When Michelle Betts first heard her clients planned to go through an upstart called BoardRE for their home loan, the real estate broker wasn’t sold.
“I actually tried to convince my clients to use a couple of other lenders I had worked with before,” the seven-year veteran with Denver’s Your Castle Real Estate said. “I had never heard of anything like that, and I didn’t want to put my clients’ money at risk.”
Betts isn’t alone there. Few people outside of Silicon Valley have heard of Board. At least not yet. The venture-backed startup launched this spring. Denver is its debut market.
What sets Board apart from traditional loan originators? It turns every offer into an all-cash offer by using a stockpile of backer cash to buy homes on behalf of approved borrowers. Board buys the home, then closes the loan — usually within two weeks, according to the company’s marketing materials — and transfers ownership to new owners for the exact same price. There are no added service costs to buyers, sellers or real estate agents, according to the company. Board’s earnings come from loan originator fees.
The key to the business model is the belief that all-cash offers close deals faster and smoother than loan-contingent deals. By making even a buyer with 5 percent or less to put down an all-cash contender, Board aims to level the homebuying playing field in competitive markets like Denver.
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“The endgame here is a cash-only real estate future where everyone has an equal shot at their dream home,” company co-founder and CEO Adam Pollack said.
Board’s roots date back to 2014 when Pollack met co-founder Nick Friedman when the two were freshman at Williams College in Massachusetts. Pollack later transferred to Harvard but the two, both 23, eventually dropped out of school to work on an idea that became Board. They started in Denver last year, trying to work with existing banks to create an all-cash offer option but nothing panned out.
“You can’t count on the traditional players to build something outside of their realm,” said Friedman, the company’s chief operating officer. “That’s what we found.”
So the duo and a third co-founder, Ian Perrex, went west, joining the winter cohort of storied Silicon Valley accelerator Y Combinator in January. That program connected them to mentors and capital. Board recently closed on a $7 million seed funding round that saw contributions from big-time investors including the 1517 Fund, backed by tech billionaire Peter Thiel.
The three co-founders of BoardRE.. From left Adam Pollack, Ian Perrex and Nick Friedman.
So far, Board has closed two deals, including the one where Betts represented the buyers. Pollack and Friedman say their goal is to build strong relationships with real estate agents in the market.
“Right now we are laser-focused on the Denver market. If we do our jobs here and execute here, there are going to be buyers everywhere,” said Pollack.
Betts, for her skepticism, said it was a good experience working with the company.
“They were no surprises or out-of-the-ordinary issues that arose from working with them except my clients had the benefits of being cash buyers, which is really helpful in Denver,” Betts said “That’s something that a lot of people are really enticed by.”
Denver has been a target for many companies aimed at upsetting the real estate industry apple cart through innovative strategies. Opendoor and Zillow Offers both hit the market last year. They also make cash offers but aren’t making purchases on behalf of specific buyers, instead sprucing up homes for resale.
After setting records for lowest inventory and fewest days on the market in recent years, the Denver-metro area’s housing market finally appears to be cooling in 2019. Jill Schafer, chairwoman of the Denver Metro Association of Realtors, said that she advises her clients who are selling to weigh their options carefully.
“I think some sellers have been burned” by accepting the first all-cash offer they receive, she said. “I think as agents, we’re all getting savvier and understand that we have to look at every aspect of an offer beyond if its just cash or not to make sure it works for clients.”