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Trading Up Homes Is a Pain. This Startup Wants to Make It Easier

Trading Up Homes Is a Pain. This Startup Wants to Make It Easier

(Bloomberg) -- FlyHomes pioneered a way to help homebuyers make cash offers, giving them an edge in competitive housing markets like Seattle and San Jose. Now that bidding wars are abating in those pricey metros, the company is promoting a new service -- and announcing a fresh round of capital to make it happen.

The four-year-old Seattle startup said Thursday that it had raised $141 million in debt and equity that it’ll use, in part, to support the growth of a business that targets people trading up to more expensive homes. Clients who use FlyHomes as a broker to buy a new house will get a guarantee that their old one will sell at an agreed upon price within 90 days. If it doesn’t, the startup will buy the property.

Trading Up Homes Is a Pain. This Startup Wants to Make It Easier

Home sellers are increasingly turning to services that give them more certainty in one of the biggest financial transactions of their lives. So-called iBuyers like Opendoor and Offerpad use algorithms to make offers over the Internet, and the companies then make minor repairs and list the properties for sale, charging a fee for the service. Traditional brokerages as well as Redfin Corp. and Zillow Group Inc. have gotten in on the business, too.

FlyHomes approach won’t be as instantaneous as those services, said Chief Executive Officer Tushar Garg. But it’ll give home sellers the same guarantee without losing the potential upside if their property gets a higher offer. “Our incentive is to make the money on the brokerage fee,” Garg said. “It’s extremely customer-centric.”

Trading Up Homes Is a Pain. This Startup Wants to Make It Easier

While bidding wars have declined precipitously in many of the places FlyHomes operates -- including Seattle, the San Francisco Bay Area and Boston -- there’s still competition. More than half the properties the company’s clients tried to buy this year had at least one other offer, Garg said.

Canvas Ventures led the $21 million equity portion of the fundraising round and was joined by Andreessen Horowitz, which already had an investment in FlyHomes. The company also received $120 million in debt from firms including Genesis Capital, a unit of Goldman Sachs Group Inc. Garg declined to comment on FlyHome’s valuation.

To contact the reporter on this story: Noah Buhayar in Seattle at nbuhayar@bloomberg.net

To contact the editors responsible for this story: Debarati Roy at droy5@bloomberg.net, Rob Urban

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