Fintech
Proptech and Fintech go extreme in niche targeting
Small markets can sometimes be good, but they require a lot of smart work and luck.
A company called Roam Home, which calls itself Roam, sent a press release to GlobeSt.com about a new offering. But it was the core concept of the proptech/fintech company that was intriguing since it was so targeted.
Roam focuses on being a marketplace for home buyers and sellers where mortgage is assumable. That can mean a mortgage rate as low as 2%, “resulting in a monthly payment that is less than half of a traditional mortgage at current rates,” the release said. Roam is seeking $4.25 million in funding to date. Its public launch occurred in September 2023 and operates in 18 metro areas across six states.
It’s a good lens to look at to understand how the dynamics of niche markets can become complex and confusing.
On the one hand, this potentially includes many homes, as FHA and VA mortgages are conceivable. “The FHA insured share of closed-end refinance mortgages for first-lien, 1-4 family, site-built, owner-occupied properties increased to 6.9% in 2021 from 6.2% in 2020, while the VA-backed share of such refinance loans decreased from 11.9% in 2020 to 10.2% in 2021,” according to the Consumer Finance Protection Bureau.
At the same time, it’s a tough concept that offers potential value to a buyer, especially considering that 30-year mortgage rates are still above 7%, according to Mortgage Bankers of America, and fees can be lower than 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 must be able to identify the market, both supply and demand. If there is too much supply, it may not be a niche market, even if it seems highly specialized. This could make sales potential more difficult. Likewise, there may be more limitations than you would expect. In the case of mortgage loans, how many of those who have them can afford to move to a new home at a higher mortgage rate?
- Understand the target market. It might seem like niche groups should be similar, but are they? Something about lifestyle might. The interest in saving money when making a popular type of purchase may be more universal.
- In line with the last point, members of the niche group must be able to identify themselves. For example, people buying a home these days probably want to save money. However, if many have never heard of mortgage lending, then it is a niche market in which a significant portion do not realize they are members. Depending on the nature of the niche, marketing may require a broader scope and educational efforts.