PERSON OF THE WEEK: Tavant is a high-tech engineering and thought leadership firm that develops digital lending technologies.
The company recently announced it is expanding its focus to include the rapidly growing proptech market.
To learn more about this development, MortgageOrb interviewed Brad Sivert, head of proptech for Tavant.
Q: Explain how Tavant’s previous experience in fintech and AI transitions to proptech and how the company plans to leverage these skills to help with each stage of the proptech lifecycle?
Sivert: There is a great deal of commonality in the technology needed for large fintech lenders and real estate and property technology companies; about a 60% to 70% overlap between the two. Because of this, we realized we already had a deep skillset and background. And with three of the top six real estate proptech companies already on our platform as clients, we have been able to leverage these relationships to explore markets as we dive deeper into proptech as an offering.
Tavant built its financial technology suite of products (VELOX platform) with more than 100 API connections that happen in real time. As soon as a company plugs into VELOX, we have additional access to real-time APIs that includes data, property validation and appraisal validation and more. As a provider of AI-powered digital lending technologies, we already have the vast majority of what large real estate and proptech companies need as they focus on rapid growth, digital transformation and for start-ups growth acceleration as they move towards IPO.
Q: Tell us a little about your background and how you are helping Tavant expand its focus to the proptech market?
Sivert: I started my Fintech and Proptech career nearly 20 years ago with ING Direct. While I was there, we were able to grow to 9 million customers with $165 billion in deposits before the CapitalOne acquisition for $10 billion. I stayed with CapitalOne to lead their digital efforts and help them navigate what was a crucial time as the industry shifted towards a more digital- and mobile-first world.
From there, I became head of product and marketing for CloudVirga, a point of sale company in the lending space out of southern California. Then I accepted an executive role with Realtor.com as its executive general manager of mortgage and product. I was able to help Realtor.com define its mortgage strategy and essentially grow revenue more than 300 percent in these verticals. My time at Realtor.com gave me a wealth of knowledge regarding the i-buyer space, the consumer mindset, property technology, and how it works in this ecosystem.
It was at this point I knew I wanted to get into the large high-tech engineering space to be able to help more than one client. I joined Tavant because they had the platform and the people in place to help numerous clients scale at a rapid pace and achieve their goals
Q: Digital innovation in the mortgage and real estate industries has progressed at a relatively slow rate. However, this does not appear to be the case with proptech with $31.6 billion invested into this space. How can providers in the proptech ensure they remain relevant and successful in the future given the rapid amount of change taking place in the industry?
Sivert: Buying a home is the most emotional, and typically the highest dollar value purchase that people will make in their life. Traditionally, the process of buying a home included looking at and visiting multiple homes over weeks, or even months, to find the right home in the right neighborhood. Well, the world is changing. Home buying needs today are much more instantaneous and on-demand knowledge is key in this new space.
The new emotional connection comes through our mobile devices. We want to be able to tour homes remotely and view landscapes without needing to visit each option in the process. We want technology to help find the financing that fits our needs best. What we need in buying a home will never change, but the way we do it, and how we get to that home will.
Traditional real estate companies – the big brands seen on little street signs in front of homes – they are the ones who’ve been slower to adopt and are having to play catch up to build a more digital-first mentality. Meanwhile, the new, typically venture capital-backed entrants, are responding to this trend from a purely technical angle first with new offerings such as i-buyers to sell your home, or; a trade-up model where the consumer can sell their home instantly and buy one that is bigger, newer and completely move-in ready, and; companies such as Yaza that allows for authentication as a homebuyer virtually tours a property. This is the new norm. proptech is matching the needs of mobile-first consumers who are high demand, but low touch.
Q: How is AI impacting the proptech market? What opportunities does AI afford providers in the proptech market?
Sivert: There are three levels of AI as it relates to both proptech and fintech. For fintech lenders, AI is tackling the valuations of homes, the likelihood of a consumer being able to pay back his or her mortgage on time, and the likelihood that the appraised value of that home is accurate.
When it comes to proptech, AI is used to look in the i-buyer models to figure out the valuation of a home in a certain market and how likely it is to sell within 35 days, or in models that forecast if a neighborhood is going to be more or less valuable in six months.
This information is valuable to real estate companies as they determine how to reach out to consumers or help them price their homes.
Consumers can use AI-powered proptech tools to run home buying scenarios to match the home to the price point that is right for them.
For example:
If I wanted a third bedroom in this home in Austin, Texas, how much would that cost? $82,000.
If I wanted a pool, what would it cost? $65,000
If I needed one less bathroom, how much could I save? $54,000
These price algorithms help homebuyers customize what they are looking for in a home with knowledge at their fingertips to make the best choice.
Q: Within the proptech space, i-buyers are quickly becoming a trend. How are i-buyers changing the real estate market, and do you think this is simply a passing trend that will pass with time, or is this a new paradigm that is here to stay?
Sivert: This is truly a fascinating trend, and one that had a lot of momentum behind it at the beginning of this year. For a consumer, an i-buyer is a dream situation. Take into consideration this scenario: A home is listed and stays on the market for 18 months. When it finally sells, the homeowner had to take a 30 percent reduction in the sale price, in addition to the 18 months of mortgage payments for an unoccupied home. An i-buyer model would propose a fair market value in cash outright today without the need to list it, stage it, pay a real estate agent, or gamble on how many months it’s going to take to sell the home (the fair market value normally won’t be more than 100 percent of the appraised value – it typically comes in right at 98 percent).
Then the pandemic hit. When this happened, the real estate market slowed down and these large i-buying companies ended up with a massive inventory on their hands. These companies are now having to pivot to help consumers refinance existing products and buy new homes. Most i-buyers have completely paused all operations and are no longer buying properties, which is a dramatic shift from 90 days ago.
The i-buying trend will definitely pick back up. However, American consumers will be willing to sell their homes at 98% of appraised value to sell it immediately and avoid dozens of people walking through their homes, especially as the pandemic comes to an end. The actual demand of selling a home through an i-buyer is still very high and if anything, it’s higher than it’s ever been, the market just needs to allow it.
Q: Given your expertise in this area, what do you think are the most significant proptech trends the industry should be closely watching?
Sivert: This year will be the proving grounds for the venture capital-backed proptech companies. Now is the time that these companies need to generate revenue and realize that when they’re not getting VC investment anymore, they need to operate as a true business, i.e., look at the margins, understand operational efficiencies, etc. All of these companies will need to shift to more effective operating models so that they may be more successful and invest in their product roadmap and strategic vision as they move forward.
Q: Based on the knowledge you have gained over your career, what advice would you give your younger self or wish someone had given you?
Sivert: Celebrate your successes but embrace your failures. Celebrating success is easy, but embracing your failures is key.
Everyone will fail multiple times in their career, and it’s okay. It’s a learning moment, it’s a pivot.
Your company might fail, you might fail in a role, you might fail in a business pitch in a strategic partnership. It’s okay: You can fail and pivot.
The key is to learn from your mistakes, embrace them, move forward and don’t hide your failures. Don’t make excuses for them, just understand what has happened and learn from it – you learn a lot more from your failures and challenges than you do from your successes.
And while successes are the nice chapters that people put in their books or on LinkedIn, the obstacles, challenges and failures they faced are what truly defines them, as they move through their careers.