Flyhomes, a pioneer of the end-to-end homebuyer model, has landed $150 million in funding that it says will allow it to meet outsized demand and expand beyond its current markets of Seattle, San Francisco Bay Area, Los Angeles, San Diego, Portland and Boston.
Two venture capital firms that led the Series C funding round — Norwest Venture Partners and Battery Ventures — will gain seats on the Seattle-based company’s board of directors. Also participating were Zillow cofounder Spencer Rascoff, Balyasny Asset Management, Fifth Wall, Trustbridge Partners, Camber Creek, and existing investors Andreessen Horowitz and Canvas Ventures.
Norwest Venture Partners’ Lisa Wu said in a statement that Flyhomes is “emerging as the leading consumer-facing brand in this new category. We’re thrilled to partner with them to serve more buyers across the country.”
Launched in 2016 by Tushar Garg and Stephen Lane, Flyhomes says it’s helped close $2.6 billion in home sales to date, with sales prices ranging from $150,000 to $5 million. The company provides end-to-end homebuying services through subsidiaries including FlyHomes Brokerage, FlyHomes Mortgage, and FlyHomes Closing.
Short-term loans allow homebuyers to make cash offers, and then take out a long-term mortgage with Flyhomes Mortgage or another lender after the sale closes. Flyhomes helps sellers prep their homes for sale, and trade up to a new home while their old home is still on the market.
Flyhomes also employs real estate agents who are paid a base salary and bonuses based on how many homes they help buy. Although buyers can work with their real estate agent of choice, they’re offered a rebate if they work with Flyhomes agents. Buyers can back out of a purchase after their cash offer is accepted, but they’ll lose their earnest money — typically 5 percent of the sale price — and Flyhomes will purchase the property instead.
When sellers chose Flyhomes as their listing agent, they pay 1.25 to 1.5 percent of the home’s sale price, or 2 to 2.5 percent for “all inclusive” services that include cleaning, staging, and inspecting.
If a home hasn’t sold after it’s been on the market for 90 days, Flyhomes will make an offer on it, although sellers can keep their property on the market until it sells.
The iBuyer business model pioneered by companies like Zillow, Offerpad and Opendoor originally targeted sellers who didn’t want to deal with the inconvenience of putting their homes on the market. Today, a growing number of companies also provide cash offers and trade-in services to buyers, providing alternative financing and acting as transaction facilitators.
Competitors in the space include:
- DivvyHomes, which raised $110 million in February, purchases homes on behalf of its customers and rents them back to them.
- Easy Knock, which is pioneering home sales and leasing options, lets homeowners sell their homes, but keep living in them.
- HomeLight, which offers a trade-in service for existing homeowners, and a lending program that allows buyers to make a cash offer in competitive markets.
- Hometap, which allows homeowners to sell a stake in their home to investors, raised $100 million at the end of 2019.
- Homeward, a cash-offer startup that purchases homes on behalf of buyers and lets them rent their new home while they sell their existing home, raised $371 million last month.
- Knock, which offers a trade-up service, “Home Swap,” has raised $600 million and plans to be in more than 100 markets by 2023.
- Offerpad, a pioneering iBuyer that generated $284 million in revenue during the first three months of the year and is preparing to go public.
- Opendoor, which went public in December and posted $747 million in revenue in the first quarter of 2021.
- Orchard, which raised $69 million in September and recently launched a new concierge service that allows home sellers to make upgrades and repairs to their homes at no upfront cost.
- Redfin, the real estate brokerage whose iBuyer offering, RedfinNow, is now available in 23 markets across nine states and the District of Columbia.
- Ribbon, which purchases homes for mortgage-eligible buyers and rents them back to them until they secure financing, raised $30 million in cash and secured $300 million in debt in 2019.
- Zillow, which last fall cut 80 jobs from its iBuyer segment, Zillow Offers, after adding Jacksonville, Florida as its 25th market.