Land Gorilla CEO Says Technology Can Make Construction Lending More Profitable


The CEO of Land Gorilla says advancements in technology are creating opportunities for more profitable construction lending.

Sean Faries said since the California-based technology service provider for banks, credit unions, and mortgage bankers started in 2010, there has been a move from spreadsheets to digitization.

Land Gorilla is now taking things a step further, allowing lenders to build their own workflows with automation to complement them.

“We are creating efficiencies for the financial institution that’s utilizing the software, where they’re able to reduce headcount or they’re able to improve processing times at such a magnificent return that the software far pays for itself,” Faries said.

Faries said that they use machine learning combined with “a lot of business logic.” The company also has its own lab with an experimental working group that is testing the capabilities of artificial intelligence in this space.

Faries said AI will play an important role in the future of the industry. For right now, they are waiting to see how regulations will come into play.

When asked how regulations affect the industry overall, Faries said one of their goals is to provide information to construction lenders throughout the country. They have a compliance library that features state statutory requirements and information to safeguard interests and mitigate potential risks.

“Anything that pertains to construction lending, we believe that that information should be readily available, not just to our clients, but any construction lender out there so they can make better informed decisions. The more they’re informed, the better construction loans they make. Everybody wins at the end of the day,” Faries said.

Faries said that the biggest challenge when it comes to building right now is the cost. It’s expensive to finance projects and in response to current interest rates, production volume for new construction is down.

Faries said builders need to make a certain amount of profit, or the deal doesn’t make sense. And after the pandemic, when materials and labor costs skyrocketed, many of them are hesitant to get into fixed-price contracts.

Things may be looking up for builders as they prepare for the second half of 2024.

According to a press release issued by leaders at the National Association of Home Builders on Monday, builder confidence in the market for newly built single-family homes climbed three points to 51 in March. This is the highest level since July 2023 and marks the fourth consecutive monthly gain for the index.

NAHB Chief Economist Robert Dietz said with the Federal Reserve expected to announce rate cuts in the second half of 2024, lower financing costs will draw more prospective buyers into the market.

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