Prospective homebuyers across the nation, and especially in red hot markets like Austin, often have to pull out all the stops and add in as many deal sweeteners as they can to even have a chance at buying a new pad these days.
Amidst the competitive chaos, an Austin real estate startup hopes to give more buyers an edge that they might not otherwise have access to: an all-cash offer.
Homeward, a company founded in 2018 by one of Austin's top-selling Realtors, uses its financial fuel and market know-how to make all-cash offers on behalf of prospective homeowners so they can make more attractive offers to top the competition. It also offers homebuyers the flexibility to avoid selling their current home in order to have the cash on-hand for a down payment on their future place.
The company started on its home turf in Austin, and quickly began to service deals in Colorado and Georgia. Now it's hoping to branch out into even more markets following a $371 million investment that includes $136 million in series B equity funding and $235 million in debt.
Norwest Venture Partners led the equity portion, along with new investors Blackstone and Austin-based Breyer Capital. The deal also included prior investors Adams Street, Javelin and Austin-based LiveOak Venture Partners. Blackstone Alternative Asset Management took the lead on the debt.
This adds to a $105 million financing last May, which included $85 million in debt from multiple institutional lenders, as well as $20 million in equity funding.
With the new money in hand, Homeward said it now has a valuation of more than $800 million. While the company didn't share exact numbers, it reports seeing the volume of homes purchased via its services increase rapidly and the rate of new customers boom ninefold year-over-year.
The company has hired 161 people so far this year since shifting to a remote workforce. It plans to hire 250 additional employees this year in roles ranging from operations and customer experience to product, marketing and data science.
“We anticipated cash offers becoming standard a few years ago — sellers prefer cash offers because they are much more certain to close,” Homeward founder and CEO Tim Heyl said in an announcement. “We designed our cash offer in a way that enables real estate agents to make every buyer a cash buyer. Our instincts were right — that's obvious from the tremendous demand we're seeing today."
Homeward's original offering gives cash upfront to potential homebuyers until they sell their existing home and guarantees the sale of that home. Buyers then can move into the new home and lease it back from the company for half a year at market rate while their previous home is on the market.
Homeward expanded on that with a buy-with-cash option for those who don't need to sell an existing home but want help to make an all-cash offer and eliminate traditional financing and appraisal contingencies.
The startup also works closely with real estate agents and partners with major brokerages and firms, including Realty Austin, on white-label products and marketing tools.
“Buying a home is one of the biggest financial decisions most of us ever make,” Brian Gubernick, Homeward's chief real estate officer, wrote in a blog post. “Homebuyers want an expert by their side throughout the process. So we keep agents at the center of the transaction, offering them services that solve their clients’ problems.”
Homeward's rapid growth and major funding come as Austin's real estate-tech sector continues to boom alongside its traditional real estate community.
For example, AnthemIQ, which spun out of commercial real estate firm Elevate Growth Partners, announced a $10 million series A investment earlier this month, and last year OJO Labs secured a $62.5 million round for its software that provides homebuyers with key information on properties and connects them with agents. And REX, an online residential real estate brokerage that directly markets homes to potential buyers, moved from Los Angeles to Austin in 2019 and has raised more than $100 million.
