The “Buy Before You Sell” solution for mortgages is a strategy that allows homeowners to purchase a new home before selling their current one. This can be particularly useful in a competitive real estate market where finding a new home might be challenging, or when homeowners do not want to rush the sale of their current property. Calque, is a company that is doing this and today we have their CEO at our podcast – Jeremy Foster to share the benefits of their BBYS solution and Amy Smith of Alcova Mortgage to give testimonial on how Calque has helped their business.
Different vendors, different outcomes: Picking the right BBYS provider with Jeremy Foster of Calque and Amy Smith of Alcova Mortgage
Listeners in a market where volume is down so much, and we’re so few financing opportunities seem to exist, every potential new opportunity you come across is so important. Therefore, you want to find out a way to close every deal possible that you come across. Today, we’re going to be talking and focusing on just that how you can capture more opportunities. And I got your attention without opener, joining me today is one of our sponsors, Jeremy Foster, the founder and chairman of Calque, which provides consumers through a select group of lenders, a service where they can buy a new home before a consumer, they will buy a new home from a consumer before the consumer sells their existing home. Obviously, if they’re needing to make a move, this is a huge service. And it’s commonly referred to as buy before you sell BBYS and that’s all we need in the industry. Another acronym BBYS is that he have some other things like BYB or whatever. But anyway, thinking about that. Anyway, we’re here and joining us today on this topic is Amy Smith. She’s senior vice president of sales at Alcova. Mortgage. And we’re excited to have both, you Amy, Jeremy, thank you so much for being here.
Thanks for having thanks for having us.
Yeah, we’re so excited. And Amy, this is your first debut and the podcast. So I’m really looking forward to full disclosure. Alcova is a client of mine and Jeremy, I’m an investor in Calque, as I’m well as an advisor to Calque. So this is all a part of the family. But folks, even if I wasn’t affiliated with Jeremy, and Calque, and even if I wasn’t coaching the owners of Alcova, I would want you to listen to this, this is a great content. So let’s start off with you, Jeremy. There’s a lot of companies offering buy before you sell BBYS out there, please explain why your program is different and how it is a better option than some of the others there if you wouldn’t mind.
The first way that we’re different is we’re lender centric. And I’ll go into that in a little bit more detail. But the second reason we’re different is we’re really the pioneers of what I would call the third wave of the buy before you sell solution. And if you want to think about the root problem that consumers are trying to solve for, at the root of the challenge for your borrowers, is the fact that they have to qualify from a debt to income perspective based on all of their debt. And if Fannie and Freddie are going to buy a mortgage, they want to know that consumers not laboring under more debt payments than they can handle. And so we as an industry over the last several decades have built a workaround around that to enable people who have a house today and are trying to buy a house at the same time and can’t make both mortgage payments. We’ve built a workaround to solve for that, which is you get pre approved with a home sale contingency on the departing residence. And then you have to go make a contingent offer on the next home and you can’t actually close and move in until you sell your current home. And we’ve gotten so used to that as an industry we think that’s natural. But from a borrower’s perspective, and even from a real estate agents perspective, that’s really a natural process. You wouldn’t think of another place where hey, you use this thing every day sell it to me before you get the replacement. It’s not a normal way to do this. And it brings with it a lot of pain points. For consumers. It means an average of 14 times a real estate agent is going to call and tell them something along the lines of Hey, David, great news, I got a potential buyer who wants to look at your house, would you please kick the dogs outside shove the kids in a closet, go downstairs and scrub the toilet. I’ll be there in an hour. Right? It’s a pretty terrible experience and people go through a lot of work arounds. The pods exist mainly as a workaround for the solution, right? People load their stuff up into pods. They move into a hotel, they move into an apartment. Sometimes we heard a horror story last year about somebody who went that way. And they ended up with their kids in the wrong school district because the home they were trying to buy fell through right you have a lot of pain that people feel around this process. It also really weakens the real estate agents ability to negotiate right if the real estate agent working on behalf of the lenders borrower is trying to go out and buy their next house and the seller of that home has two offers to consider. One is hey, great news. I’ve been pre approved through David, to buy your house once I sell my home, I don’t know exactly when that will be. And by the way, I hope that doesn’t mess up your ability to buy your next house. But that’s great news, right? That’s not nearly as powerful as, hey, Amy’s approved me for a mortgage, and I can close February 15. If you’re the person selling out of their home, you can take Amy’s financing every day of the week and twice on Sunday. And the real estate agents can parlay that and that means that they’re about four times as likely to win that home with a non contingent offer, as with a contingent offer, and when they win that home, they’re typically going to end up paying less than they would have to pay if they were making a contingent offer, usually three to 4% Less. Does that make sense?
Yeah, that does make sense. And it’s just such a compelling proposition, especially like I said, in my opening comments in a market where every deal counts in, Amy, that’s really where you come in. And I’m really wanting to get your perspective on why Alcova was selected Calque. One thing we know about the three owners of Alcova mortgage we affectionately refer to as 3am, three owners of alcova mortgage, they are not quick to make a decision. So they really do their research, even when you’re talking to them, they’ve mastered the pregnant pause, I always tease them about that. So they’re slow and responding. They’re just really contemplated, they’re very deliberate and intentional in a very positive way. The other thing I really like Amy, is they defer to you, they may think it’s a great idea. But they come back and come to you. So I want to get your perspective from Alcova’s perspective, your perspective, yeah, Alcova selected, and then you also double down and select, I want to get your perspective on why you saw Calque as the best solution of all the various options out there.
Absolutely. And David is we’ve been consulting with you for a long time. So we are forever grateful to you introducing us to Jeremy and Calque in the trade and mortgage because it’s made a huge difference for us. And I will say two of our owners are engineers, which could be why they’re a little slow. Sometimes they like to dissect and pick and look at stuff. But they’re also extremely innovative. And they were so excited about this. And they looked at this as a solution to a problem that we were having. And the solution is unique and thoughtful. And it also involves real estate agents and lenders and we can keep our partnership together. And that I think is the big difference with Jeremy’s company, the trade and mortgage and Calque versus other buyer before you sell out their companies because it discounts us a little bit. I can’t tell you how many times we’ve run into situations where we could not qualify borrowers and especially in this market, because contingencies a bad word to sellers right now it’s a seller’s world, there’s very limited inventory. And if you have contingencies on your offers that include selling your current home, it can cause you to lose the deal. So it’s not even solving a problem around qualification and debt ratio, it helps you get your offer. And I also truly believe it creates inventory because it can get people off the fence that want to move that want to buy up but they just don’t want that stress and hassle of a simultaneous close and trying to get their house buttoned up and moved out you were saying Jeremy and showing it and they can move on and feel good and and do what they need to do to still sell that home on the open market for best price. But if it will not sell Calque stepping in and they’re buying it it’s like an assurance to them. It was a unique solution to a real problem that we were having. And it was also something we could bring our Realtors as a solution to a problem they’re having to honestly,
Yeah Now, I’m sure this is welcome news to everyone involved in this thing, the buyer, the realtor. And of course you guys find offering the financing. How is your experience been so far? And can you give us any examples where this has made the difference? And how many more transactions you’ve been able to close as a result of Calque being in the picture?
Yeah, so I can say as far as implementation and learning about it and our experience with Calque, it’s been amazing. Their support staff is great there microsite that we direct our borrowers to is easy to use, and our borrowers enjoy working with them. And we did a really good job of explaining it to our operations staff and underwriters, when they got these deals because we knew the minute we rolled this out to sales, they were going to be all over it. And we were going to get deals that involved Calque. And so we wanted our operations staff to fully understand how it worked. But I can give you some real examples of I have a loan officer in the Richmond area. He’s our top producers and he can tend to be slow to adapt to new programs and products because he’s very successful living in a vanilla world. And he had a borrower who had put eight contracts on eight different homes and could not get one accepted because he had to sell his current home and he called one day and said what is this Calque stuff you keep talking about and you did training on it. Can this solve this guy’s problem? Absolutely, it can solve his problem and we directed him to the microsite, he got an offer relatively quickly from Calque Tony contacted his realtor, they were out shopping the next day. And he actually put a contract on a home and secured it. And so it was a huge solution to that problem. And I’ll tell you, it works well in divorce situations, too. I’ve had several. Yes, where you have not, that’s a great thing. But people do get divorced. And you’ve got one party that wants to leave the home and they’re not sure what they’re going to do with the home, but they’re probably going to sell it and we have used Calque for spouses that are leaving. If both spouses agree to sell the home, when they get an offer from Calque can they sign off on that I can qualify the one that’s moving out for the new home without them having to physically have sold that home yet. So it’s been a great solution to a couple of divorce situations. We’ve also picked up deals just by doing Lunch and Learns with realtors and talking about Calque because the realtors know who are in these stressful situations. They know who they have taken out shopping who have said I really want to move I want to buy a home. But gosh, the stress of my other home and having to sell it at the same time is too much. They know about those people they also know the ones that can’t qualify but they don’t want to have to sell it right away just in doing Lunch and Learns with our Realtors we pick up deals daily.
Yeah, and I know you’ll answer this question honestly. Because even though we have Jeremy on the call, but now he has working with Calque actually bear how the interaction with Calque how have you and the buyers that you’ve been working with? What has been that experience,
We feel like they’re our team member, quite honestly, because their service has been so great. And when my underwriters or processors need something from them, they reach out to the representative that the borrower is assigned to and working with and they get us stuff instantly their communication is awesome. Their customer service is amazing. They’re educators, they help explain what they’re doing to our borrower so our borrower doesn’t necessarily have to 100% rely on the loan officer to totally understand the whole process through Calque. I can tell you we’ve had not one complaint, everybody’s been satisfied. And it’s just been great.
Yeah, no, no, Jeremy in the way he runs businesses. I’m not surprised to that. But Jeremy, let’s talk a little bit about the buy before you sell options that are out there. There’s a number of other vendors that are in the space. And I’d love to have if you wouldn’t mind the help anyone listening to the same? What should I be looking at? What are the key factors that should weigh into the decision that as I go look at the various options out there, because we’re going to recommend you and I think there’s a lot of reasons why you really are the only solution but help break this down for us, if you would mind.
Yeah, so don’t do that a couple of ways. I would say from the lenders perspective, the biggest difference is embedded in what Amy just talked about. We view our lender partners as our customers and the borrower’s are their customers, right. So it’s on us to be a good team member. And for that reason, we don’t work with every lender, because the lenders are dependent upon us to do a good job on the departing residents. And we’re dependent upon the lender to do a good job with the borrower. And that’s been one of the things that’s been great about Alcova is they run such an incredibly tight ship, that it’s really easy for us to work together. That’s very different from a lot of our competitors today, most of whom, by the way, as little as a year ago, were lender competitors, right. So I would say that there’s been three big waves of this kind of movement. From a consumer process perspective, you have what people call the eye buyers like open door, that just buy the old home on demand every time. It works. But it’s really expensive for consumers, it disintermediates the lender and a disintermediate to the real estate agent, neither one of them get any business in that model. The second big model is the power buyer model. And what this was, is the power buyer buys the next home and leases it back to the customer. That model was built to work more in conjunction with real estate agents, but it disintermediated the lenders most of the time, those power buyers, were coming around and saying and even when they worked with lenders, they’d come around and say our fee is 1.9% of the next house plus a half a percent a month. And we’ll we’ll discount it to 1.4. If you give us the mortgage, they were competing with lenders and count from the ground up not only pioneered the third model, which is we’re going to address in a legitimate not trying to like bait and switch kind of way but actually meeting the objectives that Fannie and Freddie have of knowing that the home is going to be sold. We make a guaranteed offer on the departing residents and then we give the borrower 120 to 150 days, not to choose not to go through with it that’s really key, but to replace us with someone else who buys their home at full price. And so our fees tend to be lower a lot of the competitors now are pivoting to our model and they’re trying to partner with lenders because mortgage got tough, but I’d say one real question is first big question. Can I trust that this person who competed with me a year ago isn’t going to compete with me next year? Yeah, that should be a big question at the top of every lenders mind. We have never originated a mortgage in competition with our lenders. We never will originate a mortgage in competition with our lenders, like from the ground up, we’ve been built to work with our lenders. The second thing is that brings some real customer service and process differences, right? If what you built was a process to onboard the mortgage yourself like our competitors did, then trying to kludge that process onto somebody else’s mortgage origination process is a bad experience. And there are a lot of horror stories out there about how bad that experience can be. Our process has been built from the ground up to slot alongside and not interfere with our lending partners operations, right, they get a real clean agreement back from us, they know what to do with it, and their own operating processes move forward from there. We also do a whole lot again, because we’ve been built to empower and enable them. Our lenders get a lot of support that elevates their brands. So the microsite that Amy was mentioning our lending partners get a custom branded microsite, their brand is first when a borrower comes through that the LO and the real estate agent get tagged and the lender automatically get because it came through their microsite. There’s no way around, knowing that’s their customer and we never remarket. So that’s their customer. And we treat that as a sacred obligation. And everything is built to make that work smoothly and cleanly. And then we also empower them with a digital asset management platform, they get their like we brand and cobrand, their materials with their logo, their colors, all of that stuff. And then if they want to do additional outreach to real estate agents, they have a license to digital asset management platform that they can log in and customize for that agent partnership and will a lot of times help provide air cover help book Lunch and Learns send people out to educate like Amy said, we really think of ourselves as educators and partners first. And I think those are all really big items. And then I think the other really important one is is this compliant? Am I going to have loans get put back on me that’s happened with some of our competitors. Right. And so that’s a big deal. And then I’d say the last big thing is, will my borrowers data be secure or were SOC too compliant, there’s just a difference in the level of data security that we have to manage to as a third party partner. And I’d say key things, we are not going to compete with you. We are going to empower you, we are going to be compliant and your borrowers data is secure and isn’t going to be remarketed to anybody else.
And listeners, we’re recording this on a zoom. And so we’re all looking at each other as we’re talking here. And as Jeremy is talking and watching Amy’s head nodding affirmatively about all of this, but I really want to get back to you, Amy and get a little more insights of how working with Calque has impacted your business, and specifically the area of growth. We’re all looking for more business. And we said earlier? And then also what are some of the problems that this product has solved for you and your team? Obviously, you’re getting more deals done. But are there any other problems that you’re specifically solving,
I think we’re building trust with our realtor partners. And we’re coming to them with a solution to a problem they have, I can give specific examples. And I can go on and on. And we talked about a few earlier of where we were able to say deals, pick up deals, get deals, but it when you come with a solution like this to your realtor partners, you’re actually going to get more business from them because they look at you as somebody that’s really adding value that really knows what’s going on in the industry that’s there to help solve their problems too. And for the realtors that we have saved the day with having this for that we’re getting more business because of that. So we’ve definitely seen growth over it.
It is the real advantage in the marketplace for you and competitive.
But yes,it absolutely has. And I wanted to touch on something that Jeremy said when you use the word compliant and making sure we can sell our loans. And that’s why when the owners, my owners were looking at this, they put it on my desk to say is this real? Is this really going to work because in the mortgage world and we always think that if we’re going to discount an exiting properties mortgage payment that we need a closing CD, the house needs to be sold or they need to get a tenant in and provide a lease and show that they’re going to rent it but Fannie and Freddie both have a guideline written in there that most people are not aware of that if you have a non contingent offer on your home that you can discount that payment. And so that’s exactly what Calque is putting is a non contingent offer which allows our underwriters to discount the payment on the home and they’re such a good partner that when they were thinking of changing some things in the contract, they actually presented it to me to get my opinion I’m like, I think it’s gonna make it cause a problem when we go to sell, and they’re like, Absolutely, we’re not going to do it. They just truly are. I can’t speak highly enough of how I feel they truly are a partner. But yeah, definitely getting more business just because if you take one or two touchy sensitive situations for a realtor and you solve that problem they’re going to truly look at you is I’m going to trust you with everything at this point, you’re getting my business.
So that’s such a great point. And then as we look at the market, so what markets are you primarily in that those people that don’t know who Alcova, the markets you serve? What are the markets, that is your footprint, or that is the origination footprint for alcova?
Pretty much the East Coast, we’re not into New Jersey, New York areas that far north, but we’re in Virginia and North Carolina, South Carolina, Alabama, Florida. So you’re looking in that East Coast, up to Ohio, Pennsylvania.
So it’s good to have there’s a lot of different markets within that market is really where I’m trying to go to even though you may be out of the west coast or anybody things like that, you actually have found that this will work in different markets in price ranges are.
All of our markets. Yeah. And honestly, most markets are having inventory problems right now. So this is the perfect solution to that.
Jeremy, is there any markets that you found that this won’t work in that Calque is not a fit in?
Now we’re not we’re going to put a limit on how much we’re not going to buy a house more than $1.2 million. So we’re not going to be useful in Beverly Hills, like but but if you look
What’s wrong with at Beverly Hills, shame on you.
But if you look at and again, like I said, it’s not redlining, because we will think a $1.2 million offer if it solves the problem. It’s not a house worth more than enough.
I was joking. But there may be someone who’s listening to this going,
You Yep. But we will, what we try to focus on when we look at what lenders we want to partner with, we really look at two things in terms of a good partner, and are they innovative. Alcova has been fantastic. They were our first partner to choose to move forward with us. And I think they were the second partner to actually process a transaction with us. And they like they’re innovative. They maybe they’re thoughtful and honest, I think the other thing I’d say, and Amy called this out, too, we need to work with thoughtful, innovative partners who are polished. And so for us, it’s less about what markets will we go into. And it’s more about what markets are the partners we want to work with.
And that’s one of the characteristics of the partners that you’re going to work with, I think is one of the things is and again, having the privilege of coaching and consulting to alcova. And seeing just how well they are run is it is really exceptional. So anyone who doesn’t know alcova, you need to get to know this. It’s a great example in our industry of someone who is extremely well run. And then they’ll be the first to say we’re not perfect, but it’s that intentional, deliberate approach to managing the business AMI that I have experienced and working with him over the last three or four years. And that’s exactly what you’ve been there for a good amount of time to AMI, haven’t you.
Since 2015. And they were a customer of mine before I was an AE that they sold loans to so I’ve known them for years
That I’ve had for I didn’t know that part of the story. That’s pretty good. Yeah, I know. They’re gonna listen to this. So kudos to them. They deserve a shout out for what they’re doing. And Jeremy, I love the solution that you’re bringing. Jeremy, how can people get a hold of you, or someone there at Calque to learn more.
So you can learn more either by signing up for our webinar or visiting our website, or just call and we’re happy to set up a time to talk with you one on one. So easiest way to do that is Calqueinc.com or trade in mortgage.com. Either one should take you to a place where you can see some questions. And then right there we have contact information you can just click we’ll set up some time and would love to visit.
Yeah, Calque is spelled CALQUE we needed to make sure we put that out there because for those of us it’s a slightly unique spring playing on the sound.
Website was calqueinc.com. Thanks David.
Check it out. Very good. And Amy for someone who’s listening to this and yeah, I’d like to talk to Amy to get more insights into this and I wonder about this and we know if we call Calque if they’re just gonna sell us? Of course they are. But I’m finding out you’re very sincere Jeremy and your approach. You’ll say you’re very honest. You’re not just going to give a sales pitch if it works, it will work for you. But you’ll say what won’t work so very good. But still people may want to talk to you Amy what’s the best way for people to get a hold of you?
They can email me at [email protected]
So, my gosh, about as vanilla as you can. Yes. Yeah, I think about you. Alcova so fortunate to have someone like you there Amy managing and working as a production manager there as SVP I just love your style. And again, you’re licensed to speak your mind and Bring your bring your thought critical thought to the process and you have this great partnership. It’s fun to see it. There’s been a good interview. Thank you so much listeners. I hope you pay attention to this get a hold of Jeremy, have any questions that house we’re working on, you might say how it’s really working call aim, you’ll find out exactly what you heard today on this podcast is to be exactly what they’re experiencing. Amy, thank you so much for joining in and good job on your first podcast. It was fun. That’s pretty easy. It’s like any other conference call we do. Anyway. Thank you, Jeremy, for all that you do for helping so many buyers. really why I’m in the business is to help buyers get homes. And you are doing such an amazing job of facilitating that. It’s your brilliance was your vision you came up with I remember we started working together two or three years ago or whatever it was, it seems like it’s been maybe even longer, whatever it was, but I looked at your conscientious way of you looking at the competition, how are others doing it and it was so intentional, like alcova, which is very intentional. You have been very intentional building this out to make sure that this is a sustainable solution that will last no matter what the market conditions are. Kudos to you, friend.
Thank you so much, David, and thanks for having me on this. And thank you for all your help as an advisor and Amy, thank you so much for your partnership. You’ve just been phenomenal. So we’ve loved working with you all.
We appreciate it. And thanks David for introducing us to Jeremy we are forever grateful. So thank you.
All I love going on around here. Love it. Very good. Thank you much listeners. Thank you, Amy. Thank you, Jeremy. Have a great rest of your week and go Alcova keep on charging, doing well.
All right, thank you everybody. Hey listeners, this hot topic would not be possible without our sponsors. I want to say a special thank you to our sponsors – Total expert, Finastra, Byte software, Lender homepage, Angel AI, Truv, The Mortgage Bankers Association of America, Lender Home Page, The Mortgage collaborative, iEmergent, Modex, Mobility MMI.io and knowledge Coop. There’s so many good sponsors here and we’re so grateful for each one of them. Be sure to check out each of those sponsors and their spots on our website Lykken on Lending under the sponsorship page. Thank you.
You’ve been listening to Lykken on Lending a weekly mortgage market update with your host David Lykken of Transformational Mortgage Solutions. Join us next week. Thanks for watching.
Jeremy Foster is the founder and chairman of Calque. He is a financial technology expert with more than 15 years of C-suite experience and deep expertise in the real estate and financial sectors. In the banking space, he guided product strategy for a $25 billion deposit product portfolio and led the successful development of analytics and industry solutions deployed through more than 1,000 banks and credit unions. As a collaborative and data-driven leader, Jeremy has served as the Chief Financial Officer and Chief Operating Officer at three Inc. 5000 companies, including one of the first hybrid iBuyer solutions in the real estate technology sector.
With ALCOVA Mortgage since June of 2015
Title: Senior VP of Sales
Been in the mortgage industry since 1993
experience in: Origination, underwriting, credit risk, account executive, mortgage insurance, construction lending, sales management, and marketing
Bachelor of Science/Business Management. Virginia Commonwealth Univ 1993 graduate.