A remedy for homebuyer’s remorse: Real estate startup Flyhomes today unveiled a new offering called Flyhomes Guarantee for Buyers that gives customers a way to move out of a home they recently purchased. It’s the latest idea from the Seattle company known for helping people buy homes outright with cash.
How it works: If a Flyhomes buyer decides he or she wants to move within a year of closing, Flyhomes will list the home and waive its commission. The client will still have to pay the buyer’s agent when the home sells, plus the seller’s excise taxes and closing costs. The idea is to help buyers alleviate anxiety when purchasing a home, particularly in today’s competitive market with homes selling quickly. Other real estate brokerages also offer similar guarantees.
Flyhomes Background: Founded in 2016, Flyhomes has helped more than 3,000 families buy homes worth nearly $3 billion.
Its cash offer program presents customers as the equivalent of cash buyers, which sweetens the deal for sellers by eliminating uncertainty and can give Flyhomes buyers an edge. Buyers get a short-term loan from Flyhomes, which provides the cash until its clients finalize their long-term mortgage. Flyhomes says it makes no money on the short-term loan, which has an annual interest rate of about 6%. Buyers also pay closing costs when they refinance their short-term mortgage.
Most of the company’s revenue comes from agent commissions.
The 450-person startup also offers mortgage services and has a Buy Before You Sell program that helps sellers buy and move into their next home before selling their current property.
Flyhomes faces stiff competition from both traditional brokerages and new technology-driven “iBuyer” services operated by online companies such as Opendoor and Offerpad. Then there’s Zillow Group, the Seattle-based industry giant that has been touting a similar message to Flyhomes in recent years as it evolves from a media-centric search center to being involved with the actual transaction, investing heavily in its iBuyer service Zillow Offers and growing its mortgage arm.
Flyhomes is currently active in five states. The company is led by CEO and co-founder Tushar Garg. It has raised more than $200 million to date, including a $150 million Series C round in June. Investors include Norwest Venture Partners, Battery Ventures, Fifth Wall, Camber Creek, Balyasny Asset Management, Andreessen Horowitz, Canvas Partners and former Zillow Group CEO Spencer Rascoff.
