As house hunters are increasingly outbid by all-cash buyers, startups are stepping in to level the playing field.
FlyHomes and other companies make all-cash offers on homes using a line of credit from a bank while buyers work to secure a mortgage, Bloomberg reported. In exchange, the startup earns a 3 percent commission on the deal as a broker once the buyer gets a mortgage. FlyHomes says more than half of its offers are accepted.
Since the foreclosure crisis, lenders have been stricter about mortgage terms and to whom they issue home loans. FlyHomes is based in Seattle, where prices are rapidly on the rise and inventory is failing to keep up with demand. Other companies, including Ribbon and Knock are trying out models similar to FlyHomes’ in other parts of the country. Meanwhile, Zillow and Redfin are also experimenting with buying and selling homes. [Bloomberg] — Kathryn Brenzel