I know of three major fintech players that devoted tens of millions into building out mortgage lending operations over the last four years.
And, all three are NO longer in business.
I know those companies intimately b/c my wife Heejin and I visited all three, and two of them actually came to us asking how to generate more purchase business.
Two of the companies (Sindeo and Clara) no longer exist, after burning through tens of millions of venture capital, and the third (SoFi) is only a lead gen company now (they no longer fund mortgages).
I used to worry about the onslaught of fintech but no longer do for a few reasons:
- It’s cheaper to buy software/technology from third party providers than it is to develop it. This is the biggest mistake lender and real estate firms make. Third party providers are spending tens of millions themselves to create viable tech solutions and they are slugging it out in the marketplace to make sure their offerings are the best. I have yet to see any firm create something internally that even comes close to what is available from third party providers.
- Buyers want people/trusted advisors to help them. No matter how smooth or slick technology is, buyers (and sellers) still want a trusted advisor to assist with what will be the biggest transaction of their lives. It turns out that people and relationships are still important 😊.
- Engineers/Developers not in the trenches. The tech firms use engineers and developers to create their systems. But b/c those people lack sufficient experience in the trenches, they often miss the mark.
- Technology still misses things that real people see. I blog about this frequently, but technology often misses major issues that cause transactions to blow up at the 11th hour. Alimony and child support continuity issues, losses from a side business, insufficient history of commission income, pending retirements and unexplained deposits are only a few examples of issues that technology often misses.
Tech lenders can garner refi business, but they can never seem to garner purchase business for the reasons discussed above.
ONE REASON TO FEAR TECH LENDERS & REAL ESTATE FIRMS
There is, however, one reason to still fear tech lenders and real estate firms: They are very good at generating leads, and they are going after all of our clients.
It is amazing to think about how many past clients and people from our networks we all lose to competitors simply b/c we are not staying in front of them. The data is stunning!
I will discuss the data and the solutions in tomorrow’s blog.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 310167
