In its first year, real estate startup FlyHomes avoided raising outside capital by attracting a customer base of homebuyers with perks like super speedy closing dates and airline miles. But now the technology-powered real estate brokerage is ready to take it to the next level, thanks to $4 million in fresh funds.
Today, FlyHomes announced $2 million in venture financing, led by e-commerce pioneer Mark Vadon, with participation from Pritzker Group Venture Capital and Avant CEO Al Goldstein. Vadon, who previously co-founded Zulily and Blue Nile, will join the FlyHomes board as part of the investment. The startup has also raised an additional $2 million in debt financing. The funds will help FlyHomes increase its marketing horsepower and expand to more cities.
“Mark’s investment is a really big deal,” said FlyHomes CEO Stephen Lane. “Him joining our board and becoming a leader and mentor at the company is more important to us than any size cash that he would have possibly provided.”
FlyHomes says it has helped more than 300 customers buy homes in Seattle, a notoriously difficult housing market driven by low inventory and high demand.
Update: The Northwest Multiple Listing Service says FlyHomes has facilitated 164 transactions in the Seattle region. We asked Lane about the discrepancy and he clarified, explaining that the number 300 includes transactions with multiple buyers.
The service is now also available in the Bay Area, Chicago, and Boston. The company’s model relies on a team of experts who work on different parts of the homebuying process, rather than individual real estate agents who own the process from start to finish. Employees are paid salaries and bonuses, rather than the commission structure of a traditional real estate brokerage.
“Where traditional real estate brokers have all been generalists — agents market; they help clients buy houses; they tour houses; they submit offers; they do closing — our backgrounds are from Microsoft and we’ve taken a specialist approach to the business,” Lane said. “We have negotiating teams, full-time tour leaders. We have ex-McKinsey and World Bank consultants help onboard customers. We’ve got ex-Microsoft operations and finance folks that run our closing process. We’ve taken this very specific subject matter expert approach.”
That model allows FlyHomes to help customers close in as little as seven days. Other services include on-demand home tours, pre-offer home evaluations, and perks associated with the home purchase, like Lyft credits and airline miles.
“Rising home prices make it increasingly difficult for homebuyers to purchase a home and millennials are increasingly demanding new and flexible solutions” Vadon said in a statement. “FlyHomes has built a great offering at the nexus of fintech and real estate.”
FlyHomes says it takes fewer than two offers for its customers to secure homes in markets, like Seattle and San Francisco, both of which have housing markets heated by an influx of high-paid tech workers. Those newcomers have become FlyHomes target customers.
“We’ve become the player for buyers at Microsoft, Amazon, etc. to work with,” Lane said, adding later, “in terms of the tech scene, everybody’s using us.”
FlyHomes is targeting these customers with millennial-focused, technology-driven services aimed at making homebuying more efficient. The startup is also connecting with these customers directly by hosting events at Amazon, Expedia, and the various WeWork locations around Seattle.
FlyHomes is part of a micro-trend of Seattle startups trying to make home buying more millennial-friendly. Brand-new Loftium is pursuing a similar goal by offering down payment assistance for home buyers who are willing to rent out a spare bedroom on Airbnb and split the profits.
The two startups are well aware of their common mission and are moving into the same office space to “build a place for the influencers in the Seattle startup community for real estate,” Lane said. The offices are located in an old furniture store downtown.
FlyHomes has ostensibly the same goal as its neighbor Redfin: using technology to make home buying more efficient and enjoyable. But Lane doesn’t see the newly-public real estate giant as a direct competitor.
“The real estate market is really big,” he said. “There’s a number of buyers out there who look to shop with Redfin. At the end of the day … some people prefer Redfin and some people prefer our level of service. We are better than anybody else, possibly in the business, with the level of service we provide. Redfin has built a really good search app and they’ve got an awesome website. Our product, at the end of the day, is that end-to-end customer service that we provide.”