How Acre is making home buying more accessible for Triangle residents

It’s been a challenging time in the real estate market for many potential home buyers in the Triangle. Through a frantic pandemic market that drove up housing prices and a need for more housing supply, the buyers who have been most successful were those with equity and out-of-state buyers. But today, a Durham startup company, Acre, is making it easier for buyers in the Triangle who may not qualify for a traditional loan to enter this competitive market and find the home of their dreams. 

In today’s blog, we spotlight Acre, the provider creating solutions for people who may not have had the opportunity to buy in the past.

Acre combines the ease of renting with the financial upside of owning in the greater Raleigh metro area, with more supported areas on the way. Visit their website to learn more at www.acrehomes.com

Acre was designed to offer flexibility for buyers who can benefit from a shorter-term option that doesn’t lock them into a 30-year mortgage, particularly in today’s market where interest rates are always changing. Acre is different in that they work with buyers and their agents to make a cash offer on the home, which means a mortgage with a higher rate isn’t even on the table. The buyer has a choice of two  Acre products: opt for a lower payment and less appreciation on the home, or work with Acre to claim half of the appreciation on the home when you move.

“It’s meant to bring the best of both worlds between what we typically think of as a mortgage-backed purchase of a home and renting a home,” said Acre’s Head of Operations and Co-founder Pete Crawford. “On the purchase side, you get to benefit from the home’s appreciation, you get to pick the home, and you get to make it your own. On the rent side, you get something much more akin to a rental experience when it comes to flexibility in the home.”

Crawford said Acre was in part a response to data that shows people stay in their homes for shorter periods of time than previous generations. “Somewhere around 30 percent of folks who buy a home end up selling it within five years,” Crawford added. “Even if home price appreciation has been great you’re still paying so much in terms of the cost of buying and selling.”

“When the team started exploring where we could truly create value on the customer side, this shorter timeframe was really floating to the top,” explained Genie Ko, Head of Marketing at Acre. Ko said they have seen specific homebuying scenarios find success with Acre.

The Triangle continues to attract new residents from all over the country. Crawford said Acre is a great option for this relocation market. “We have people coming in for medical fellowships. We have people coming in for tech jobs with firms that could relocate them in the near future,” he said. “The two things they will know is where they’re going to work and if they have children, where they want them to go to school — but they won’t know about the local market.”

Acre allows them to benefit from the home’s appreciation during the short time they are there without having to go through the mortgage and selling process. If they leave the Triangle, they’ll still earn financial gain from the home without throwing money away on a rental. If they decide to stay, they always maintain an option to purchase the home from Acre without competition and can roll their appreciation towards this purchase.

Crawford said another scenario for good Acre candidates is when family dynamics are changing: it may be a divorce or an empty nest situation, or other major life change. However, Crawford also said he’d seen more specific situations where Acre was beneficial: such as, when a homeowner was moving from Cary to Apex so their daughter could attend a specific high school where rentals weren’t available.

“Their three- to four-year need for their daughter was not going to pan out for them financially,” he said. “For them, this was a much better deal. And they’ve already told us at the end of three and a half-ish years, they’ll cash out, take their value, and will buy a place in the mountains as empty nesters.”

In an environment with higher interest rates, Acre offers options for what Crawford refers to as the “golden handcuffs” scenario. “In this current environment — with interest rates and given the lockup that there is with homes where so many people are sitting on really, really low mortgages — they don’t want to leave,” he said.

Acre opens new opportunities to find a new home without abandoning that low-interest rate. “You can probably rent that home out at a profit and go get your primary residence with Acre. And in addition to not wanting to walk away from that low mortgage, you’re not getting penalized on a second mortgage because with Acre, you don’t have a loan,” he added.

For potential buyers who aren’t certain if a location or home is right for them, Acre provides them the luxury of a “try before you buy” situation. “They might solve for work, commute, and school and then get on the ground and realize, ‘We hate this neighborhood. But we really love the one next door,’” Crawford said. “Great. You didn’t make a bad decision. You can pick up and move.”

He said Acre has allowed these residents the flexibility to move to different neighborhoods after they realized there was a better option for them.  “That’s part of the whole idea here,” he said.

Ko said one of the best situations she’s seen benefit from Acre are small business owners and entrepreneurs. “We are eliminating so many of the pain points of the homebuying process for this audience,” she said, and for people who may not have typical tax documents to make a mortgage easy to obtain, Acre is the solution. “Unlike the typical mortgage lender approach, Acre has a proprietary approval method that gives us the freedom and accuracy to consider other types of financial contributions. This includes gift funds from friends or family contributing to the Acre value share, variable income from 1099 employees, and similar situations.” 

“It’s not debt,” Crawford said. “Small business owners don’t necessarily want their biggest liability or asset to be their home. They actually want it to be their business. With Acre, you always maintain the option to purchase the home, whether it’s when the interest rates are in a better environment or just you with your business are in a different place and you are prioritizing your finances differently.”

Acre requires 5 percent down on the home’s value to secure the home. From there, Acre works with your real estate agent to make a cash offer. “You’re not taking on all the stress of having to bid and win the home and stretch your budget. We absorb all of that, make it a much easier experience and give you something that’s still a great financial outcome,” Crawford said.

Next, buyers will work with Acre to determine a monthly payment, which includes taxes and insurance. “While they’re living in the home, if they have a maintenance issue, we cover the major end items of the home,” he explained, ”and while living in the home, the buyer earns appreciation, which is available to them when they choose to cash out.”

Finally, Ko explained that Acre may not be right for everyone, even though it solves numerous problems for many potential buyers. “Your financial decision-making on a home is so unique to you and everything includes tradeoffs,” she said. One of the benefits of Acre is the honesty of the team, she explained. “Pete and the team will tell you if a mortgage is a better option for your situation. It needs to be a good fit for the buyer and  a better financial outcome than a mortgage.”

Visit the Acre website to learn more about the company or to contact the team directly.

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