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Through its brokerage and mortgage business, the real estate startup Flyhomes has worked to build an end-to-end approach to homebuying and selling through its own agents and loan officers.
But with its power buyer program, Flyhomes sets its sights on a bigger target: Agents at other brokerages whose clients want to lead with the strongest possible offer.
Since 2017, the real estate company has also been one of the early players in the burgeoning power-buyer space. That’s when Flyhomes unveiled its cash offer product, a short-term loan that lets homebuyers bring an all-cash offer to the negotiating table, before refinancing into a long-term loan.
Once known as “Flyhomes for Agents,” the company’s power buyer program has now been rebranded to “Sailbridge.” The newly renamed program still features the cash offer option and also includes a “buy before you sell” service.
The name was changed, in part, to help make clear that these power buyer tools are available to clients of any agent — not just those who are affiliated with the company’s brokerage wing, Flyhomes spokesperson Justin O’Neill told Inman over a video call.
“It is built on Flyhomes’ proprietary mortgage platform,” O’Neill said of Sailbridge’s power buyer offerings. “But the idea is just to eliminate the sense of confusion with third-party agents, because Flyhomes does have a brokerage component to our larger platform.”
Like with other power buyers, these Sailbridge offerings can help an agent’s clients make strong offers on homes in a way that is more attractive to sellers and even provide leverage to negotiate a lower price on the sale. An agent doesn’t have to be associated with Flyhomes to use these services. And participating won’t touch the agent’s commission.
But there are some additional costs and considerations for buyers including a convenience fee and additional closing costs. Here’s how the products work and how agents can get started.
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From there, the Sailbridge team will provide agents with instructional resources that explain the process, according to Arjun Nair, head of Sailbridge for Flyhomes.
They’ve tried to set up a process where agents who have a lot of questions can have them answered in detail, Nair said. But agents who don’t have as much time to get into the weeds can still help their clients make all-cash offers with Sailbridge, he added.
After filling out an offer request form online, qualified applicants will receive three documents: A proof of funds, a program-approval letter for the specific home the client wants to buy and an addendum to add to the offer that informs the seller they’ll be paid in cash.
“I said addendum: it’s very light,” Nair told Inman. “We’re not trying to play with contracts too much. We want to make the offer as simple as possible.”
Going with an all-cash offer allows the buyer to waive various contingencies and strengthens the offer for buyers. But for buyers who go through this service, there are two main routes to select from as described below.
For first-time homebuyers, the main Sailbridge product is a relatively simple cash offer.
The buyer qualifies for a short-term loan through Sailbridge, which can close in as few as 10 days — although not always that quickly. Then after that loan is secured, the buyer can refinance into a long-term loan from Sailbridge or any other lender.
For the sellers, a key part of the draw is that Sailbridge promises to buy the home even if the buyer backs out of the deal, provided the contingencies in the contract are met.
In the rare cases when Sailbridge has to make good on this guarantee, the company effectively acts as an iBuyer, listing the home on the market in a bid to sell it quickly, Nair said. If that second sale makes a profit, Sailbridge will also pay back all or part of the buyer’s earnest money after covering its own costs, according to the company website.
“When we guarantee these offers, the intention is not to buy the home,” Nair said. “And part of why we’re so confident in guaranteeing these homes is we’ve got that due diligence in terms of really fully underwriting the consumer to the fullest extent possible.”
Ultimately, these guarantees are made with the intent of strengthening the offer in the eyes of the seller, Nair said. It’s structured to allow first-time buyers to feel confident waiving appraisal and finance contingencies.
These same features are also available to existing homeowners but with a process more geared toward their needs. The Sailbridge “buy before you sell” product is for such repeat buyers.
On the buying side, it works much the same way, offering an attractive all-cash guarantee to the seller. The process is designed to unlock the equity of their previous home before it’s sold. But by allowing homeowners to sell their current home after they’ve secured their next one, they’re also able to avoid the possible inconvenience of having to move twice.
Agents whose clients use a Sailbridge loan get to keep the commission. But depending on the product they’re using and how they finance the long-term loan, they may be on the hook for additional fees and closing costs.
Here’s how Sailbridge makes its money.
For the cash offer product — aimed at first-time homebuyers — the company charges the buyer a convenience fee equal to 1 percent of the purchase price, paid at closing of the short-term loan. On top of that, the buyer pays closing costs on that loan.
If the buyer then refinances into their long-term loan through Sailbridge, then that same 1 percent convenience fee will be credited back to them at closing. If the buyer prefers to refinance with another lender, they do not receive the convenience fee back.
Importantly, this means the buyer will also pay closing costs on two loans — the short-term first and the long-term next — instead of just one. So even if they end up getting the 1 percent convenience fee back, they’ll pay additional lending costs that aren’t part of a typical home transaction.
For existing homeowners using the “buy before you sell” option, there’s a higher convenience fee and it’s only partly refundable.
A “buy before you sell” client will pay 1.9 percent of the purchase price in convenience fees at closing on the short-term loan. If that client refinances through Sailbridge, 1 percent of the purchase price will be refunded via closing credit, leaving a net fee equal to 0.9 percent of the price. Like the cash offer option, the buyer will also pay closing costs on two loans instead of one.
For agents and their clients who might benefit from this approach but might be leery of the higher costs and fees, Nair recommends bringing two offers to the negotiating table with the listing agent — a normal offer at the buyer’s preferred price and a stronger cash offer with a reduced purchase price.
“Let’s say we’re talking to a seller,” Nair said, and ask them, “‘Would you prefer a contingent offer that’s 0.9 percent more, or a cash offer that’s 0.9 percent less?’ I think most sellers — and this is anecdotally — are going to take the cash offer that’s 0.9 percent less.”