Tech-focused real estate brokerage FlyHomes is officially launching a new product today designed to help clients compete with the all-cash offers that have become typical in hot housing markets, like Seattle.
It’s called “Guaranteed Offers” and it works like this: FlyHomes adds an addendum letter to the offer contract of pre-approved, qualifying clients ensuring that the brokerage will purchase the home if the deal isn’t closed by the agreed upon deadline.
FlyHomes created the program to give sellers more certainty that selling to one of the company’s clients will be as reliable as an all-cash offer — or more — says CEO Stephen Lane.
“We think it’s really unfair that sellers will choose an all-cash offer over the 98 percent of homes that are going to close, and therefore we’re taking the risk for that uncertainty,” Lane said in an email.
FlyHomes has secured a $2 million credit facility, which will provide the capital to purchase the homes. If a deal doesn’t go through, FlyHomes will buy the home for the agreed upon price and then sell it, but Lane doesn’t anticipate that will happen very often.
“We expect this number to be relatively low,” he said. “While we can’t know for sure until we hit a certain volume, we’re building this program to increase certainty for our clients and for sellers.”
Guaranteed Offers is similar to services offered by Redfin and Zillow, two other Seattle-based, tech-focused real estate companies. Customers who opt-in to Redfin Now can sell their homes directly to the brokerage, typically earning a little less cash but selling faster with less risk. Zillow’s Instant Offers service speeds up the transaction process by connecting homeowners to offers from investors as well as a comparative market analysis from a local real estate agent.
“We leveraged many of the learnings from companies like OpenDoor, OfferPad, etc. to find a way to purchase homes in a matter of days if, for some reason, the client’s transaction falls through,” Lane said in an email.
FlyHomes’ latest announcement comes on the heels of a $4 million investment round led by e-commerce pioneer Mark Vadon.
The company is based in Seattle and its services are also available in the Bay Area, Chicago, and Boston. FlyHomes takes a novel approach to homebuying, relying on a team of experts who work on different parts of the process, rather than individual real estate agents who own the process from start to finish.
Employees are paid salaries rather than the commission structure of a traditional brokerage, which is a bit of a gamble considering the big dollars successful agents can rack in on commission. FlyHomes also allows clients to earn airline miles when they purchase a home.
Those novelties, Lane says, have made FlyHomes “the player for buyers at Microsoft, Amazon, etc. to work with.” The company is also aggressively marketing to the tech industry co-hosting events at Amazon and WeWork.
FlyHomes has partnered with Better Mortgage to make the last-minute home purchases associated with Guaranteed Offers feasible.
“Historically, mortgage companies and real estate brokers have made a ton of money off of buyers and sellers, but when something goes wrong in closing, both sides have walked away scratch free, and it’s the buyer and seller that really lose,” Lane said in a statement. “We’re excited to actually stand behind our clients, so that if something goes wrong, the seller won’t lose.”