Maya and John Elliano wouldn’t have won without Flyhomes.
This past April the Seattle-area couple finally found a house they loved, but had to compete against 14 other offers — a familiar situation for buyers trying to purchase a property in the current chaotic real estate market.
They beat the competition thanks to Flyhomes, a Seattle-based startup founded in 2016 that just landed a massive $150 million investment to expand its real estate model across the country. It’s one of the largest rounds raised this year by a Seattle-area tech company and follows a string of megadeals for startups such as Rec Room, Outreach, Highspot, Rad Power Bikes, Stackline, Tanium, Icertis, and others.
Flyhomes helps clients purchase houses directly with cash. The idea is to present its customers as the equivalent of cash buyers, which sweetens the deal for sellers. Buyers secure a short-term loan from Flyhomes, which provides the cash until its clients finalize their mortgage.
The Ellianos signed up with Flyhomes in March and used the service from start to finish — for touring, for mortgage, and ultimately to purchase their home. They beat out other offers that were priced higher because the seller liked the cash offer and fast closing time (two weeks), perks enabled by the Flyhomes model.
“We had been looking at homes for a long time, in a discouraging market with a lot less cash than other buyers and real estate investors,” said Maya Elliano. “So once we started working with Flyhomes, we were able to be decisive and worked with them to place a competitive offer to win the home.”
The integrated end-to-end service under one umbrella is a key differentiator to help fend off competition in the trillion-dollar real estate industry, said Flyhomes CEO Tushar Garg.
“We’re building the world’s best home-buying experience,” Garg told GeekWire this week. “That vision is coming closer to reality.”
Homebuyers and sellers have a flurry of options to pick from on their real estate journey, from traditional brokerages to new “iBuyer” services operated by online companies such as Opendoor and Offerpad.
There’s also Zillow Group, the Seattle-based industry giant that has been touting a similar message to Flyhomes over the past few years as it evolves from a media-focused search hub to being involved with the actual transaction, investing heavily in its iBuyer service Zillow Offers and growing its mortgage arm.
“Zillow’s first-quarter results exceeded expectations and showed our momentum toward delivering a seamless, end-to-end real estate transaction,” Zillow CEO Rich Barton said in May.
Spencer Rascoff, Zillow’s co-founder and former CEO, invested in Flyhomes as part of the latest round. He’s been tracking the startup for several years and said the growth has been impressive.
“Flyhomes is at the forefront of a group of innovators bringing consumer-first solutions to homebuying,” said Rascoff, who is leading a SPAC that is taking Offerpad public this year at a $3 billion valuation.
In some ways, Flyhomes is benefitting from an unusual market that has seen inventory sink 37% year-over-year, as its cash offers can help give buyers an advantage in bidding wars. Garg isn’t worried about how things might change when and if the market stabilizes. In a slower market, he said sellers may prefer all-cash offers even more so given the increased uncertainty of when they can sell.
“We are creating the best buying experience — it’s not for any one market situation,” added Garg, who co-founded Flyhomes with his former Microsoft colleague Stephen Lane.
Flyhomes has bought and sold more than $2.6 billion in home value since launching five years ago, and its transaction volume has more than tripled year-over-year. In addition to its cash offer and mortgage products, the company also offers a “Buy Before You Sell” program that helps sellers buy and move into their next home before selling their current property. The company makes money like a traditional brokerage, taking a piece of each transaction, and also earns revenue from its mortgage arm.
Flyhomes declined to provide revenue metrics.
It plans to use the fresh funding to expand in its current cities — Seattle, the Bay Area, Los Angeles, San Diego, Portland, and Boston — and launch in new ones. The company’s headcount tripled over the past year to 400 people, and that number is expected to double over the next 12 months.
Norwest Venture Partners and Battery Ventures co-led the Series C round. Fifth Wall, Camber Creek, Balyasny Asset Management, and existing investors Andreessen Horowitz and Canvas Partners also participated. Total equity funding is nearly $200 million. Flyhomes declined to provide an updated valuation. It was valued at $150 million following an August 2019 funding round, according to PitchBook.
Lisa Wu of Norwest Venture Partners and Roger Lee of Battery Ventures will join the Flyhomes board as a result of the funding.
“This market is massive and there will be lots of winners,” said Wu, whose firm invested in Opendoor. “But you have to start with the customer first in order to create the authenticity and consistency of the experience. Flyhomes stands out because they started with the customer first, and the vision has been very consistent.”
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Source: https://www.geekwire.com/2021/flyhomes-raises-150m-expands-across-u-s-aims-change-way-people-buy-homes/
