Over the past several years, fintechs have become a force of innovation within the real estate industry, opening new communications and sales channels to the diverse stakeholders in the residential and commercial property markets.
There is no tally on how many fintechs are currently operating – some are still in beta, others are slowly rolling out in selected markets and others are already building partnerships with financial to leverage a further expansion.
In this edition of Westfair’s “The Next Big Thing?” series, we consider 10 real estate-focused fintechs that are quietly changing how the real estate industry operates.
New York City-based fintech executive Vishal Garg created this company after an all-cash buyer snatched away his desired property while he was bogged down in a lethargic mortgage process. Today, Better.com digitizes the entire mortgage process while eliminating the need for commissions, fees and branch appointments. The company now operates in 44 states and the District of Columbia, and last month it was ranked by LinkedIn as the best startup of 2020, hiring more than 1,500 employees since March with plans for another 7,000 over the next 12 months.
San Francisco-based Divvy Homes provides a digital answer on the rent-to-own model in residential real estate by purchasing the homes selected by its clients and then becoming their landlord. The clients pay a 2% upfront fee and a portion of their monthly rent can be converted into a down payment if the client decides to go from tenant to homeowners. Divvy Homes is currently focused on eight markets – Atlanta, Cleveland, Dallas, Memphis, Phoenix, San Antonio, St. Louis and Tampa – the company stated that it purchased more than 900 homes during 2019 and is now receiving 10,000 applications a month.
This New York City fintech offers end-to-end, tech-enabled leasing solution that incentives departing tenants to provide earlier notice of moving out – the company says the average is 68 days pre-lease expiration – thus helping landlords reduce vacancies while giving apartment an earlier heads-up on units that will become available. The Doorkee system is designed to eliminates broker fees while helping the disparate stakeholders work together. Now being offered exclusively in New York City, the company plans to expand into other major metro areas in 2021 before a national rollout.
New York City’s Latchable Inc. is the parent company behind, Latch, a smart access system for multifamily developments. Residents in a Latch-secured building can use a smartphone, keycard or code to unlock their door, share temporary credentials with visitors and service providers, and receive unattended package delivery from major courier companies. Property managers can tap into this web-based platform to admit the right people, oversee staff and handle tenant lockouts. Last month, the company unveiled LatchOS, an upgrade to its proprietary technology that
integrates with property management software through automated syncs to increase time and cost efficiencies.
One of the emerging trends in commercial real estate investment involves tokenized properties, which brings blockchain technology into the investing picture. When a property is tokenized, an Ethereum-standard (ERC20) real estate token is created to represent property shares, and the total value of all generated tokens equals the total value of the securitized property. Tokenized investing is more prevalent overseas than in the U.S., and Hong Kong-based Liquefy gained attention last fall with its highly publicized $600 million tokenization of a luxury London hotel. The company already has powerful allies: it has financial backing from Dubai’s royal family and is registered as a Technology Partner in the Amazon Web Services Partner Network.
Another New York City endeavor, this fintech aims at the student housing market by connecting college students seeking off-campus apartments near some of the nation’s top schools. The LoftSmart platform includes 360 virtual tours for the apartment hunters, TransUnion credit scoring information on the students for the property owners, and the ability for both parties to chat online ahead of leasing, which can be arranged through online contract signing and payments. Online reviews of the properties also provide the students insight on the properties they are considering. The platform covers most of the country, although the Northeast is only currently represented by rental units around the University of Massachusetts.
This Boston-based company offers a platform for legally signing and notarizing documents online. Notarize, which promotes itself as the first U.S. company to facilitate fully online real estate closings, stated that its technology is now used by more than 3,000 title agents and has been responsible for enabling the purchase and sale of more than $30 billion in real estate. The Covid-19 pandemic has further fueled interest in the company, with CEO Pat Kinsel highlighting the company’s business “has skyrocketed more than 400% since March as businesses and consumers seek transaction liquidity in this new environment.”
San Francisco-based Opendoor pays between $150,000 and $500,000 in all-cash transactions on houses built after 1960. Sellers in nearly two-dozen markets are able to determine their closing timeline between 14 and 60 days. If any repairs or renovations are needed to bring a home up to market-standard conditions, Opendoor will request a credit and make them on the seller’s behalf. Opendoor is now in 21 markets, although it has yet to come into the Connecticut and New York markets.
New York City-headquartered fintech Ribbon provides homebuyers with an all-cash, guaranteed-to-close “Ribbon Offer” that can be presented to sellers. Qualified buyers are pre-approved for a purchase and home valuations are completed within 24 hours. If a homebuyer can’t close with a mortgage on time, Ribbon will buy and reserve the home on behalf of the homebuyer and lease it to them for up to six months. The company, which is currently in four states – Georgia, North Carolina, South Carolina and Tennessee – said that buyers saved an average of $10,000 in cash discounts and received a 100% on-time closing.
New York City-based Simplist launched in September 2019 and focuses on borrowers who are either self-employed or not part of the traditional workforce. This fintech’s proprietary technology is used to verify the applicants’ financial information, and qualified borrowers are matched with competitive rates from a list of 25 national lenders and regional and local banks. Simplist, which also offers access to refinancing options for existing homeowners, currently operates in the Colorado, Connecticut, Florida, New Jersey and Pennsylvania.