Colorado Startup Wants To Make Homeownership More Affordable For All3 min read
Homeownership has long been the quintessential American dream, but it hasn’t always been the most affordable one. The average American has $38,000 of debt, not counting mortgages, which can make getting one of those elusive home loans practically impossible. Colorado-based startup BoardRE is here to make the impossible possible.
The basic idea of BoardRE is that the company provides cash for a home to give the buyer more leverage over the competition. Buyers who work with BoardRE will have to go through an approval process, but then the startup will supply the cash and assist them in finding homes they can afford.
The founders of BoardRE, Adam Pollack, Ian Perrex, and Nick Friedman, know how difficult it can be for younger people to purchase a home. Pollack and Friedman are both in their 20s and understand that without the cash incentive of a quick sale, a seller may not go with a younger buyer.
“Sellers prefer the speed and certainty of an all-cash deal. It can happen much quicker, and you can save money on the home as a buyer, and it’s just a much smoother process to buy home all cash,” said Friedman.
Pollack and Friedman view the current market as unfairly advantageous for the wealthy. In Colorado Springs, the median price of homes sold during this past May was $329,250, an increase of more than $1,000 from the month before. Anyone with bank accounts well-stocked with funds may be able to put up those hefty totals for a home upfront and snag the deal, but the average American doesn’t have that kind of cash on hand.
The minds behind BoardRE also believe that the achievement of simply buying a home doesn’t put the everyday American on an equal level with the rich. Pollack and Friedman stress the importance of opening up the best homes, neighborhoods, and school districts as possibilities for those who can’t pay up front. With Colorado ranked as the sixth-best state for homeowners in the country, Pollack and Friedman intend to fix the local real estate market so that hopeful homeowners can stay in the state.
“We really are coming from it as outsiders looking in. I wouldn’t say (the real estate market) is necessarily broken, but there are better ways that it could be done,” said Friedman. It’s possible the state will draw more homeowners in with more green energy tools. Taking a page from North Carolina’s book — ranked second in the nation for solar panel installation — could be an excellent strategy.
In the BoardRE model, the company will screen a potential buyer through their approval process and then tell them the price point they can afford. According to Pollack, they then work with buyers on the loan options available to them.
After settling on how much cash BoardRE will provide for a home, the buyer looks for their dream home with their real estate agent. The homebuyer and real estate agent still have control of the negotiations. Whether the buyer wants to nab an already rehabbed home, which will typically sell twice as fast as those that aren’t, or they want to tackle a fixer-upper, is completely up to them. BoardRE only steps into the process again once the buyer and real estate agent pick the home on which they want to put the cash offer.
BoardRE becomes the buyer once they provide the cash for the sale. They then go through a second closing in which the home is sold to the buyers themselves. BoardRE will sell the loan as well to a more traditional secondary lender after shopping for the best rates for the newly minted homeowners. Owners then get to tackle all of the joys and challenges of homeownership on their own, from undergoing a minor kitchen remodel and hopefully seeing the average ROI of 82.7% to adding personal touches of style so that friends and family can comfortably gather in the new home.
BoardRE has already closed three transactions so far with their model and has 10 more buyers in the pipeline of searching for a home. With these potential sales lined up, Pollack is hoping that over time BoardRE can prove itself as the new way to approach home buying. The company is only focused on sales in Colorado at the moment, but its founders say that they are already prepping themselves to move into more markets in the future.