HomePace, a startup that says it helps homeowners "easily access their home equity without taking on additional debt or interest payments," on Wednesday announced it has secured $7 million in Series A funding and will use the money to expand in the Seattle metro and elsewhere.
The time seems ripe for this sort of service with U.S. homeowners seeing a more than $3.2 trillion rise in home equity in 2021, according to property information analytics company CoreLogic. Washington saw the third-largest gain following Hawaii and California. It's also a tool for home sellers to access the equity for a downpayment on a new house.
HomePace is based in Park City, Utah, but co-founder and COO Megan Graf lives in the Seattle area, where she is a member of the Seattle Alternative Investment Association and GeekEstate, a network of proptech entrepreneurs. She and CEO Joe Cianciolo were previously directors at multinational investment management corporation BlackRock.
Founded in September 2020, HomePace provides homeowners and homebuyers with financial flexibility through accessible home equity. Instead of charging monthly interest, HomePace says it "aligns itself with homeowners by sharing in the home's gain or loss when the homeowner chooses to sell in the future." Homeowners receive up to $250,000 in cash.
The fee structure varies, using what the company calls "a dynamic pricing model" that generates contract terms specific to each homeowner and home. There is no single HomePace percentage; it can change based on the home, how much the homeowner takes up front, and the homeowner's credit score.
"We offer a simple, online quote process for a homeowner to estimate their terms. We also provide scenarios to help homeowners gauge how much they might pay over time, as the home value changes," the company said in a statement.
If the home increases in value during the contract, HomePace receives the initial amount paid to the homeowner, plus a percentage of the gains. If the home decreases in value, HomePace shares in that same percentage of the losses, which is subtracted from the initial amount the homeowner received.
Depending on how much value the home lost, homeowners may pay less to HomePace than they received upfront. "We provide an estimate of all fees and contract terms right from the start," the company said.
Homeowners can use the HomePace website to estimate the upfront amount they’re eligible to take, as well as the HomePace percentage. In Washington, the company is partnering with Connection Credit Union in Silverdale and expanding partnerships with other credit unions, lenders and other financial institutions. It said it expects to announce "several of these new Washington-focused partnerships soon."
LENX, the corporate venture arm of Lennar, one of the nation’s largest homebuilders, led the Series A round.
“We have been closely monitoring this emerging landscape of home equity investments and recognize it is an innovative way for homeowners to access record levels of home equity in a non-intrusive manner,” Eric Feder, president of LENX and member of HomePace's board of directors, said in a news release.
Prior investors Bling Capital, NextView Ventures, and Ride Ventures joined LENX in funding the round.
HomePace would not say how many people have used the service but said it has written contracts for homeowners in the six states it operates: Arizona, Colorado, North Carolina, Tennessee, Utah and Washington.
The company would not say how many employees it has because it's in the process of hiring so "does not have a final headcount to share," a spokesperson said.
It intends to expand in Seattle, Park City and Raleigh, North Carolina. But with the increasing demand from employees for remote work, HomePace is building a remote-first company, it said, adding it's planning a Bellevue location for hybrid work over time.
