Seventy million dollars in seed funding is a colossal investment for an unproven tech startup, even one that promises to completely disrupt a traditional, relatively low-margin industry like mortgages. But this is no ordinary mortgage startup. Venture capitalists, including Zillow founder Spencer Rascoff and Trulia co-founder Pete Flint, believes Tomo has the potential to overthrow the legion of lenders who have increased their market share, invested heavily in technology and reaped record profits in recent years.
Tomo, founded by former Zillow executives, is based on the premise that homebuyers should gain an edge, especially in a market largely defined by limited inventory and fierce bidding wars.
“The place you’ve seen the most innovation in the real estate industry over the past decade is what we call ‘search and find’. So put the listings online in a portal, ”said Carey Armstrong, who co-founded the company with Greg Schwartz and ran Premier Agent at the Seattle-based real estate tech giant. “Our job is to help you buy the home of your dreams, not just browse and look at pretty pictures.”
To provide this competitive advantage, Tomo claims to issue mortgage pre-approvals within hours – not days – and cut closing times to 21 days (the industry average is 47 days). The startup says it has also partnered with top local real estate agents who know the markets they serve.
“There is a hunger among millennials and young people who want to buy homes in a different way,” Armstrong said in an interview with RealTrends. “They are used to modern experiences with great service and a digital experience. This has not traditionally been available to them [when buying a house]. You work with a lot of different vendors who are all offline and don’t really coordinate with each other. Where we come in is to provide a one-stop-shop and as digital home buying service as you want, but there is always a human being available to advise you.
Tomo says its platform is different from its competitors, which appear to range from traditional mortgage companies and banks to iBuyer brokerages like Zillow, Redfin. For starters, he is not the source of mortgage refinancing. Tomo will only issue purchase mortgages, and he is specifically targeting areas where house prices are rising particularly rapidly and demand is high among millennials, who are generally disadvantaged in today’s housing market.
Its digital mortgage product focuses on third-party data, automation and API integrations, according to the company. Tomo says it will offer the lowest mortgage rates in the industry, matching the rates of its competitors. If an assessment doesn’t arrive on time or the closing documents miss the deadline, Tomo executives say they will always close on time.
Success on the buy side of the mortgage industry is strongly correlated with the ability to evolve a product and develop a sustainable pipeline with real estate agents. Some of the major US lenders, such as Rocket mortgage, United Wholesale Mortgages and loan deposit, have spent hundreds of millions of dollars developing technologies to make loans faster and make the home buying process easier for consumers. Tomo is also expected to overtake traditional banks and tech-focused companies like Better.com, which is also venture-backed and claims it will be worth $ 7.7 billion as a result of a more merger and acquisition. late this year.
Tomo has a great opportunity – Freddie mac expects purchases in 2021 and 2022 to approach around $ 3.6 trillion. And no mortgage lender has even a 10% overall market share (Rocket is the largest), so it is possible to enter a very fragmented market if they have the funds to compete.
And at first glance, Tomo will have the money. The $ 70 million seed round, the third in U.S. history, follows a $ 40 million seed round. Ribbit marquee led the last round and the other participants include World Daylight Saving Time, NFX, Capital SVB and Capital Zigg.
Tomo has already launched Tomo in Seattle, Dallas and Houston and plans to launch it in other hot markets later this year.
Tomo is a new mortgage platform backed by former Zillow executives Greg Schwartz and Carey Armstrong. The seed capital was raised by 10 investors of capital companies to obtain Tomo of the ground. Who according to Crunchbase, it is the third biggest round of funding in the history of the United States.
The idea behind Tomo is to help the buyer gain the upper hand when buying a home.
In an interview with Actual trendsformer Zillow executive Carey Armstrong said buying a home should never be a miserable and stressful experience.
“The place you’ve seen the most innovation in the real estate industry over the past decade is what we call ‘search and find’. So put ads online in a portal, ”she said. “Our job is to help you buy the home of your dreams, not just browse and look at pretty pictures.”
Instead of automated platforms, Armstrong mentioned that Tomo connect buyers with the best local agents who know the markets they serve.
“There is a hunger among millennials and young people who want to buy homes in a different way,” she said. “They are used to modern experiences with great service and a digital experience. This has not traditionally been available to them [when buying a house]. You work with a lot of different vendors who are all offline and don’t really coordinate with each other. Where we come in is to provide a one-stop-shop and as digital home buying service as you want, but there is always a human being available to advise you.
One of the company’s claims is that it is using data to trick buyers to close in three weeks.
According to ValuePenguin, the average closing time is 47 days for all types of loans. Tomo wants to reduce this time.
The goal is to get the buyer for the home they want as quickly as possible. The pre-approvals would be done in hours instead of days and guarantee the buyer a close on time.
There is a lot of opposition there. Perhaps to stand out, the company said there is no refinancing. Instead, its goal is to secure buyers with new mortgages.
For starters, former Zillow executives Armstrong and Schwartz launched Tomo in Seattle, Dallas and Houston. The plan is to target areas where house prices are rising and high demand is hurting millennials and first-time buyers.
It’s early. Tomo has its work cut out for it in a competitive group of other proven mortgage companies.