Toronto-based proptech startup Properly has launched a new service allowing users to buy a new home using their current home’s equity, before having to list it. The startup claims this new service is Canada’s only way to buy using a current home’s equity, before listing it.
Properly’s new service allows customers to use the equity in their current home to finance a new home with a guaranteed sale.
Founded in 2018, Properly aims to quash issues typically associated with a home sale, like untimely house showings and expensive repairs. The platform uses 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. After launching in Calgary last year, Properly raised a $22 million Series A financing round in August 2019.
Previously, Properly allowed users to sell their home directly to the startup instead of listing a home on the market. This new service, currently available in Toronto, gives customers the ability to buy their next home by unlocking the equity in their old home before having to list that home, with a sale guaranteed by Properly.
“What we wanted to offer our customers is the ability to have the confidence necessary to make an offer when they see the home they love hit the market, but be in a position to have their risk substantially reduced, because Properly is supporting them with this guaranteed backup offer,” Properly CEO and co-founder Anshul Ruparell told BetaKit.
As part of the new home-buying service, Properly has partnered with CIBC to provide the startup’s customers with expedited mortgage approvals, competitive rates, and advice on financing, as they decide where to get their mortgage for their next home. Customers can still opt to go through other mortgage providers should they wish.
Toronto’s real estate market has shown extreme volatility during the COVID-19 pandemic. The Toronto Regional Real Estate Board reported sales volumes fell by 63 percent and average home prices declined by 11 percent from March to April.
Ruparell said these high levels of volatility in the real estate market caused by the COVID-19 pandemic is leaving many prospective buyers apprehensive about taking on risk. The CEO noted that Properly’s new service is intended to minimize that risk.
Properly’s new service for homebuyers allows customers to finance their new home with a guaranteed sale, meaning that if the previous home does not sell within three months, Properly will buy the home at the backup offer price it provides as part of its standard offering.
Although based in Toronto, Properly has, until now, only operated in Ottawa and Calgary. With the launch of this new service, Properly will now serve customers in Toronto, with the goal of eventually serving every major Canadian city.
“[Toronto] is a very diverse city with a very expansive market, where the needs of the customer in, let’s say, Liberty Village, are entirely different than that of a family living in or moving in Brampton,” Ruparell told BetaKit. “Before launching in Toronto, we wanted to ensure that we have the capabilities necessary to serve that really diverse array of customers.”
Ruparell said Toronto’s “hyper-competitive” real estate market has added to homebuyer stress, as many homebuyers are unsure of how much equity they will have to fund the purchase of their next home until their existing one is sold.
“Beyond that, you don’t necessarily know if your home will sell in time, and for many people, the idea of getting stuck holding both the new home and mortgage on the existing home is really stressful and also financially burdensome,” Ruparell added.
Since the onset of the pandemic in mid-March, Properly has added five new members to its staff. The startup temporarily laid off 15 percent of its team in April, and later re-hired 100 percent of the furloughed workers. Ruparell said the startup is back in growth mode and plans to add “dozens” of real estate agents to its team in Toronto and Ottawa.
Image courtesy Properly.