Online mort­gage ad­viser wants to en­ter mar­ket

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This week, the founder of an online mort­gage ad­viser seeks ad­vice on how to break into the D.C. mar­ket from our ex­perts at the Ding­man Cen­ter for Entrepreneurship at the Univer­sity of Mary­land’s Robert H. Smith School of Busi­ness.

— Dan Bey­ers

The en­tre­pre­neur: Ori Zo­har got a taste for entrepreneurship in col­lege, buy­ing used caps and gowns from grad­u­ates and selling them to the next year’s crop of se­niors. Af­ter he grad­u­ated, he de­cided not to strike out as a “rogue en­tre­pre­neur,” but in­stead to hone his ex­per­tise in mar­ket­ing. Zo­har moved to New York to work at the big advertising agen­cies. Af­ter nearly seven years in dif­fer­ent roles, he wanted to fo­cus his skills on his true pas­sion: start-ups.

Through his net­work, Zo­har con­nected with co-founder Nick Sta­mos and the in­vestors that would give them the fund­ing to launch Sin­deo, a startup set on dis­rupt­ing the mort­gage in­dus­try.

The pitch, from Zo­har, Sin­deo’s co-founder and se­nior vice pres­i­dent of dig­i­tal mar­ket­ing: “A mort­gage is one of the big­gest and most mean­ing­ful fi­nan­cial trans­ac­tions peo­ple make in their lives, yet it still feels like book­ing a flight through a travel agent in 1990. It’s very re­la­tion­ship-based. It’s very low-tech. It’s very frag­mented, and the terms and process are not ac­ces­si­ble to con­sumers.

“We cre­ated Sin­deo— in Greek it means ‘ to con­nect’ — be­cause we want to be the best at con­nect­ing bor­row­ers with the right loans for them. We are a mar­ket­place of 40 lenders of­fer­ing more than 1,000 types of mort­gages. Bor­row­ers work with one of our un­bi­ased mort­gage ad­vis­ers: We do the shop­ping and com­par­isons, then we guide bor­row­ers all the way through clos­ing and fund­ing of their loan.

“Our whole phi­los­o­phy is about sim­pli­fy­ing the mort­gage process and re­mov­ing the bias. Our ad­vis­ers are not in­cen­tivized to rec­om­mend one mort­gage over another. Their com­pen­sa­tion plans are based on cus­tomer sat­is­fac­tion — they get a salary, ben­e­fits, low flat fee for ev­ery loan that they close and bonuses based on cus­tomer sat­is­fac­tion. We are try­ing to change how com­pen­sa­tion drives be­hav­ior and change the way that re­la­tion­ship is built.

“We just got li­censed in Washington. In the next few years we hope to be a na­tional com­pany, syn­ony­mous with pro­vid­ing a com­pre­hen­sive ser­vice and sup­port through­out the home­buy­ing process — from plan­ning to shop­ping to qual­i­fy­ing to clos­ing their loan.

“Right now we have mort­gage ad­vis­ers based out of San Fran­cisco and li­censed in D.C. that can orig­i­nate loans there, but we hope to open a lo­cal of­fice soon.

“Sites like Bankrate and Lend­ing Tree and Tru­lia are just help­ing bor­row­ers find the right bank; they aren’t help­ing peo­ple fig­ure out the right type of loan in the rig­or­ous way that we are do­ing, walk­ing bor­row­ers through­out the process us­ing tools that we have de­vel­oped to trans­form it into a much more per­son­al­ized ex­pe­ri­ence. We fig­ure out what type of bor­rower you are and which type of mort­gage you need, based on ser­vice, ca­pa­bil­i­ties and loan types. Then we shop our net­work and show you the dif­fer­ent ways you can struc­ture your loan, with all costs and fees clearly ex­plained. We fo­cus on con­nect­ing bor­row­ers with the right loan, which could save them sig­nif­i­cantly more money.

“Our fo­cus is on mil­len­ni­als, a new gen­er­a­tion of home buy­ers who are con­sid­er­ing the best way

to ap­proach this im­por­tant de­ci­sion. There is a mean­ing­ful shift as all of these dig­i­tal na­tives be­gin look­ing for their first home.

“How do we scale and in­tro­duce our­selves into new­mar­kets? We need to roll out the red car­pet be­cause we have very lim­ited aware­ness in D.C. What is the most ef­fi­cient way to grow our pres­ence quickly and cheaply in a mar­ket where there are a lot of big play­ers with big mar­ket­ing bud­gets?”

The ad­vice, from Brice Leconte, en­tre­pre­neur-in-res­i­dence at the Ding­man Cen­ter for Entrepreneurship and founder of iUnit, a devel­oper of “smart” energy-ef­fi­cient, so­cially con­nected apart­ments:

“The real es­tate in­dus­try is ripe for dis­rup­tion, but it is also an en­trenched in­dus­try. (I know it well; my cur­rent start-up is in the real es­tate space.)

“The mort­gage in­dus­try is such a big in­dus­try that it’s dif­fi­cult to go af­ter the whole in­dus­try at once. Gain trac­tion by pin­point­ing a niche that will help you scale. Iden­tify one or two types of loan pro­grams that re­quire more hand-hold­ing for the bor­rower, hence cre­at­ing a big­ger pain point and greater need for your ser­vices. It might not be the niche you ini­tially ex­pect. Ex­plore the vet­er­ans mar­ket, par­tic­u­larly in the D.C. re­gion. Try to get as much trac­tion pos­si­ble for the type of loan you fo­cus on, and then you can grow out of that. “Mil­len­ni­als will even­tu­ally be a huge mar­ket of home buy­ers, but they aren’t there yet. They are still mostly renters, so they won’t be the ones to help you scale now. In­stead, fo­cus on the 35-to-45 age group, who are buy­ing homes and are still In­ter­net-savvy enough to find you.

“Another word of cau­tion: Real es­tate is def­i­nitely one of the in­dus­tries with the high­est cus­tomer ac­qui­si­tion costs. You need to fig­ure out those costs. Con­tact the mort­gage as­so­ci­a­tions. You have to be sure that you have that priced prop­erly in your busi­ness model.”

The re­ac­tion, from Zo­har: “Ac­qui­si­tion costs and en­trenched re­la­tion­ships are def­i­nitely some of the big­gest chal­lenges we have. It’s a great idea to make our ar­rival in a new mar­ket more man­age­able by fo­cus­ing more nar­rowly on a few groups that would get the big­gest ben­e­fit from our ser­vice, rather than try­ing to be ev­ery­thing to ev­ery­one. As we see trac­tion with those groups, we can broaden our fo­cus and our cov­er­age.

“Low­er­ing our ac­qui­si­tion costs through part­ner­ships is an an­gle that we’ve seen some early suc­cess in Cal­i­for­nia, and given how lo­cally fo­cused real es­tate is, we will iden­tify the most ac­tive ones in our na­tion’s cap­i­tal.”

Ori Zo­har

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