How this fintech startup is aiming to disrupt the homebuying process

May home sales rebounded to the highest level since 2005. Tomo Co-Founder & CEO Greg Schwartz joins Yahoo Finance Live to discuss.

Video Transcript

AKIKO FUJITA: We saw a big rebound in home sales in May, jumping to the highest level in 16 years. This coming even as weekly mortgage applications showed signs of the housing boom starting to fizzle just a bit. Mortgage demand fell nearly 7% on the week, according to the Mortgage Bankers Association.

Our next guest is looking to disrupt the real estate space with a new digital in-home purchasing platform. Let's bring in Greg Schwartz, Tomo co-founder and CEO. And Greg, it's good to talk to you today. Walk us through the platform first. This really comes as we've seen just incredible demand in the housing market. How are you looking to capture some of that market with this new approach?

GREG SCHWARTZ: You bet. Great to be with you today. Homebuyers need a boost, right? We need a boost to compete with these investors that are buying 17% of all home sales right now or to generally all cash investors. Tomo is bringing to bear a beautiful, easy to use, digital mortgage product, partnered with some of the very finest local agents in the country so that we individuals can compete and take back our neighborhoods from investor buyers who tend to be turning them into rental inventory.

ZACK GUZMAN: Yeah, how does it-- I mean, I saw you guys just raised $70 million in seed funding here in terms of the size of the round-- pretty large. When you talk about what that's being used to, to kind of improve the process, what are you seeing as maybe those big pain points, aside from competition maybe on the end of the little guy?

GREG SCHWARTZ: Yeah, so we hear every day about 15 offer situations and mortgage processes that when folks walk into their local big bank branch, they feel like they're at the DMV. So we're having to re-architect the entire and rethink the entire mortgage fulfillment process with new software and digital tools that feel like everything else in our life, the beautiful e-commerce experiences really everywhere. And then we have to build savvy local teams, who can guide folks. Because we're all looking for a branch right now.

Hearing about, you know, lightning mortgage demand, that's really about lightning supply. Because homes are selling faster than they ever have before, not fewer folks looking for homes. More folks want homes than ever before. So the Tomo assignment is a beautiful digital mortgage experience that if you want to get pre-approved in minutes, you can really do it without even talking to anyone, that we have wonderful people to guide you. And then we'll guarantee we close on time every single time. And that'll give folks the life that they need to compete.

AKIKO FUJITA: Yeah, Greg, I would say any DMV reference is never a good one, right? So certainly a lot of people looking to improve the experience. I mean, we're talking about being able to get approval quickly, as you've pointed out, through a platform like Tomo. We've also heard a lot about prospective buyers not even going to the house anymore because they can take a virtual tour. What does that mean in terms of accelerating the home buying process? And ultimately, does that lead to more overheating when it's so accessible?

GREG SCHWARTZ: Yeah, I think-- we believe it'll lead to more trades ultimately, more homes through an easier process. Folks can get into the situations they want to live in. So right now, it takes about 55 days for a transaction to conduct itself. We think we're going to be able to half that. So-- over the next year. So bring that 55 to about 25 days and put much less burden on the buyer. That should bring liquidity. It should allow folks who are stuck in their homes.

That's the real big problem, is, I can't move. I don't know where I'm going to move to so I don't market my current home. So people are stuck in situations that are suboptimal. If we make it more joyful, a little bit easier, bring down the expense of the transaction as well, that's a really big important part of this, bringing down the expense of the transaction. We think we can free some of the stuff up.

But most importantly, we've got a little revolutionary spirit here. We need to take back our neighborhoods from the institutions that are turning our neighborhoods into asset classes. And little more, you know, it's 17% nationally are investors. In some neighborhoods, as much as 25% or 30% of the homes are being traded to institutions. And we're going to make sure that individuals who have great jobs, are earning, saved money, did all the right things, can compete for sellers' attention.

And that's a guarantee that we're going to close on time so that sellers don't have to worry they're going to be left in the lurch. It's a process that can get you preapproved in literally 10 minutes of work. And in two hours or less, the bank-- we will actually underwrite the individual person. And then we'll guarantee we close on time. And that'll give us-- we, the buyers-- and we've all experienced this-- the horror story of falling in love with a place, wanting to move in, and then the process reality of the DMV reference just takes the life out of us.

ZACK GUZMAN: Yeah.

GREG SCHWARTZ: And we'll solve it.

AKIKO FUJITA: I imagine a lot of people are watching this, just sort of nodding their heads, saying, I've been there before. It's certainly going to be interesting to watch the growth of the platform. Greg, it's good to talk to you today. Greg Schwartz, co-founder and CEO of Tomo.