For an executive who runs the publicly traded parent company of a real estate brokerage that employs nearly 15,000 agents, Fathom Holdings CEO Marco Fregenal sounds pretty excited about his company’s acquisition of START Real Estate, whose 70 agents are expected to close 400 deals in Colorado and Utah this year.
What’s got Fregenal fired up is the prospect of taking Centennial, Colorado-based START Real Estate’s business model, which focuses on first-time homebuyers, nationwide.
Founders Randy and Terri Bell have “developed a proven model for guiding first-time buyers through the homeownership journey, a demographic representing one of the largest and fastest-growing segments of the U.S. housing market,” Cary, North Carolina-based Fathom Holdings said Thursday in a press release announcing the deal.
Marco Fregenal
“It’s not the only thing they do, but it’s the majority of what they do,” Fregenal told Inman. “They’re very hands-on from the beginning, educating the client on the process, because the purchase process is complex, right? And so they really take the time to do that. So we decided that we wanted to acquire them because we want to roll this out across the country.”
The terms of the deal were not disclosed. Last month Fathom raised $5.4 million in a public offering of 3 million shares priced at $2 per share, with proceeds earmarked for sales, marketing, strategic growth and ongoing operations.
Employing marketing and lead generation targeting first-time homebuyers, over the last 15 years, START Real Estate has amassed a database of 50,000 prospects, Fregenal said.
“They do a lot of things in terms of marketing, but they also helped so many people that those people are telling other people about it, right?” Fregenal said. “And so they got a lot of referrals.”
START Real Estate marketing campaign targeting first-time homebuyers. Source: Facebook.
With the Bells now on Fathom’s payroll, he expects to be employing their business model in at least 15 states within a year.
“I’ve always believed that first-time buyers are really important for this industry,” Fregenal said. “And, you know, first-time buyers have had a really hard time the last couple years because of high interest rates, right? So interest rates are improving.”
In addition to its real estate brokerage business, Fathom Realty, parent company Fathom Holdings, also offers mortgages through subsidiary Encompass Lending Group and title insurance through Verus Title Inc.
That makes START Real Estate’s 70 percent mortgage attach rate another attractive aspect of the deal.
“For every 100 deals that they do, 70 of them use the mortgage company that they like to partner with,” Fregenal said. Going forward, that mortgage company will be Encompass Lending Group (ELG).
“All that business that comes in from lead generation and their clients will go to ELG, because they’re part of the Fathom family,” Fregenal said. “They also have a very high attach rate for title, because they really are very hands on in helping that buyer through the entire process. So we’re really excited we made the acquisition.”
The START Real Estate team will train other agents across the country on how to replicate its business model. Fregenal said Randy and Terri Bell will also work with Flavio Jimenez, Fathom Realty’s vice president of business development for Hispanic markets, to bring their first-time buyer program to the Latino market.
“This is probably one of the most exciting opportunities for us because of the domain expertise that they have,” Fregenal said.
Although the company is now part of Fathom, it will likely maintain a separate brand identity within Fathom Realty, such as START Team or First-Time Buyer Team.
“We’re not going to change much,” Fregenal said. “They’ve proven that they built a great business. Think of it as, they created this really beautiful fire, and now we’re going to put more gasoline on it.”
Fathom Realty’s flat-fee and revenue-sharing commission models have helped the company grow its agent count. Many START Real Estate agents are expected to opt for Fathom Realty’s newest commission plan, Elevate, in which agents pay a 20 percent commission split in exchange for “concierge-level services” including dedicated marketing support and lead generation.
Shares in Fathom Holdings, which in the last 12 months have traded for as little as 65 cents and as much as $3.37, closed up 3 percent Thursday at $1.76.
The company’s price per share dipped below $1 in March, triggering a compliance warning from Nasdaq in April. But worries about delisting faded when Fathom’s share price climbed back above the $1 minimum threshold in May.
As of June 30, the 14,981 agents affiliated with Fathom were involved in 22,425 transactions in the first half of the year, up 28 percent from 2024, putting Fathom Realty on track for its busiest year since 2022.
Although Fathom posted a $3.6 million second-quarter net loss, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were in positive territory for the first time since Q2 2024.
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