Fello, the Pepper Pike, Ohio-based company that uses technology to generate cash offers to buy and sell homes quickly, has raised $25 million in debt and equity.
Co-founded in 2019 by Ryan Young, Tom Schrader and Stephen London, the so-called instant buyer formerly known as FlashHouse will use the new capital to scale its operations nationwide, Fello said in a Tuesday statement.
The equity portion of the funding was led by Javelin Venture Partners in San Francisco with participation from Ben Rubenstein, founder of OpCity and former chief revenue officer of Realtor.com, the Santa Clara, California-based real estate listing service, Fello said.
Fello's expansion comes at the same time at least one competitor gets out of the iBuyer market.
In November, home listing service Zillow shuttered its iBuyer division, called Zillow Offers, because of "the unpredictability in forecasting home prices far exceeds what we anticipated," CEO Rich Barton told CBS News.
Fello uses information from home sellers and algorithms to calculate a fair market price for a house within 24 hours.
Unlike house flippers, who tend to buy homes in poor condition, fix them up and sell them for a substantial profit, iBuyers typically buy houses that are in good shape, do necessary repairs, then resell them, according to RubyHome.com, which has done an analysis of the iBuyer market.
In 2021, iBuyers accounted for 1.3% of the total U.S. single-family home market, with 70,000 purchases and 45,000 sales, doubling their sales volume from 2019, prior to the pandemic, said RubyHome.com, which based its analysis on data from NAR, Opendoor, Zillow, Offerpad and Redfin.
The difference between Fello and some other iBuyers such as Zillow is the involvement of real estate agents.
Fello's technology can enable sellers to avoid the uncertainty of home showings or repairs and enable them to sell more confidently, the company said.
On the other hand, sellers who prefer traditional home listings can work with their own real estate agents or those assigned by Fello to sell their homes, the company said.
"Fello has created a model and very sophisticated technology that is the ideal solution for home sellers and agents alike," said Jed Katz, managing director of Javelin Venture Partners, in Fello's statement.
