Point — “Would you like to sell me part of your home?”
The story of Airbnb, retold in home ownership, crazy or disruptive?

I recently stumbled upon Point, an a16z, Greylock, Ribbit and Bloomberg-backed startup, who is reinventing home ownership in America. Point would buy between 5–10% of your home equity, essentially becoming a co-investor/co-owner of your home, holding for 10 years. During the holding period, you can buy back Point at the current appraised value, or sell your home, in which case Point shares in the appreciation / depreciation of your home. If none taken, at the end of the 10 years, you will be obligated to buy back Point’s shares at the current appraised value. On the other end, Point allows qualified investors to participate in the investment, promising high return on secured asset.
With components of a marketplace, Point is a way for homeowners to diversity their wealth, get some liquidity out of their homes, especially when home equity or a second mortgage aren’t great options (for its monthly payments, credit requirements, or lengthy process, etc.) For investors, it is a way to participate in residential, single-family real estate, especially in areas with appreciating home value such as the West Coast where Point got its start.
Sounds great, right?
Most say it doesn’t. Some of the common rejections I encountered are:
- Why would I want a stranger owning part of my home? Would they be able to kick me out?
- Can I still do things to my home like I used to be able to?
- That just sounds crazy. That’s MY home.
It does sound crazy because no one has done this before. In a way, I would liken Point to Airbnb before we are used to having strangers stay in our homes. Nonetheless, the devils are in the details, so let’s dive in.
- Ownership: Upon signing, Point would file a Deed of Trust and a Memorandum of Option, which I interpreted loosely as the equitable title stays with the homeowner. Similarly, the homeowner can still remodel their home as they choose, keeping in mind that Point would benefit from any appreciation as a result, without having to bear any of the costs. Additionally, Point will be added to the homeowner insurance contract. (Point’s FAQ)
- Stability of Marketplace: Without complete information how much of Point’s investments are being funded by outside investors and not its balance sheet (though with only $8.4M seed funding, it is likely), I wonder if the system has built-in perverse incentives. Investors are likely to participate if they think single-family real estate will go up. Homeowners are likely to participate if they, on the other hand, think their home value will go down, hence lessen their payment to Point at the end of the term. So in a market where most people believe is going up, Point will starve of supply, and where it’s expected to come down, Point can’t find enough investors. Its differentiating factor will be pricing, through better data, algorithm or lack of competitors (similar lenders) or alternatives (which unfortunately for Point, home equity is looking up.) My assumption here is that homeowners mainly participate for arbitrage, which is not 100% of the case, as Point also provides no monthly payment, lower credit barrier, and quickened process.
- Let’s talk about $$. Two things make me nervous about Point’s model: 1) It’s appraisal process, and 2) other fees homeowners are responsible for.
- Appraisal process: Point states that appraisals will be done by an on-site appraisal, 3rd-party automated valuation models (AVMs), and Point’s own proprietary pricing algorithms. The homeowner will bear the cost of the appraisal. Additionally, there is a downward risk adjustment on the value of the home, hence the equity value Point will pay for, if Point thinks there’s a material chance the home will depreciate (similar to Open Door). In the absence of competitive offers, homeowners can accept Point’s offer, or leave it. While being mindful of the free market principal that if a transaction takes place, the price is fair, I wonder who gets to pick the appraisal firm and how would Point ensure that it does not poach the territory of predatory financial services while still providing market-alternative, necessary services.
- Other fees: Point charges a 3% processing fee of the amount it invests in the property (for comparison, Open Door charges 7%). In addition, there is a un-inclusive fee schedule that homeowners are responsible for, making the cost of using Point as an arbitrage more onerous. Perhaps it’s Point’s way to prevent the perverse incentive mentioned above?
All in all, I am positive about the disruption that Point is being to the market and the hairy questions it is tackling. Philosophically, I believe wealth in America could be more diversified, real estate market needs innovation, and while I would point out that the Atlantic doesn’t know what securitization means, I agree with its suggestion of prudence on the side of investors and homeowners when evaluating new financing options. Point needs to take risks, but let’s hope that the team does think long and hard about the implications, to make sure it isn’t harming consumers, investors and employees, and that requires reinforcing integrity as a core corporate value (nod to my friend Bhavik, who isn’t on Medium.)
P/s: As always, I welcome questions, healthy debates and commentaries that will deepen my understanding of the topic. Bye now!
