Originally Posted on St. Louis Post Dispatch
HomeTraq believes its on-demand home showing app can help banks and mortgage lenders reduce their customer mortgage loss that stems from real estate agent referrals to the competition.
Editor's note: Welcome to the first installment of The Pitch, a new online feature examining emerging St. Louis-area startups. The idea is to look not only at a startup's business plan and revenue strategy, but how and why it was created, and how it's selling itself to potential investors. Not all startups succeed, so this isn't an attempt to pick winners. Instead, we hope to provide a window into how emerging entrepreneurs transform an idea or problem into a business strategy, while also shining a light on the veracity of St. Louis' emerging startup scene.
Companies interested in being featured in The Pitch can reach out to Business Journal technology reporter Nathan Rubbelke at nrubbelke@bizjournals.com. - Erik Siemers, editor
Banks looking to capture potential mortgage lending prospects share a common problem: in the home buying process, finding a lender almost always comes secondary to finding the home itself.
Because of that, many banks never have a chance to make a pitch. "The reason that happens is because the custumer goes shopping first, meets a real estate agent and that agent refers them to the competition before the bank even knows their customer is shopping,” said Mark Gorman, a veteran of the mortgage and banking industry. To provide a remedy to banks, Gorman and partner Brett O'Daniell launched St. Louis startup HomeTraq, a software platform designed to help banks reduce their mortgage loss rate while also easing the home search for buyers. The two co-founders bring more than 45 years of mortgage, banking and real estate experience to their startup. Gorman was founder and president Gorman & Gorman Home Loans, which Enterprise Bank & Trust acquired in 2013. Gorman and O’Daniell worked together at Gorman & Gorman. HomeTraq was a member of St. Louis accelerator Capital Innovators’ spring 2019 cohort. It is also a Mock Angels graduate of St. Louis’ IT Entrepreneur Network.
The technology: HomeTraq, according to Gorman, works similar to the way a consumer would use Uber or Lyft to quickly find a ride. The software is designed to help users find agents to schedule a home showing within an average of three to five minutes. Showings are on the buyers terms, with no commitment or solicitation from the agents showing the house. The company is working with partnering banks and mortgage lenders to distribute the app to their customers, allowing them to engage with potential homeowners earlier in the transaction and reduce that 93% customer mortgage loss and churn due to agent referrals to the competition.
How it makes money: HomeTraq receives a 25% referral fee on the agents' buy-side commission, which equals $1,350 in revenue on an average $200,000 purchase transaction. Gorman and O'Daniell said the company is revenue-positive, and its technology is live and scalable.
Size of the market: The market is, essentially, all home sales, but HomeTraq is particularly eyeing the younger generation, especially millennials and the younger end of the GenX generation that now account for half of all home sales each year. HomeTraq’s growth plans are based on its distribution model with lender partners. The company said around 7-9% of every bank's customer base buys a home each year, but the average bank captures less than 1⁄2% of the mortgage opportunities from those customers. The company said its early traction shows it can double the average bank’s mortgage production from its own customer base.
Competitive advantage: HomeTraq says it stands out because it empowers lenders to market an on-demand real estate tool to existing clients who are home shopping, as well as market to new clients. Lenders distribute the app to their consumers as a new way to immediately tour homes, while protecting the lender against referrals to the competition from the agents performing the home showing.
Business it could disrupt: The concept is more of a reaction to an already disrupted industry. Websites like Zillow and Redfin have given homebuyers the ability to shop for, and even buy, homes online. And the No. 1 mortgage lender, Quicken Loans, also operates primarily online; it doesn't have offices or loan officers in Missouri. HomeTraq is essentially providing banks and other mortgage lenders a home-buying tool they can provide to their customers that puts them in that customer's home buying conversation.
Managers and their background: Mark Gorman founded, owned and generated successful exits from mortgage, real estate and title companies. Brett O’Daniell has 18 years experience in real estate and mortgage sales and systems.
Advisors: Bill Donius, Phil Bracken, Dan Lauer
Capital raised: $500,000
Capital sought: $1 million
Ideal exit: 3-5 years
CLOSER LOOK
Company name: HomeTraq
Year founded: 2017
Co-Founders: Mark Gorman, Brett O’Daniell Employees: 10+ local independent contractors
Website: www.HomeTraq.com
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