Update: Faira has settled charges referenced in this article that it was operating as an unlicensed brokerage by agreeing to hold its buyer fee in a trust account until Faira’s money-back policy expires, said CEO Kamal Jain.
For-sale-by-owner (FSBO) startup Faira has raised another $1.2 million, with plans to bring “transparent bidding”to the San Francisco Bay Area.
Faira, which has so far only operated in the Seattle area, is among a handful of companies that are pioneering “transparent bidding.”
The sales tactic creates an auction-like experience that some observers expect to gain traction, even as many agents remain skeptical.
The Kirkland, Washington-based startup had previously been charged with operating as an unlicensed brokerage by the Washington State Department of Licensing.
Jerry McDonald of the agency’s real estate division said the department was still in talks with Faira over the charge. Faira spokeswoman Katrina Wisner said it’s made changes requested by the agency, though “it could take time for them to process our response.”
Faira claims to have listed over 100 properties in 2016 and to have saved customers an average of $20,000.
Faira’s free listing option includes traditional FSBO services, such as photography, for sale signs and lockboxes.
But unlike many FSBO services, the offering also comes with an MLS listing posted by its licensed brokerage subsidiary or a “partner broker,” as well as inspection and title reports. Faira’s paid package, which costs 1 percent of a home’s price, offers agent support services.
Buyers can review a listing’s property reports on Faira’s website and place bids for a $500 fee. They get their money back if a seller turns down their offer. But if a seller accepts, buyers must either pay a 0.5 percent-commission to consummate the deal or back out and lose their $500.
The goal is to fetch top dollar for homes while eliminating the need for traditional earnest money deposits, offer contingencies and “downstream negotiations.”
Faira listings generally make a typical offer of compensation to buyer’s brokers. But they also provide a strong incentive for buyers to purchase their listings without representation, typically offering a 3-percent discount off the purchase price to buyers without agents.
The funding round was lead by Uber and Vroom investors Mark Hager and Himel Capital.
“Powered by a dynamic team, Faira developed a technologically sophisticated marketplace that takes the complexity and confusion out of home sales, unlike anything I’ve seen before,” Hager said in a statement. “I look forward to the significant impact Faira will surely have on home sales in the Bay Area.”
Editor’s note: This story has been updated with comments from Faira and the Washington Statement Department of Licensing.
