Tomo, and long-awaited Founded by former Zillow executives and raised $ 70 million in seed funding, the fintech startup has launched in three markets and serves homebuyers and agents with pre-approvals for mortgages within hours, ensuring timely closings and matching rates from competing lenders.
Tomo supporters, now open for business in Seattle, Dallas and Houston, say they will stand out from the competition by supporting a proprietary end-to-end digital mortgage and home buying platform with customer service teams operating in specific markets.
All too often, real estate agents feel like program coordinators and are forced to inspect all parties involved in a deal to take care of the details that could disrupt a closure, according to Tomo co-founder and CEO Greg Schwartz.
“We just want to close on time, every time,” Schwartz said. “This is the mandate of the company.”
If the appraisal is not received on time or the borrower’s documents are not reviewed until the day before the closure, Tomo will still receive funding, he said.
“It’s on us, not on realtors and not on consumers,” Schwartz said of the company’s commitment to a timely closure. If there are unfinished business that may make it difficult to sell a loan on the secondary market: “We will close it anyway – we are just a portfolio. [the loan]… We will bring this to our balance sheet. “
Tomo also says it will provide fully guaranteed mortgage pre-approval in a matter of hours and will meet the lowest rates offered by competing lenders in the markets it serves. The company says its largely in-house technology platform will help it deliver on those promises.
“The key to us is underwriting first, early underwriting, accurate underwriting and reducing labor costs associated with rush, error and last minute mistakes,” Schwartz said. “We think a lot of institutions are losing 10 to 15 basis points on nearly half of their loans because they are in a rush at the last minute.”
Through partnership with real estate coaching company Tom Ferry, Tomo will refer home buyers to real estate agents in other companies. According to Schwartz, unrepresented home buyers who pre-qualified with Tomo and choose to work with a partner agent will receive a 1/8-point cut in mortgage rates.
“We’re going to partner with the best agents in the country – those who invest in their careers, who know their communities, who are locally oriented,” Schwartz said of the non-exclusive partnership with Tom Ferry. “If we’re going to send our clients who come pre-approved and not affiliated with an agent, we want those people to be accountable to those clients, to us to make great transactions, because this is a two-way street. We need our partner agents to deliver truly innovative modern shopping experiences. The Ferry Community brings it. “
When asked how Tomo can be confident of achieving such ambitious goals at launch, Schwartz pointed to a “star team” in the mortgage industry, as well as key employees from other industries such as Shane Proch-Wilson. Before becoming Tomo’s senior vice president of mortgages in January, Proch-Wilson served three years as senior director of strategy for Southwest Airlines.
“We have to provide mortgages on time and safely, without drama,” Schwartz said. “Southwest has to deliver a plane, right? Everytime “.
It is no coincidence that Tomo is launching a market in what Schwartz has called “three of the toughest markets in the country” – Dallas, Houston and Seattle.
“We are falling into the belly of the real estate beast,” Schwartz said amid intense competition and difficult valuations in these markets. “We enter these markets in order to immediately enter the most difficult situations. And then we will be very careful with the expansion and will not enter new markets until we are ready. “
According to him, Schwartz and his co-founder Tomo Carey Armstrong (the company’s director of revenue) are former Zillow executives, and the other members of the tech team are also veterans of the real estate industry.
“Some of us have been involved in the real estate industry for over a decade, observing, observing, loving and disappointed with what we saw,” Schwartz said. “This is an opportunity for us to take that wonderful story that we had and bring it up from a different perspective. The lens is that we see buyers wanting to do a better real estate deal that is less emotionally disastrous than what’s happening right now – 15 offer situations, deferred appraisal processes, last-minute condition lists, delayed closings. loss of contracts. Realtors and their clients deserve the best. “
Investors seem to trust the business model and team behind Tomo, providing $ 70 million in seed funding led by Ribbit Capital, as well as DST Global, NFX, SVB Capital and Zigg Capital.
After closing $ 40 million initial round of funding“There was such interest from some really amazing investors that we welcomed additional investors, which helped us accelerate a bit,” Schwartz said. “An additional $ 30 million in the bank helps.”
Tomo will have many competitors in its quest to attract home buyers and real estate agents. The iBuyer business model, pioneered by companies such as Zillow, Offerpad and Opendoor, has gone beyond target audiences, which is not only targeting sellers who did not want to list their homes, and proptech now includes a cash and exchange services.
Schwartz said Tomo’s final guarantee will give homebuyers an edge, and he is skeptical that demand for cash supply services will be sustained. First, from the buyer’s point of view, “it is quite expensive,” as companies charge 1 to 4 percent for such services.
“This cash offer could be for proptech’s Groupon,” Schwartz said. “I don’t understand this. But if consumers want it, and listing agents appreciate it, we’ll do it. It is not so difficult. But we are pursuing a more fundamental requirement, which is to provide mortgages faster, cheaper, and better. And it’s really difficult. “
For similar reasons, Schwartz said Tomo would not offer refinancing.
“We’re going to keep an eye on what we believe will create sustainable value for us, our investors, our clients, and our partner agents, and excellence in refi is not among the top four or five things we think of. that should be at the global level, ”he said. “You have to choose who you are going to become and what you will be best at. We try to be the best when buying mortgages. ”