Proptech and Fintech Get Extreme in Niche Targeting

A company called Roam Home — branding itself as Roam — sent a press release to GlobeSt.com about a new offering. But it was the basic concept of the proptech/fintech company that was intriguing as it was so targeted.

Roam focuses on being a marketplace for home buyers and sellers where the mortgage is assumable. That can mean a mortgage rate of as little as 2%, “resulting in a monthly payment that is less than half of a traditional mortgage at today’s current rates,” the release said. Roam claims $4.25 million in funding to date. Its public launch was September 2023 and it operates in 18 metro areas across six states.

It’s a good lens to look through to understand how niche market dynamics can become complex and confusing.

On one hand, that potentially includes a lot of homes, given that FHA and VA mortgages are assumable. “The FHA-insured share of closed-end refinance mortgages for first lien, 1-4 family, site-built, owner-occupied properties increased to 6.9 percent in 2021 from 6.2 percent in 2020, while the VA-guaranteed share of such refinance loans decreased from 11.9 percent in 2020 to 10.2 percent in 2021,” according to the Consumer Finance Protection Bureau.

At the same time, it’s a tight concept that offers potential value to a buyer, especially given 30-year mortgage rates are still above 7%, according to the Mortgage Bankers of America, and the fees can be lower than in traditional mortgages.

But niche markets can be more complex than selling a product at a good price to someone who wants it. Here are some of the considerations that come to mind with niche markets:

• A company has to be able to identify the market, both for supply and demand. If there is too much supply, it may not be a niche market, even though it seems highly specialized. That could make the potential for sales more difficult. Similarly, there may be more limitations than you’d expect. In the case of assumable mortgages, how many of those who have them can afford to move into a new home at a higher mortgage rate?
• Understand the target market. Niche groups may seem like they should be similar, but are they? Something speaking to lifestyle might. An interest in saving money when making a popular type of purchase might be more universal.
• In keeping with the last point, the members of the niche group need to be able to identify themselves. For instance, people buying a home these days likely want to save money. However, if many have never heard of assumable mortgages, then you have a niche market where a significant portion doesn’t realize they are members. Depending on the nature of the niche, marketing may require broader reach and educational efforts.