Firm: Countdown to Buy
CEO: Jim Hodson
Product: Online real estate marketplace
Going Virtual: Buyers and sellers agree on a price without face-to-face negotiation
An idea from former Deloitte exec Jim Hodson that's now helping lendersuse the Web to extricate troubled mortgages from their REO roster was hatched way back during the height of the real estate bubble, while he was passing a house in his car.
He drove past the house often, and found that one thing remained the same while one thing changed: the house was always for sale, and the listed realtor was always different.
"I figured there was a disconnect between the buyers and the seller of the property," says Hodson, the CEO of Countdown To Buy, a new online mortgage marketplace. That disconnect, whether it was about valuation or a communications glitch among parties, gave Hodson the idea to form an automated time sensitive sales process in which buyers and sellers come together in virtual marketplace.
Countdown To Buy, which launched in late 2009, uses patent-pending technology to match buyers and sellers in a real estate transaction through a time-limited process that reduces the property's listed price one percent each day over a price range that's pre-negotiated between Countdown To Buy and the seller. Once an offer matches or exceeds the listed price, the property goes into contract.
"We found a way to get buyers and sellers to the bottom line without human interaction. That accelerates the transaction time and everybody walks away happy," Hodson says of Countdown to Buy, which considers itself an alternative to traditional real estate brokers like Prudential, ReMax and Century 21 and real estate auction firms such as Williams and Williams, and Hudson & Marshall.
The firm takes a position that the real estate sales "system" is riddled with conflicted interests that hamper fair pricing and speed-agents may want to sell quickly, while sellers want a high price, for example. By removing that "human" element and making the sales process based on automatically triggered changes in offered prices, Countdown to Buy attempts to erase the impact these conflicted interests can have on negotiations.
Homebuyers also have access to independent property information including assessments, valuations, appraisals, contractor opinions, and other aggregated 3rd party content which is all posted online, and can additionally can view the actual demand for a property, such as the total number of buyers looking to purchase the home.
Hodson, whose background includes executive stints at Character Arts, an entertainment licensing company; and at Deloitte, where he held positions in finance, operations and IT departments, says Countdown To Buy is designed for all economic conditions. But it's launch in the era of bank REO and distressed properties is serendipitous.
In just a few months, the site's shown potential. A pilot of 11 REO properties for three financial institutions averaged 14 days from list to contract at an average price of 98 percent of fair market value, compared to industry norms which range from 60 to 90 days and about 90 percent of fair market value according to most estimates.
"It's an unusual model because of the anonymity factor," says Craig Focardi, a senior research director at TowerGroup, who also says he likes the speed that the marketplace will introduce.
He also says the site's challenges include generating an active online marketplace. "One of the problems in the market today is sellers not wanting to lower their price," Focardi says, adding sellers may be reluctant to relinquish control over price negotiation.
Countdown to Buy, which markets the product to financial institutions based on access to qualified borrowers and the listing-to-contract speed, says three financial institutions are currently under master service agreements and are piloting the service, while engagements with other firms are pending the results of the pilots.