Market Problem:
In the residential real estate market, there is a market inefficiency that makes existing homeowners less attractive buyers in a competitive seller’s market. Conventional loans require a payoff of your current mortgage before you can close on your new home making you a less attractive contingent buyer.
As a contingent buyer, selling your home is your only option, but lining up two complicated, large financial transactions that rely upon multiple parties makes the entire real estate market less efficient.
Who’s it for:
Homeowners looking to upgrade, downsize, or reduce stress in their next move and the real estate agents that advise them
What we did:
We created and launched a private loan that allowed the home buyer to show their current home as free and clear of financing. This removed the contingency from their new home purchase allowing them to get the best financing possible and making them essentially a cash buyer.
To accomplish this new loan product, we developed relationships with a local bank to back our origination and gained approval from the major home mortgage wholesalers. We then went to market by working directly with real estate agents in the Minneapolis/St Paul metro area with a partnership strategy that provided them more flexibility for their clients.
We iterated these loans to allow for less risky transactions for our funding sources and simplify them for the borrower. This led to a significant online presence and sales collateral that positioned our unique differentiators for both the borrower and real estate agents. The loan initiation process was automated across systems to reduce operational labor.
Success metrics:
- +500 loans initiated in a 2-year period
- +150% growth in loan volume generated YOY
- Less than 1% breakage rate