RetroRate, a startup focused on making assumable mortgages easier to find and evaluate, has raised $2.2 million in seed funding.
The platform allows real estate agents to find assumable loans through MLS data and guides them through a complex approval and closing.
By streamlining this process, RetroRate aims to make assumable mortgages more accessible and actionable, said CEO Andy Taylor, who previously served as director of product at Redfin from 2009 to 2015.
“There is enough of this (assumable loan) volume out there, and we really proved that to ourselves by pulling this data together,” he said. “What we’re trying to do is basically build an assumable loan tool set and process automation around this old, archaic process that no one seems to know how to do anymore.
“The goal is, ‘Can we make assumable just like other financing types?’”
The funding round was led by Swiss Ventures, with participation from Eniac, Cooley Ventures, Keshif Ventures, Interlock Capital, Launch Factory and ArkusNexus.
Bringing back a ‘lost art’
Assumable mortgages — where a buyer can take over the seller’s existing mortgage, often at a lower interest rate — were more common decades ago but have since fallen out of the mainstream. RetroRate aims to change that.
“It’s a lost art that hasn’t been popular since 1984, thus the name RetroRate, right? It’s, ‘You don’t want just like today’s rate, you want yesterday’s rate,’” Taylor said.
With mortgage rates near their highest levels in two decades, the majority of homeowners are still locked into rates below 4%. Roughly 22% of those loans are assumable — creating a large but underused opportunity in the housing market, according to RetroRate.
“We’re trying to build tools for consumers and agents alike,” Taylor said. “I’ve always taken a very agent-centric approach, so I wanted to build tools that will let any real estate agent, loan officer, or title or escrow officer be an assumable expert.”
RetroRate’s core offering is a proprietary database of assumable loans, overlaid with a search portal for real estate agents.
“There’s a SaaS component where, basically, agents can log in and they’ve got a search portal that allows them to find homes that have assumable loans on them, what the terms are and how good those terms are,” Taylor said.
To build its data engine, RetroRate pulls from MLS listings, county property records and historic interest rate data.
“We’ve kind of cleaned (data) up, because it’s been touched by a thousand different agents, a thousand different county clerks and so on,” Taylor said. “They’ve all manually typed it in at some point. We score them using artificial intelligence against the prime rate, as the prime rate is changing every day.”
RetroRate provides widgets that agents can embed in their websites.
“If a user is looking at an agent’s website, and they’re looking at a listing details page and it says 123 Main Street, and that home happens to have an assumable loan on it, well then, we’ll run the same side-by-side comparison that the agent would have seen,” he said. “There’s a big old button that says, ‘Hey, I want to save $1,500 a month on this home.’”
The widget strategy also includes access to an application programming interface (API).
“It’s good for agents who don’t necessarily have a technical team on their on their back end, and for the larger sophisticated folks, like a Compass or a Redfin or a Zillow,” Taylor added.
Low awareness, high potential
“(Agents) can be kind of a hero for their seller, and it also gives them sort of pricing guidance and how to talk about these things,” Taylor said. “Nobody seems to know what (assumable loans) are. Even agents don’t seem to know what these are.”
“Listing agents are literally spending all their time talking about marble countertops and stainless steel appliances, and they’re not talking about an assumable loan.”
Taylor said RetroRate’s tools are especially useful for properties that have been sitting on the market for a while.
“It’s been fantastic for listing agents that are looking for ways of regenerating interest for those stale listings,” he said. “For buyers, because they’re basically able to regain their purchase power, and sellers are able to sell their homes with more people walking down the street at the open houses.”
Scaling and future plans
RetroRate is currently operating in California, Oregon, Idaho, Arizona, Colorado, Texas, Louisiana, Alabama, Florida and North Carolina. RetroRate Concierge Service — which helps buyers, sellers and agents fulfill a transaction — is open for business nationwide.
“We can light up a state very quickly. I mean, it takes us about an hour to process the data, get it onboarded,” Taylor said. “We’re just trying to be smart about how we’re spending the money. The ($2.2 seed round) is going to keep the lights on for a while, but we want to be smart about it, and we want to grow in the ways that (demand) dictates.”
“We’re going to have some announcements here soon on some really key partnerships that actually just came in this morning.”
First Time Home Buyer FAQs - Via HousingWire.com
