgage. That means no nasty surprises to torpedo the deal in the final hour. All-cash offers and contingencies In today’s supply-starved real estate market, homebuyers are seeking ways to make their offer stand out from the crowd. Bidding way above the asking price isn't the only way to do that -- fewer contingencies is another reason why sellers prefer a cash offer. Cash buyers represented 36% of home sales in 2020, according to CNBC. So, how can one go up against these Goliaths with easy access to millions of dollars in cash? The secret lies in aligning yourself with a lender who will let you negotiate with the power of cash, but with the ability to pay the money back over time like a normal mortgage. Interested in making a cash offer on your next house, with no financing contingencies and no additional costs, increasing your likelihood of making a winning offer by 4X? Learn how to get Cash Approved™ today!
Kelly K. | Jul 22, 2021
7 fees & closing costs associated with real estate cash offers
You’ve made an exciting decision: you’re ready to begin searching for the home you’ve always dreamed of – covered patio and all. Whether you’ve just started to explore different neighborhoods, or you’re in the initial stages of budgeting and planning, successfully navigating the homebuying process requires a solid understanding of the costs and expenses you’ll incur along the way. What to expect for closing costs, for example, is an important detail when figuring out how much you can afford to pay for a house. Closing costs are the fees and expenses you pay, outside of your down payment, to complete the sale of the house. According to data gathered by The Motley Fool, in 2020, the average closing costs for a house were $5,749. However, this number can vary greatly based on a home’s market value and geographic location. As a homebuyer, you can expect to pay 3%-6% of the home's purchase price on closing costs, but that number can be as low as sub-1% or as high as 4+%, depending on the state. What closing costs do you pay with cash offers? Increasingly, homebuyers in competitive markets are learning that "cash is king" -- that is to say, buying a house with a cash offer increases your chances of winning when there are multiple offers on a home. Sellers prefer an all-cash deal as it eliminates the uncertainty and slow process of transacting with a traditional mortgage lender. Seriously, high-fives all around! It’s a common assumption that in order to make an all-cash offer, you have to have hundreds of thousands of dollars already stashed away in your bank account, or a wealthy relative who does and is willing to front you the cash. However, there’s another option for buyers who aren't high rollers: making an all-cash offer facilitated by an iLender like Accept.inc. The same benefits of a cash offer without the need for upfront liquidity? That’s what we call a win. Do cash buyers pay closing costs? Yes, if you're making a cash offer on a house facilitated by a mortgage lender, you are still responsible for paying closing costs. In fact, all-cash offers are subject to many of the same closing costs any buyer pays when following the old-fashioned mortgage process. To delve deeper, here’s a look at the closing costs you'll pay with a cash offer on a house.Earnest money deposit (EMD) Earnest money, also known as a "good faith" deposit, refers to money paid to a seller, accompanied by your offer, to communicate to the sellers that you're serious about following through with the purchase. It's held in escrow until closing. How much you'll want to put down for your EMD depends on a couple of things. From market demand in the neighborhoods you are considering to the terms outlined in your purchase agreement, you can expect to pay a good faith deposit to be around 2%-5% of the purchase price. Your real estate agent will be a great resource to help you determine a specific earnest money amount that is appropriate for a competitive offer. The good news? This amount is not an additional fee but a deposit that is credited towards your down payment at closing. Title insurance & title search fees Title insurance is a one-time fee that serves as a form of protection against any unexpected title issues that may arise while you own the property. On average, title insurance costs about $1,000 per policy. In addition to procuring insurance, a majority of states require a title search to access public records and verify the seller is the home’s rightful legal owner. A title search, which can cost between $75 and $250 for a single-family home, will also reveal any undiscovered or undisclosed claims on the property, such as liens, wills, outstanding mortgages or deeds – all of which could affect the purchase process. Homebuyers who use Accept.inc's partner title company will not incur this additional expense -- we pay it for you. Escrow fees An escrow fee, or closing fee, is generally paid to the title company – an independent third party that handles title transfers, paperwork – like recording the deed – and the distribution of funds involved in the real estate transaction. Typically, the escrow fee is based on a percentage of the home’s purchase price (rather than a flat cost), but it’ll ultimately vary by company and locale. It can range, on average, anywhere from less than 1% to as high 2%. So, if you’re buying a $250,000 home, for instance, it could cost anywhere from $1,000 to $5,000. An escrow account, which operates similarly to a savings account, is used to collect and safeguard funds during closing, as well as throughout the lifespan of the loan. In addition to protecting your earnest money deposit, your lender may utilize an escrow account to fund your homeowner’s insurance and annual property taxes. Property taxes Property taxes may also be part of your closing costs, even when making a cash offer. Some states charge property taxes in advance – collecting either 6 months or an entire year’s worth of taxes upfront. Because property taxes are often prepaid by the seller, when ownership is transferred, the buyer will be responsible for reimbursing the seller for a prorated portion of the taxes. This number is calculated by dividing the total amount of property taxes paid by the seller by the number of days remaining in the year. Homeowners insurance Buyers are typically responsible for paying the entire annual premium for their homeowner’s insurance at closing. The cost of a homeowners policy varies greatly – using factors like coverage amounts, location, the value and size of your home and the deductible to calculate your premium. For instance, your new humble (or not so humble!) abode may be located in an area that requires your policy to include flood or earthquake coverage for added protection against these potential threats. HOA transfer If you’re purchasing a piece of property located in a community governed by a homeowners association (HOA), you may be responsible for covering a transfer fee. Separate from your yearly dues, the transfer fee exists to compensate the HOA board for recording and distributing the proper paperwork and documents. Private mortgage insurance (PMI) An Accept.inc all-cash offer is similar to a traditional mortgage when it comes to private mortgage insurance -- Since you are still receiving a mortgage at the end of the process, if your down payment is less than 20% of the home's purchase price, you'll still pay PMI. The cost, which ranges from 0.5% to 1% of the loan amount, is calculated annually and added to your monthly mortgage payments. Closing costs on cash offers typically include the buyer’s first month’s payment. How do you buy a house with cash without all the cash? All-cash offers provide a smoother, quicker real estate transaction – and they’re highly attractive for sellers, so cash offers are more likely to win a bidding war. But, let’s face it: most homebuyers don’t have access to the kind of liquidity or money required to fork over the price of the entire house up front. When you're competing with institutional buyers and those with deeper pockets, that feels unfair. That’s why Accept.inc is here to level the playing field. We believe anyone who qualifies for a mortgage deserves the speed, certainty and competitive advantage that comes with making a cash offer – but with the ability to pay back funds over time like a mortgage. We provide homebuyers just like you with competitive rates and no additional costs (or hidden fees). Ready to start making strong real estate offers that stand out from the pack? Get Cash Approved™ today!
Kelly K. | Jul 14, 2021
Rich relative no longer required: A big moment for Accept.inc.
Today is an exciting day for Accept.inc as we move closer to our mission of putting an all-cash offer on every home. I wanted to share a bit more about me and why we started Accept.inc. It all changed over a gin & tonic I grew up in a stable middle class family in Long Island, NY. My father was in the mortgage industry and real estate was a daily conversation. I was lucky enough to spend my summers in Fire Island, NY building Wagon Express, a hauling company that I started with my identical twin brother, Benjamin. It wasn’t fancy, but I got to work the docks with my best friend, delivering bags and beer for weekend travelers eager to enjoy a few days of paradise in their summer rentals. That said, having seen first-hand the impacts the real estate crisis had on my family, I swore I’d never go into real estate. Instead, I thought I would concentrate on getting into a good college and pursue a traditional, stable career path. Adam Pollack (left) and Benjamin Pollack (right) haul the cargo of a visitor on Fire Island. The Pollack brothers run perhaps the last schlepping business on the island and have abandoned their radio flyers for larger, plastic wagons. Phillip Montgomery for the Wall Street Journal. Around the end of high school, something shifted in me. I became more interested in public service and the pursuit of something more meaningful. That shift started with small decisions, like dropping the standard math and econ classes at Harvard and choosing to study Social Theory and Argentine Tango (I totally bombed the “lab portion” of this dance class). I met Nick Friedman, one of my co-founders, freshman year (he was dormmates with my twin brother), and it didn’t take long to realize that we both wanted similar things out of our careers and lives. We ended up spending a few summers developing venture ideas that we thought were brilliant, but in hindsight were complete duds. They are still on a whiteboard in the basement of my parents' house! For whatever reason, we kept at it and in 2016 became fixated on the idea that while technology had changed the way many things were bought and sold, including homes, few ventures had changed the way homes were transacted. We asked ourselves, “What is the best, smoothest transaction in real estate and how do we provide that experience to everyone?” You don’t need to be the son of a mortgage attorney to know that a cash offer that can close in 3 days is a whole lot better than waiting 1.5 months to know if a home sale is going to go through with a mortgage. The problem is, the majority of buyers don’t have hundreds of thousands of dollars sitting in their bank accounts to make a cash offer. So then came a big decision: I left school with Nick in mid-2016 to build the cash offer for everyone who can qualify for a home. Shortly thereafter, we joined forces with our technical co-founder, Ian. Now, all we had to do was prove our concept with our first transaction and raise money. You’ve heard of the overnight success story. This isn’t one of them. We had so many failures along the way to getting our first transaction done. We got ripped off. We got told “no” hundreds of times by investors and customers alike. Potential buyers, industry partners and investors laughed us out of the room. Some told us that what we were trying to accomplish was just too good to be true, or, there had to be some catch. In August 2018, we hit rock bottom. I had to tell Harvard whether or not I was coming back or deferring (again). We had just hit another obstacle and it seemed ludicrous to keep going. I remember calling Nick that afternoon, saying we should call it quits. Nick offered to buy me a gin and tonic, and we went to our favorite bar perched where the Denver skyline meets the Rocky Mountains... I was done. Beyond done. We had just 800 bucks left in our bank account from our pre-seed round, no viable way to run the business, and we hadn’t paid ourselves going on two years. Six hours and many drinks later, we mapped out our options and decided that we’d give the venture until the end of the year. We called everyone we knew, cold call after cold call, pitch after pitch. We had our first break in November when Y Combinator agreed to fly us out for a 10-minute interview. When the interview team asked us why the hell they should invest in us after two years of failing, I told them that we were an encyclopedia of a 1000 ways this venture wouldn’t work... and because of that we finally had the one that would. There’s a lot of trust that’s built between partners when your chips are down. That’s when you learn who you are and who you are with. And it makes the victories along the way all the more sweet, in our case getting into Y-Combinator 7 days before we had planned on killing the company. And yes, the business model Nick, Ian, and I pitched to YC is the very same Accept.inc uses today. YC DemoDay Pitch with Nick & Ian. Back then, Accept.inc was named Board after the company’s roots from our college dorms (i.e. room and board). The fundamental problem with a traditional mortgage transaction is that sellers and agents really have no way of knowing the creditworthiness of buyers who place bids on their home. That means sellers end up waiting 40+ days on a lender to know if the buyer is going to get a loan and the home sale is actually going to go through. Think of early Ebay (pre PayPal) when sellers wouldn’t even send a buyer’s item before they received a check by mail and knew it wouldn't bounce. Cash, on the other hand, is great for home sellers because they don’t need to wait anxiously for the buyer’s lender to OK the transaction; the transaction will fund the moment the buyer and seller want it to. The unfair advantages of being a cash buyer are hidden in plain sight: cash buyers are up to 4X more likely to win the bid than buyers who need a mortgage, get discounts off the home price, and can close faster. This unfair advantage bestowed on those buyers capable of paying all-cash began to exclude the everyday buyer from competing on desirable homes, which doesn’t seem right. Buying a home is one of the biggest transactions of anyone’s life. It’s a crucial part of creating good towns, communities, schools and a society where people can thrive. So, we created a new kind of lender that facilitates cash purchases on behalf of buyers that qualify for a mortgage. We invest in evaluating the buyer upfront -before they even identify a home- and approve them for our cash offer program. Once the buyer finds a home they love, we purchase the home all-cash at the price the buyer and their agent negotiate. We hold onto the home until their mortgage with us is ready to close and sell it to the buyer at the exact same price we bought it for. Sellers and agents can close in days instead of months, and any buyer who can qualify for a mortgage can put their best foot forward with an Accept.inc cash offer. Because we make money off the loan like ordinary banks and don’t commission our loan officers, we don’t need to charge buyers, sellers, or agents any additional cost to upgrade their offer to a cash offer. Nick (left) and me(right) celebrating the first ever Accept.inc (then Board) cash offer, which closed hours before YC demo day in March, 2019. Even as the company has grown and the roles have become more specialized, I still find myself asking about different individual buyers and their experiences with us. I guess you could say it’s my way of staying close to the product, but it’s more about reminding myself about the real-world impact Accept.inc has. One of my favorite success stories was from when we helped a teacher who had been struggling to win a home for 4+ years. The condo she wanted to purchase was popular with home flippers and the seller would only accept cash. She applied with Accept.inc (then called Board) and won – on her first offer! A lot has changed since we started out in 2016: we’ve transacted hundreds of millions of dollars' worth of homes, grown the team to over 90 amazing people, and helped thousands of buyers, sellers, and agents. But one thing will always endure: our commitment to ensuring everyone has an equal shot at homeownership. As we announce our $90 million that we raised over the past year to get us closer to this goal, to keep adding new markets and to hire more people, I want to say a big thank you to the buyers, sellers, agents, investors, and of course employees who have supported and believed in us. We still have so much to do, but we could not have gone this far without you. Oh and Nick, thanks for that gin and tonic 😉
Adam Pollack | Jun 24, 2021