- Spruce, a digital closing company, is rolling out a white-label product aimed at ascendant real-estate tech companies.
- The service allows tech-forward brokerages, iBuyers, and other proptech pioneers to run their own digital title agencies, without having to build one in-house or acquire one externally.
- CEO and cofounder Patrick Burns said that the company is trying to build the tools that power real estate's tech evolution, which has moved the traditional methods of buying and selling homes increasingly online during the coronavirus pandemic.
- Spruce is among the proptech companies profiting from the pandemic and resulting digital shift of real-estate transactions. In May 2020, Spruce raised a $29 million Series B.
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Spruce, a real-estate tech company that creates digital closing tools for residential transactions, is launching a white-label version of its closing service.
Called SprucePowered, the software will allow proptech companies to create their own title agencies, bringing the entire closing process into their own firms without having to build their own solutions or acquire digital closing companies.
The news comes in the wake of a massive year for proptech, as early pandemic shutdowns highlighted the importance of digital tools among real estate professionals and consumers. Residential real estate, in particular, had a banner year, with 2020 setting records for home sales. The boom in single-family homes brought outsized attention to the companies providing nontraditional ways to buy, sell, or finance the purchase of a home during a global pandemic.
With its newest offering, Spruce is pitching itself as the digital closing tool that can power these proptech companies, including tech-forward brokerages and iBuyers, which use software to make instant offers on homes (and aim to resell them later for a higher price). While Spruce has partnered with firms like this in the past, its newest product gives clients total control of their own title agency, using Spruce's software to run closings behind the scenes.
"Proptech companies have unique customer experiences, and therefore unique customer experience needs," the CEO and co-founder of Spruce, Patrick Burns, told Insider. "These companies recognize that the best way to fulfill that consumer need is to offer additional services in the real-estate transaction to become more of a one-stop shop so they can control that customer experience."
Spruce's main product makes its money through both a standard closing fee and a premium it charges as the "agent of record" in the title insurance transaction, the traditional revenue stream for closing companies. With SprucePowered, clients are able to pocket both of those amounts, paying Spruce a flat fee that corresponds to the volume of transactions.
For these firms, the ability to keep the transaction seamless - and digital from end to end - is paramount. In the past, to do so, they had to either build their own digital closing tools, acquire a digital closing company, or partner with a third-party provider, like Spruce.
Some of the biggest names in real estate, like Softbank-backed Opendoor and Compass, have been able to acquire title companies, while others have tried to erect the digital closing infrastructure themselves. Then there are the third-party firms: States Title and First American-backed Endpoint have also sprung up to provide digital closings.
Burns told Insider that SprucePowered grew out of the "custom needs" of some of its current client base. A discount broker, for example, needs a closing solution that prioritizes cutting costs above all else, while more luxury-oriented, concierge services should guide customers through a leisurely closing process, providing advice the whole way. This white-label solution allows Spruce to customize how the software works for each client.
"Our mission is to turn every transaction into a one-click checkout, but that takes so many different forms in so many different transactions," Burns said. "We are providing the infrastructure, the tools, the picks, and shovels of this evolution."
Spruce's efforts to take residential real-estate transactions online have attracted investor interest: Spruce has raised $50.1 million in funding since its founding in 2016, most recently raising a $29 million Series B in May 2020. The company said that it has seen a 450% increase in transactions during 2020.
While the SprucePowered software is aimed at the proptech industry, the company also works with real-estate investors, like single-family rental companies, allowing them to bring homes through the closing process in bulk. The company also works with lenders to add digital closings to the mortgages they grant.