Leaders from Better, Point and EasyKnock said that consumers are becoming increasingly curious about alternative financing options — but they still need agents to help guide them.
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As owning a home has become more expensive in the last year in a higher mortgage rate environment, proptech companies that provide alternatives to traditional financing have seen an increase in demand from consumers, leaders from Better, Point and EasyKnock told Inman Connect New York attendees during a session entitled “How Proptech is Transforming the Equity and Rental Game.”
Since low inventory has also been a major barrier to homebuyers and sellers looking to move, quick solutions that can help a buyer move fast, like Better’s One Day Mortgage, have also become very attractive.
Shortly after homeowners start thinking about going on the market, they seek to get a pre-approval — often before they even choose an agent — Vishal Garg of Better said, which has been a big reversal from historic trends.
“Financing is the new top-of-funnel,” Clelia Peters, the session’s moderator, noted.
Eoin Matthews’ customers at Point, which provides a third-party finance option for homeowners by selling shares of their home out to other entities, avoid monthly payments altogether and, therefore, the expense of those higher mortgage rates. The company has seen a surge in demand over the last roughly 20 months in response to mortgage rates.
In Point’s case, agents often act as consultants for consumers whose interest is piqued by the company’s business model.
“Where [agents] can act as consultants in the community is pretty important,” Matthews said.
Jarred Kessler of EasyKnock said the same goes for his company, which provides solutions like sale leasebacks and cash offers that help consumers who are asset rich but may not be aware of their buying options.
“Agents can serve as a concierge by engaging with these products,” Kessler said.
Today, curious consumers often drive adoption of these types of proptech offerings, but it wasn’t always that way, Matthews noted. One of Point’s first customers about nine years ago had a disabled son who needed a home to live in, but couldn’t afford a traditional mortgage. An agent brought that customer to Point. Now, it’s typically the consumer who learns about Point first and goes to their agent to consult how it works. Garg and Kessler said the same goes for their companies’ products.
“The role is being reversed now,” Matthews said. “The consumers will have found the information online and now ask the agent what they think.”
Kessler said that about 80 percent of people who visit EasyKnock are simply curious about the platform.
“Right now, we’re entering a period where people want to embrace technology and understand the offerings out there,” he said.
The proptech leaders also shared a few predictions about how financing might look in the next two to three years.
“I think you have tens of millions of people who want to buy a home and the first place they’re going is to get a pre-approval,” Garg said. “That number is only going to increase because home prices are not forecasted to go down, so affordability is going to be the biggest issue,” and homebuyers will want to jump on opportunities to save where they can.
Matthews added that private companies, because banks are not innovating quickly enough, will be working to solve those finance problems for the consumer.
Kessler agreed that more finance alternatives would likely emerge.
“I think the future is, you’re going to see alternatives to traditional mortgages,” Kessler said. “I think for agents, mortgage lenders and others, it’s going to be much easier to engage and present those opportunities. People are probably going to want to text you more than talk to you — that’s the bad news — but the good news is, people are going to be more interested in these products.”
Email Lillian Dickerson