Business

More millennial homebuyers? Digital brokerage bets on it

A proposal from the California Association of Realtors could encourage older homeowners to sell. (Dreamstime)
A proposal from the California Association of Realtors could encourage older homeowners to sell. (Dreamstime)

SAN DIEGO — The founder of a fast-growing mortgage lender is launching a tech startup in San Diego, hoping to help millennials and other tech-savvy buyers find houses within their budgets.

The company, called Greendoor, is building a suite of online tools to help buyers search for houses based on the monthly payment — one that includes all the costs often hidden from users searching online. Greendoor is also building an algorithm that helps buyers determine which houses or condos are the best deals on the market.

The startup is co-founded by Bill Lyons, the CEO and founder of Griffin Funding, the fastest growing mortgage lender in the country during 2017, according to Inc. 500. The company’s other co-founder is Teevan McManus, who’s heading up day-to-day operations as president.

McManus said buyers often don’t realize what their all-in monthly costs will be when searching for homes or condos to buy, forgetting to add in things like mortgage insurance and taxes. While popular tools like Redfin include payment calculators, buyers still can’t search by monthly affordability. There’s also no tool to determine if the property is a good investment or not.

The buyers have the upper hand

McManus and Lyons said they’re honing in on the buyers, not the sellers — which sets them apart from other real estate technology tools.

“The timing could not be more perfect for our launch,” Lyons said. “The market is becoming a buyer’s market. However, from our research, we’ve found minimal tools that serve the needs of today’s buyer, especially the millennial demographic that is starting to drive much of the economy.”

Advanced search tools are increasingly in demand for home buyers of all ages, but especially the younger ones. Buyers aged 36 and below now represent the biggest chunk of home buyers, making up 34 percent of all purchases last year, according to the National Association of Realtors. As this tech-savvy generation gets older, Lyons thinks they’ll demand more robust technology for their house hunt, especially considering nearly all (99 percent) of millennials start their house hunt online.

Greendoor makes money as a traditional real estate brokerage would. Just like Redfin or Coldwell Banker, Greendoor employs real estate agents. They’re also partnered with Griffin Funding, Lyons’ other venture, acting as a funnel for new loans, if the buyer chooses to go that route. Greendoor even offers to pay the buyer’s first mortgage payment if they get pre-approved for a Griffin Funding loan.

“Proptech” booms in the startup world

Greendoor is part of a wave of new technology companies that emerged in recent years to modernize the process of buying and selling. For the past decade, emerging tech startups that have real estate products and services have moved quickly, forcing traditional real estate firms to rethink their core business models and embrace digital first innovations.

ARTICLE CONTINUES BELOW ADVERTISEMENT

The real estate tech industry, also called “proptech,” has attracted the eyes of investors worldwide, capturing a huge chunk of venture capital dollars invested last year. Global VC investments in proptech startups catapulted in 2017, with $12.6 billion invested in 347 deals. That’s a 92 percent increase in proptech compared to the year prior, marking it the largest fiscal year in real estate tech history.

San Diego has seen a small collection of such proptech startups, including digital mortgage startup Approved, which was acquired by Credit Karma in 2018. Greendoor’s Lyon was an adviser to Approved up until it’s acquisition.

Lyon has a long history in real estate. Besides being the founder and CEO of Griffin Funding, he’s also previously launched Revestor, an online tool for real estate investors. That site, launched in 2012, has about 50,000 users locally.

Greendoor is also only focused on the local market, to start. In the future, the company envisions a fuller suite of tech tools for the buyer, including ways to keep track of documents, appointments, and keeping tabs on timeline items.

This digital-first approach may reflect the future for all real estate agencies, as the business adapts to the modern era.

“Real estate has been ripe for change for a long time,” McManus said. “The days when you would walk into a real estate brokerage and ask an agent to show you around are over. A veil has been lifted, and all data for properties on the market are available online through platforms like Greendoor, Redfin, and Trulia. Now, the next step in the process is adding transparency for the buyer, and that’s what we’re trying to do.”

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.

CONTINUE READING

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.