Sundae, a residential real estate marketplace that pairs sellers of distressed properties with potential buyers, has entered the lending market with its new finance option for investors, deemed “Sundae Funding.”
Historically, Sundae’s business model relied on multiple cash buyers vying for its marketplace listings with sellers choosing from the top three cash offers to incentivize competition.
Now, however, Sundae’s lending service will help its investors with financing options that will include competitive rates, pre-approvals and underwriting, alongside the upfront funding for its listings.
“The biggest challenge investors face is finding opportunities. Their second biggest challenge is financing,” said Josh Stech, CEO and co-founder of Sundae.
The new option builds on Sundae’s current business model, which Stetch and Sundae have deliberately differentiated from an iBuyer for years. Its argument: Sundae focuses on buying distressed houses that need significant renovations in “as-is” condition and are often rejected by iBuyers.
Another difference is that most iBuyers provide an offer before seeing the house, which means the price almost always changes later on, the startup claims.
Interested sellers can go to Sundae’s marketplace and request an offer wherein the company will then gather additional information, conduct a home visit and make an offer. If the seller accepts and an inspection is completed, the company offers a $10,000 cash advance before closing to help homeowners with moving costs or other expenses. It charges no closing costs or agent fees.
Sundae claims that on average, sellers receive 10 offers within three days on its platform.
Launched in 2019, Sundae’s popularity has taken off in the proptech sector, having raised a total amount of funding to date just over $135 million. Its most recent round took place in July when the startup raised an $80 million Series C fund, co-led by Fifth Wall and General Global Capital.
In addition to providing a marketplace to connect sellers of distressed property to the best buyer, the startup also operates as a property investor and will purchase, renovate and resell properties through its resale brokerage, Sundae Homes.
Sundae Funding, however, will also be available for properties sourced outside of Sundae’s marketplace and investors can even go as far as financing their remodeling and construction fees in addition to the purchase price of the house.
According to the proptech, Sundae borrower’s furnished underwriting documents are only reviewed once a year. Borrowers are given access to Sundae’s team of loan experts who can offer one-on-one guidance in choosing the right financing option that meets their needs.
The lending program is currently available in California – Sundae’s home state and where the program was piloted – as well as Florida, Georgia, Texas and Colorado with more states to become available over the next few months. With its unveiling, Stetch hinted at the company’s mission to become a “one-stop shop” for property investors.
In addition to Thursday’s product news, Sundae also revealed it is expanding its proprietary operations across the Carolinas and Tennessee. Sundae’s Marketplace is now available in Charleston, and will soon be an option for home sellers in Greenville, Myrtle Beach, Charlotte, Raleigh-Durham, and Nashville.
According to the company, the market expansion will increase the company’s geographic footprint to 28 total markets nationwide.
“For investors, these markets are hyper competitive, with 1/3 less supply than usual. We’re looking forward to being the place where they can quickly and easily access our full inventory of properties to make and offer and secure their next property,” said Stech.
Sundae’s lending service will be available in these markets in the next few months.