This fall marked the ten-year anniversary of the implosion in the housing market. If you weren’t old enough to be a homeowner then, you should know that the Great Recession really, really wasn’t a fun time to live through.
Not only did people lose their homes, many others lost their jobs, and the recovery that followed was weak, long, and in some parts of the country remains incomplete.
The reasons for the collapse in residential real estate were complex. Low interest rates, unscrupulous mortgage brokers, and complex financial instruments that incentivized lenders to sell loans almost the moment the money was lent helped create the housing bubble.
However, one of the most devastating aspects for many borrowers was the fact that the terms of their loan sometimes came as a surprise. Adjustable mortgage rates and balloon payments that buyers were often only dimly aware of (at best) led thousands of borrowers to walk away from their homes.
In the decade since the crash, some things have changed. You can’t walk into a lender with no income and no job and get a loan, like you could at the height of the bubble. You actually have to prove you can afford to pay back your loan, which is a good thing.
No one wants a repeat of the era captured in The Big Short, where strippers juggled five mortgages.
That said, the process of buying a home still lacks transparency. Once a buyer finds a home he or she wants (which 95% of the time, occurs online), the entire transaction goes dark. Negotiations occur offline, and the sale ends with a mountain of paperwork getting initialed and signed right before the keys get turned over.
Digital platforms built on a principle of transparency (think Uber and AirbBnbB) and have already started to revolutionize transportation and hospitality, yet one of the cornerstones of the American economy—residential real estate—remains largely opaque and hard to navigate, even for informed consumers.
That could all change if one St. Louis area startup succeeds.
Transactly, housed in OPO Startups in St. Charles, Missouri, is a digital platform that allows buyers and sellers to collaborate and negotiate during the purchase process. The startup already has a strong pedigree in the residential real estate market. Founder and CEO Bryan Bowles is also the founder and former president of Worth Clark Realty, a brokerage with offices in four cities (St. Louis, Kansas City, Chicago, and Denver) that managed to land on the Inc. 500 in 2016 and 2017.
Bowles has stepped away from his position at Worth Clark to focus solely on developing Transactly, and with more than 66% of first-time homebuyers being millennials, the team at Transactly believes the addressable market for the digital platform is huge.
“Purchasing a home is a frustrating process, and as more millennials enter the housing market, they are going to be surprised to see how antiquated the process for buying a home is,” Bowles said. “It just isn’t a customer-friendly transaction, and it looks nothing like nearly every other transaction they’ll be a part of. We believe there is a significant demand for Transactly, and that buyers will flock to agents who can provide a technology-based, more transparent process when purchasing a home.”
Had it been around 10 years ago, a platform like Transactly would obviously not have prevented the housing market from crashing. However, some buyers mightmay have had a better understanding of exactly what they were getting into. And when you’re talking about a market as important to the economy as housing, we are all better off with a properly functioning market that incorporates as much transparency as possible.
Those of us who didn’t lose our home but still saw our job opportunities decrease or our salaries stagnate during the Great Recession should be rooting for a real estate market that’s fair, transparent, and functioning well.
Personally, I also believe the best place to build a platform that will revolutionize real estate transactions is right here on the Silicon Prairie, where most homes are places we’ll live for decades, not investment opportunities. Families who are making the most significant financial decision and largest purchase they’ll ever make deserve a process that’s fair and transparent.
If Transactly succeeds, that’s exactly what they’ll get.