Flyhomes, a real estate technology company, has announced a significant change in its business strategy. The company will shut down its real estate brokerage operations by the end of September and transition its agents to The Real Brokerage. This move allows Flyhomes to concentrate exclusively on its wholesale lending products, particularly its popular "buy-before-you-sell" service.
Key Takeaways
- Flyhomes will cease its real estate brokerage operations by the end of September.
- The company's real estate agents and their active clients will transition to The Real Brokerage.
- The strategic shift allows Flyhomes to focus entirely on distributing its "buy-before-you-sell" product through wholesale channels.
- This decision follows a similar move two years ago when the company eliminated its direct-to-consumer mortgage business to avoid channel conflicts.
A Strategic Pivot to a Wholesale Model
The decision to close its brokerage division marks the final step in Flyhomes' transformation into a wholesale-focused fintech company. The Bellevue, Washington-based firm will now prioritize distributing its financial products through third-party partners, such as loan officers and real estate agents, rather than employing its own agents directly.
Tushar Garg, the co-founder and CEO of Flyhomes, explained the rationale behind the change. He emphasized that the move aligns the company's operations with its long-term goals.
"This move completes our shift and focus to wholesale lending and lets us scale Buy Before You Sell through the professionals homebuyers already trust," Garg stated in the announcement.
Eliminating Channel Conflict
This strategic pivot is not without precedent for the company. Adam Hopson, the Chief Operating Officer at Flyhomes, drew a parallel to a previous business adjustment. According to Hopson, this change mirrors the company's decision from nearly two years ago to exit the direct-to-consumer mortgage sector.
"Nearly two years ago we eliminated our direct-to-consumer mortgage business to avoid channel conflicts with our loan officer partners," Hopson said. "Today we’re doing the same on the brokerage side." By focusing solely on providing its products to other professionals, Flyhomes aims to become a partner rather than a competitor to brokerages and lenders.
What is a Wholesale Lending Model?
In a wholesale lending model, a company (like Flyhomes) originates and funds loans but does not work directly with the consumer. Instead, it offers its products through a network of third-party mortgage brokers, loan officers, and other financial institutions. These partners then offer the products to their own clients. This model allows the originator to scale its products widely without the overhead of a large direct sales force.
The Flyhomes "Buy Before You Sell" Solution
At the core of Flyhomes' new focus is its signature "buy-before-you-sell" product. This financial tool is designed to solve a common and stressful problem for homeowners who want to buy a new property but need the equity from their current home to do so.
The service provides several key advantages for borrowers. It allows them to make a strong, non-contingent offer on a new home, which is often more attractive to sellers. This is possible because the financing is not dependent on the sale of their old house.
Key features of the product include:
- Debt-to-Income Ratio Adjustment: The borrower's existing mortgage payment can be excluded from their debt-to-income (DTI) calculations when applying for the new loan.
- Equity Access: Homeowners can tap into their current home's equity to fund the down payment on their next home.
- Cash-Equivalent Offers: The program enables buyers to present offers that function like cash, with down payments as low as 5%.
- Flexible Timeline: After moving into their new home, the owner can sell their previous property on a normal market timeline, avoiding a rushed sale.
Impressive Market Reach
Since its founding in 2016, Flyhomes has facilitated over $7 billion in transactions using its buy-before-you-sell and cash offer products. The company's services are available in 36 states across the U.S.
Transition for Agents and Recent Corporate Activity
Flyhomes confirmed that its current brokerage clients will not be left without support. All active clients will transition with their agents to The Real Brokerage, ensuring continuity of service. The company did not disclose the number of agents affected by the shutdown.
This operational shift follows a period of significant corporate activity for Flyhomes. The company has been actively repositioning itself in the market and securing capital to fuel its wholesale strategy.
Recent Strategic Moves
In July, The Real Brokerage acquired Flyhomes' AI-powered property search portal and its associated engineering team. The technology is being integrated into The Real Brokerage's own client platform. This deal signaled a deepening relationship between the two companies ahead of the brokerage transfer announcement.
Just a month later, in August, Flyhomes announced it had closed a $15 million Series D funding round. The investment came from existing backers, including prominent venture capital firms like Andreessen Horowitz, Norwest Venture Partners, and Canvas Partners.
Alongside the equity funding, Flyhomes also secured a substantial $200 million warehouse line of credit. This facility is crucial for its lending operations, providing the capital to support more than $1 billion in annual loan originations. The company's wholesale platform, launched in 2024, has already grown to include a network of 30,000 loan officers, demonstrating significant early traction for its new model.
