Real estate tech startup Properly has switched up its business model, moving away from one of its core value propositions: a purchase guarantee on customers’ homes.
A digital real estate brokerage, Properly differentiated itself in the Canadian market by promising listing homeowners a “near-instant offer” on their homes, with the option to sell directly to Properly. The company is now focused on its brokerage offering, along with a variety of home-buying services, including mortgages.
“At this time we have paused all new Sale Assurance offers given unprecedented volatility in the Canadian housing market.”
Properly attributes the decision to a volatile real estate market. “At this time we have paused all new Sale Assurance offers given unprecedented volatility in the Canadian housing market,” the company’s website reads.
The change comes less than six months after Properly raised $36 million CAD with plans to “double-down” on its home purchase product. However, that funding came with a pause to expansion plans across BC, Ontario, and Québec, as well as cuts to a “handful” of Properly’s staff. Three months later, the company announced that it had laid off an additional 71 employees, approximately 37 percent of the company.
At the time, Properly co-founder and CEO Anshul Ruparell attributed the cuts to real estate market conditions deteriorating “much faster than we anticipated,” adding that the company could not “predict when the market will recover.”
Ruparell declined an interview request for this story, but told BetaKit that “the decision to part ways with members of the Properly team was not a choice I made lightly.”
He added that Properly is “feeling both momentum and excitement” about its current strategy.
Founded in 2018, Properly aimed to simplify the process of buying and selling homes. The platform used machine learning to help homeowners determine what their home would sell for on the open market, with the option to sell directly to Properly and close quickly. In addition to its 90-day Sales Assurance, the company offered its users a price match guarantee, meaning if the home sold for more than Properly’s offer, 50 percent of the difference was refunded to the customer.
To make its home purchase guarantee possible, Properly secured $100 million CAD of debt financing in 2020. The startup is also backed by approximately $100 million CAD in equity financing, with investment from Parker89, Bain Capital Ventures, Prudence, FJ Labs, Golden Ventures, Intact Ventures, Max Ventures, AlleyCorp, Interplay, and Industry Ventures. A number of notable individuals have invested in Properly as well, including Wealthsimple’s Mike Katchen, Spencer Rascoff (co-founder and former CEO of Zillow), Eric Wu (CEO of Opendoor), and the Property Brothers.
Having since “paused” its home purchase guarantee, Properly now looks more like a typical digital real estate brokerage. According to its website, the company continues to employ its own real estate agents and offers online tools like listings and pricing estimate.
Adrian Schulz, a mortgage broker for Centum Financial Services with expertise in real estate tech, told BetaKit that models like the one Properly was focused on are predicated on markets where home valuations are on the upswing. With home prices steadily declining now, Schulz said it’s unsurprising that companies built on a home purchase guarantee model would have to adjust.
Properly has recently expanded beyond home buying and selling, and into the mortgage space. The move put it in direct competition with a plethora of Canadian FinTech companies looking to create online mortgage experiences, including the more-established Nesto and newcomers to the space like Neo Financial and Pine.
In Schulz’s estimation, the opportunity for a large number of digital real estate and mortgage brokers in Canada is limited given the country’s small population size.
As is the case for banking-focused FinTech companies, Schulz added that digital brokerage companies will likely have a hard time penetrating the market given that Canadian consumers lean towards borrowing from traditional banks. He argued that, as it stands, the majority of consumers tend to work with banks and credit unions over mortgage brokers.
For its part, Properly’s CEO said the company is “currently heads down mobilizing our go-forward strategy, and feeling both momentum and excitement. We’re not ready to share details just yet, but will be in a few months prior to launching some new innovations.”