Charleston’s PunchListUSA Broadens Client Base to Weather Frenzied Housing MarketJan 27, 2023 02:30PM ● By David Caraviello
It was a long shot, and Min Alexander knew it. Because she’s had a broker license for over a decade, she’d managed to make a LinkedIn connection with Bob Goldberg, chief executive officer of the National Association of Realtors. So Alexander messaged Goldberg a cold pitch about what PunchListUSA, her up-and-coming home repair company based in Charleston, could do for the NAR and its roughly 1.6 million members.
“I thought it would just get lost in an inbox,” recalled Alexander, PunchListUSA co-founder and chief executive officer.
Goldberg didn’t respond — but the investment arm of the NAR, to whom he had forwarded the message, did. In early 2022, PunchListUSA and the NAR began working on a customized program that would entail NAR members gaining free access to PunchListUSA’s online repair estimate tool, by uploading an inspection PDF through a web portal. On Sept. 8, the NAR issued a press release announcing the partnership, which both sides believe streamlines one aspect of the home buying or selling process.
It was a huge victory for PunchListUSA, in more ways than one — not only did the NAR partnership promise to enhance name recognition and business growth, but Second Century Ventures, the NAR’s strategic investment arm, also became an investor in the company.
What started as a contractor service for individual real estate agents has grown into a company with a thriving institutional business, a broad roster of investors, 27,000 account holders, and 109 full-time employees, 22 of them working in new headquarters in the WestEdge building on the Charleston peninsula.
PunchListUSA representatives were at the NAR’s annual conference in November in Orlando, Florida, conducting demos for attendees. The company’s list of clients now includes established real estate agencies such as Berkshire Hathaway HomeServices, Ansley Atlanta, Carolina One of Charleston, Realty Austin in Texas, and Keller Williams Capital Properties in Washington, D.C. In August, Inc. Magazine named PunchListUSA as No. 775 on its annual list of the 5,000 fast-growing companies in America.
Why has it worked? As Alexander tells it, it’s because PunchListUSA has attempted to change one aspect of the real estate industry without trying to displace any of the companies or people who already work within it.
“There’s been a lot of disruption in real estate. But the first wave of disruptors wanted to displace professionals. And anytime you have a push like that, that’s not a positive but a negative detractor of, how do I reduce trade and livelihoods and purpose in an industry? That doesn’t tend to go well,” said Alexander, a native of Columbia who holds degrees from Duke University and MIT.
“It’s like, Zillow came out guns blazing that they would be the alternative to brokers. Well, you have a trade profession of 1.6 million licensed NAR members, and 2 million overall as an industry. And you really, the perspective that I’ve always valued with my team is, we really push to empower stakeholders who work with us — brokers, agents, pros, contractors, our strategic partners. And I think that is a much more virtuous way to push business, when folks want to root for your success.”
Battling housing headwinds
The initial incarnation of PunchList — before it added the “USA” to its name — was founded in 2017 by Charleston real estate agent Jimmy Banyas and Rich Estes, the owner of a residential construction company. Their goal was to expedite the repair process on Holy City homes that needed punch list items checked off before the residence could close. The company developed technology that delivered an analysis of inspection reports, paired clients with contractors from within its network, and aimed to have the work done quickly without sacrificing quality.
The idea took off — Banyas and Estes took the company from digs in Mount Pleasant to a location in the heart of downtown Charleston’s tech corridor, expanded to 10 other markets, and by early 2020 had plans to grow to 50 employees. Then came the coronavirus pandemic, and the post-lockdown, pent-up sales frenzy that roiled the real estate market nationwide for more than two years. Competition for available homes grew so intense that prospective buyers weren’t just negotiating over punch list items — in many cases, they were offering to forego inspections completely in an attempt to win the seller’s favor and close the deal.
The conditions took a toll: in early 2021, Alexander said, the company was down to about 18 full-time employees.
“Our strategy, it’s really genius. It’s embedded in a transaction where there is urgency, where there is less price sensitivity, because folks will pay to have the work done and ensure they close versus, ‘Just let me handle it for the lowest cost,’” Alexander said. “So that is a great place for us to be in. But in a hot market, when sellers are waiving inspections, and they waive contingencies, that’s actually not the best place for us to be in because buyers don’t have leverage to get the repair work done.”
Alexander was brought on board in May of 2021, with that hot market still raging, as a late-stage co-founder and CEO, replacing Estes in the latter role. She had previously served as chief operating officer and general manager at Auction.com, where she led a team of 800 people with operations in 23 states, handling over 140,000 home auctions annually. With its core business suddenly compromised by unforeseen circumstances, the soon-to-be relaunched PunchListUSA needed a presence in the institutional market, and scale — both of which Alexander specialized in.
That meant PunchListUSA doing more work “outside of the transaction,” Alexander said, such as offering home repairs and renovations beyond the scope of a residential sale. And that meant mining Alexander’s contacts to bring in institutional business with entities such as single-family owner-operators, REITs, and iBuyers who deal in thousands of properties, rather than a single one. “It’s really difficult to launch into retail space, because the marketing and the traction is very slow to build,” she added. “But it’s powerful once it’s built up. We needed a cushion to ensure we had revenue and our business could continue growing regardless of the headwinds.”
PunchListUSA landed its first institutional client in Zillow Offers through relationships Alexander had made in her two decades working in the real estate sector. The company’s portfolio of institutional clients has since expanded to 25, she added. In July, it announced $39 million in new investment led by Sweetwater Private Equity and Morpheus Ventures, and including additional investment from Home Depot Ventures, Second Century Ventures, Palm Drive Capital, the Bielsky Family Office, IDEA Fund Partners, Meeting Street Capital, Solo Capital Management, and VentureSouth.
That injection of funding, along with a broader base of business, give Alexander confidence even heading into a 2023 where homes sales are expected to fall 7 percent nationally, according to the NAR.
“The one thing that makes me feel very good about where we are is that we’ve really spent the past two years bolstering our foundation,” Alexander said. “In a great year, there will be six million residential transactions in our country. Next year, we’re on track for 5.3 million. That’s a reduction. But I think we’re in the best position that we could be in. Downturns are really kingmakers in our industry. That’s when you really shine.”
14 markets and counting?
PunchListUSA has 5,000 contractors in its network, and each one goes through a screening process that can include referrals, background checks, and verification of tradesman licenses, worker’s compensation insurance, and government-issued ID. That’s one part of the vetting process — ensuring that the pro who shows up at a front door representing PunchListUSA is legit. The other half involves training on the company’s proprietary app for contractors. A PunchListUSA employee also typically conducts a final walk-through with the contractor after the work is completed.
“A technology is really only as good as its delivery on the fulfillment side,” Alexander said, “and because we are a people-based business, that’s been the core focus.”
When PunchListUSA dispatches a contractor to a residential home to handle repairs in advance of a closing, the company doesn’t really seem all that different from the one that Banyas and Estes founded five years ago. The scope of the business, though, has changed dramatically, giving PunchListUSA more flexibility in weathering the peaks and valleys of the housing market.
PunchListUSA has opened another office in Irvine, California, Alexander said, and is eyeing a Dallas location by the middle of 2023. Charleston, though, remains the company’s home. And as for potential expansion beyond its current 14 service markets? PunchListUSA receives data from all 50 states through its agreement with the NAR, and has a goal of growing to 30 markets. But the company is willing to take its time getting there.
“It’s been tempting,” Alexander said. “We’re always asked a lot about expanding out of the 14 markets we’re in and growing into others. For right now, until we’ve penetrated deeper and made sure that we are mastering the 14 markets that we’re in, there isn’t a real need, especially in this economic environment.”