Real estate agents and homebuyers will soon be able to pay for home inspections at the closing table through a new service provided by Porch’s Inspection Support Network (ISN).
The pay-at-close program is currently available to select inspection companies and will begin a broad roll-out in 2022, Porch said, providing payment to inspectors at time of inspection, as well as invoicing the escrow company on behalf of the homebuyer to defer payment to the close of escrow.
Inspectors typically frown on requests for deferred payment due to the risk of escrow falling through or the hassle of collecting payment. But Porch said that its inspection software business, ISN, is ideally positioned to automate and streamline the process of deferring payment to the close of escrow. Some of the largest inspection companies have already activated the pay-at-close module and are ready to launch, the company said.
Matt Ehrlichman
“We’re always actively exploring every avenue to help home inspection companies grow and stand out from their competition,” said Porch Group founder and CEO Matt Ehrlichman, in a statement. “At the same time by helping homebuyers now pay for their inspections at close, we can make the homebuying experience easier and with less friction for all parties.”
Porch provides software and services to about 20,000 home services companies including home inspectors, moving companies, utility companies and warranty companies.
The company’s 2017 acquisition of ISN, a developer of enterprise resource planning (ERP) and customer relationship management (CRM) software for home inspectors, expanded Porch’s position in the home inspection industry. It then broadened its customer base by acquiring moving company software and leads provider HireAHelper in 2018, and roofing software company iRoofing in 2020.
Since going public in a December 2020 merger with a special purpose acquisition company (SPAC), Porch has continued to grow through acquisitions.
In the first nine months of 2021, Porch invested $178.7 million in cash and $24.8 million in common stock to acquire companies including omnichannel marketing platform V12 Data ($21.8 million), property and casualty insurance agency Homeowners of America ($113.7 million) and home warranty provider American Home Protect ($46.3 million).
Expansion into mortgage and title
Porch’s acquisitions are also paving way for an expansion into related software verticals including mortgage and title. In May, Porch became a major provider of software for title companies, with a $35.8 million acquisition of title and real estate software and data analytics company Rynoh.
In October, the company closed its $86.5 million acquisition of Floify, a provider of digital mortgage automation and point-of-sale software. Based in Boulder, Colorado, Floify has processed an average of 77,000 mortgage applications a month in 2021, helping loan officers collect and verify borrower documentation, track loan progress, and communicate with borrowers and real estate agents.
To fund future acquisitions and organic growth, Porch raised $413.5 million in net proceeds from a private offering of 0.75 percent convertible senior notes in September. When the notes come due in 2026 they’ll be convertible into cash or shares of Porch common stock at an initial conversion price of approximately $25 per share.
Since going public, shares in Porch have traded for as little as $11.35, and as much as $27.50. At Monday’s closing price of $18.29, the company’s market capitalization is just over $1.7 billion.
In its most recent quarterly report to investors, Porch posted a $5.1 million net loss, on $62.8 million in revenue. Revenue was up 192 percent from the third quarter of 2020, when Porch posted an $8.9 million net loss. At $86.5 million, the net loss for the first nine months of 2021 was also up 158 percent from $33.5 million a year ago.
Company executives said they expected full year 2021 revenue to be in the neighborhood of $195 million, which would represent 170 percent annual growth.
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