- Homeward announced it closed $25 million in equity and debt to help make the home buying process easier for users
Homeward — a company that is helping improve the home buying process — announced it raised $25 million in initial funding including $4 million of equity funding led by LiveOak Venture Partners and $21 million of debt funding from Genesis Capital and Keystone Bank. The founding team members of Opcity, ApartmentList, and a few other real estate tech startups also joined this round.
Homeward’s business model enables customers to make all-cash offers to secure their next home prior to selling their existing home. And this round of funding will power the expansion of Homeward’s support teams and acquisition initiatives as well as improving its web and mobile customer experience to scale its initial product offering called The Homeward Way.
“The current process of home buying is backward,” said Homeward founder and CEO Tim Heyl in a statement. “Buyers have to sell their existing home and then rush to find a new one. We remove this uncertainty by letting buyers use our cash to secure their next home first. Then they can take their time and sell their existing home for its full market value.”
Heyl has been working in the real estate industry for more than 10 years and launched the Heyl Group in 2009 — which has grown to become one of the top 25 teams in the U.S. While Heyl was working in the real estate industry, he encountered a major challenge in the process — which is that buyers couldn’t make an offer on the home they wanted until they sold their existing home, but they did not want to list without knowing where they were going next. And Heyl launched Homeward in 2018 to redesign the home buying process with the Homeward Way model thus capturing a growing market share in Texas, Georgia, and Colorado.
The Homeward Way gives homebuyers credit their home equity upfront and it lets them make an all-cash offer to secure their next home using the company’s funds. Plus Homeward customers also receive a floor price guarantee on their existing home in case they are unable to sell it for its full market value.
The buyers who use Homeward’s all-cash offer get an average discount of 2-5% on their next home and are twice as likely to beat buyers who make mortgage-backed offers. And Homeward customers can also stay in their current home while they make improvements to their new property. They only have to move once and can control the timing of their move.
Homeward customers don’t have to sell their existing homes at a discount to iBuyers — which generally offer below-market pricing and charge fees greater than those of traditional real estate agents. The service that Homeward charges is at a fixed 1.90% of the purchase price compared to iBuyers that charge up to 9% of the home sale price. And iBuyers also take a portion of the real-estate agent’s commission and often force home buyers to work with them exclusively.
“We partner with exceptional entrepreneurs who are looking to transform large established industries. We recognized early on after meeting with Tim, given his incredible domain expertise and accomplishments and our experience as the first institutional investor in Opcity and Ojo Labs, that Homeward has real potential to disrupt the real estate market by empowering the consumer,” added Krishna Srinivasan — a Founding Partner at LiveOak Venture Partners. “Our team is excited to invest and support the Homeward team as they reshape the broken legacy process of buying and selling homes.”
How does the Homeward Way work? First you get approved by submitting an application so that Homeward can calculate your home equity and provide you with an approval in minutes. Then you work with your agent to find and purchase your ideal next home without having to list and sell your current home first. From there, you can secure your next home by making an all-cash offer with Homeward’s funds. And then you lease your new home back from Homeward for up to six months and list your home for sale whenever you’re ready. If it does not sell, then Homeward will buy it from you at a pre-agreed, fair market price. Once your old home sells, you’ll get a mortgage and buy your new home back from Homeward at the original purchase price.
According to Zillow, 43% of home buyers have an existing home to sell before they buy their next one. And this hurdle prevents can cause homeowners to delay their move indefinitely, which hurts customers and their agents.
“Without Homeward, my clients would still be in their old house.” explained Matt McKnight — a real-estate broker in Austin, Texas. “The right home in the right neighborhood popped up well before they had considered listing. Homeward’s all-cash offer secured the house and gave us the time we needed to list their existing home without feeling rushed.”
