Based on a model similar to popular iBuyers such as Knock and Opendoor, Felix Homes offers to buy a homeowner’s house for a prearranged price.
A new startup is hoping to be the bridge between iBuyers and real estate agents — it tries to sell your house and, if unsuccessful, buys it for a prearranged price.
Tyler Forte, who is preparing to launch his company Felix Homes in Nashville this month, first got the idea for the new iBuyer structure after watching a family member try to sell a home. After choosing the real estate agent who promised the highest price, the family had to settle for $30,000 less after he failed to sell the home for that much.
“I put my investor hat on, I put my tech hat on, and I created Felix,” Forte, who worked at a venture capital firm in New York before starting the company, told Inman. “We really do want to offer a better consumer experience.”
The key difference, however, is that the company will first spend 90 days trying to sell the property the traditional way, by listing it and trying to get the highest possible price.
According to Forte, such a model taps into a key demographic often missed by iBuyers — those who need to sell a house fast but do not want to settle for a lower price as a “convenience fee.”
“It’s kind of like cashing your check at Western Union rather than cashing it at the bank,” said Forte, adding that the average 10 percent charged by iBuyers only works for a subset of people that need to offload a property very quickly.
Felix Homes, which is based in New York City and hopes to eventually expand to markets beyond Nashville, will pay those who list a house with them 2 percent of the home value upfront and recommend repairs that it believes will help a property sell for more.
After 90 days, the owners can either agree to sell the house at the prearranged sum of 5 percent below the listing price or decide to hold on to it or go somewhere else. Should the company sell the house at a higher price, it will cap its commission earnings at 6 percent.
In the past two years, the market for iBuyers has exploded. Numerous startups are attempting to compete for customers who need to sell a home fast. Forte said that Felix Homes offers the certainty of knowing your house will sell while still trying to get clients the highest possible price.
“Yes, we guarantee that your home will be sold, but we’ll really try to optimize for price,” he said.