Homeward gets $ 371 million to help people make all-cash deals on homes – TechCrunch
Trying to buy a home in a competitive market is perhaps one of the most stressful things an adult can go through.
Competing with a group of people, anything that puts up bids on a house that flies off the market in a few days is no fun. A startup that tries to give homebuyers a competitive edge by giving them a way to offer all the money on a home has just raised a shipment of money to help it continue to grow.
Homeward based in Austin, which aims to help people buy homes faster, announced tToday, she has raised $ 136 million in a Series B funding round led by Norwest Venture Partners at a valuation “just north of $ 800 million.” The company also took out debt of $ 235 million.
Blackstone, Breyer Capital and existing backers Adams Street, Javelin and LiveOak Venture Partners also participated in the equity financing, bringing Homeward’s total equity raised since its inception to $ 160 million.
Homeward’s model appears to appeal to both homebuyers (including first-time buyers) and agents, with strong growth since May 2020, when it raised $ 105 million in debt and equity. The company declined to reveal specific revenue figures, but noted that its GMV (gross value of merchandise) rate was up more than 600% year-over-year.
Additionally, in March, Homeward said it saw a 5-fold increase in the volume of homes serviced and a 9-fold increase in the number of new customers per year. In addition, it has hired 161 employees since January alone and currently has 203 people, up from around 33 at the same time last year.
CEO Tim Heyl founded the real estate startup in late 2018 on the assumption that in most cases sellers prefer to receive all offers in cash as they are more likely to close. Loans can fail, but cash is cash.
Heyl started the business after working in the industry for the previous decade, first as a broker and then as the owner of a securities firm. During that time, he saw many of the industry’s problems with his own eyes. And one conundrum he encountered frequently was people who didn’t want to bid on a home without knowing for sure that their current home would sell within a certain amount of time. It’s a dilemma many face during the COVID-19 pandemic, as demand outweighs supply in many major US cities.
“The pandemic has dramatically increased demand for our product,” Heyl told TechCrunch. “This is a historic sellers market with unprecedented demand from buyers and the lowest inventory levels in decades.”
The company plans to use its new capital to “double” its supply, expand to meet “disproportionate demand” and open additional markets. Currently, Homeward operates in Texas, Colorado and Georgia.
“Right now we have a waiting list in every market across the country, so this growth capital will allow us to meet that demand,” Heyl said. Its ultimate goal is to open up its offer to agents across the country.
Homeward also plans to double the size of its securities and mortgages teams in the second half of the year in order to be able to offer its clients and partner agents “one simplified experience”. It also plans to integrate its consumer and in-house software systems for approvals, offers and close “so that everyone can be on one platform and we can eliminate confusion and waste,” added Heyl.
So how exactly does it work? Homeward will make an all-cash offer on behalf of a customer wishing to purchase a home. During this time, that client can hire an agent (from brokers such as Redfin or Keller Williams) to list their house with less pressure to sell it within a certain amount of time or at a reduced price. Once Homeward buys a house, he will rent it out to his client until he sells his house, gets a mortgage, and can buy the property back from Homeward. During the process, Homeward offers a predetermined guaranteed price for his client’s house with the promise that if he is unable to sell the house for at least that amount, he will buy it.
The company charges the purchaser a “standard convenience fee,” which varies by condition and service. The buyer can obtain closing credit when using the company’s mortgage services.
Heyl believes Homeward’s “alternative iBuyer” model is a better deal for customers because it doesn’t buy a customer’s old home for less than market value. The company is also working with agents, not against them, he said. For example, her offerings are available to any agent, but the company “strategically” partners with top brokers and teams, providing them with what it describes as “dedicated support, white label and digital marketing tools to help them stand out. crowd and attract more customers.
“Most alternatives to traditional real estate minimize or replace the agent,” Heyl said. “But we are agents ourselves, and we built this for the agents.”
Homeward is profitable per unit if you count transaction revenue minus the costs of acquiring and completing each transaction, according to Heyl. However, it is not yet profitable on the basis of net income.
Jeff crowe, Managing Partner of Norwest Venture Partners, will join Homeward’s board of directors in connection with the financing.
“Homeward is innovating at the intersection of real estate and fintech – it’s the next frontier,” he said. “HOmeward’s cash offering addresses real issues for buyers in all market conditions, and the team has identified a winning strategy by partnering with agents and their clients.
Jim Breyer of Breyer Capital describes Homeward as one of Austin’s most innovative companies.
“We are inspired by the company’s mission to create real estate finance solutions to overcome the limitations of traditional mortgage and we are proud to support them as they continue to evolve quickly and efficiently,” he said. he declares.