Seattle-based real estate tech company Flyhomes has acquired San Francisco-based artificial intelligence startup ZeroDown.
Flyhomes acquired ZeroDown in January and spent the past five months integrating ZeroDown's technology before announcing the deal Tuesday. With the acquisition, Flyhomes has launched an AI-powered home search tool to compete with heavyweights like Redfin and Zillow.
"The information that we have on the portals today is way more limited," said Tushar Garg, CEO and co-founder of Flyhomes. "We know the portals have existed forever, but we can all say that there's a lot more problems to be solved."
The companies didn't disclose financial terms of the deal, but Garg said it was an all-equity deal. He added that 16 employees are joining Flyhomes through the acquisition, but he declined to say how many employees Flyhomes has now.
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Flyhomes in September moved out of its roughly 9,000-square-foot space at 1201 Western Ave. to a 4,000-square-foot space at the Logan Building at 500 Union St. Garg said the company now works remote and has ditched its office space altogether, minus occasionally meeting up at coworking spaces.
Flyhomes' search tool allows users to look for homes in specific cities or neighborhoods while filtering for price, bedrooms, home type and more. The tool also has an AI-powered chat for consumers to ask questions, for example about parks nearby or power lines in the neighborhood.
The ZeroDown brand is folding into Flyhomes. ZeroDown's website redirects to Flyhomes.
Flyhomes, founded in 2016, allows homebuyers to present all-cash offers so they can stand out. After moving into their new homes, buyers can transition to a long-term mortgage, either through Flyhomes or an outside lender.
Garg said Flyhomes will keep and expand the all-cash-offer business.
The ZeroDown acquisition and new search tool coincide with rule changes from the National Association of Realtors (NAR).
Starting Aug. 17, home sellers will no longer have to make blanket payments to buyer agents for homes listed on multiple listing services. NAR in March agreed to pay $418 million to settle lawsuits brought by home sellers regarding these blanket commission fees, which the plaintiffs alleged were anticompetitive.
Garg said this rule will make buyers sign contracts with sellers before looking at homes, so consumers will want more preliminary data before getting an agent involved and having to pay them.
"We think information is a huge bottleneck," Garg said.
Flyhomes raised a $150 million Series C round in 2021, but higher mortgage rates and decreased homebuying demand have hurt the company recently. Since July 2022, the company has gone through at least four rounds of layoffs. Flyhomes had about 820 employees as of January 2022 but now has 265 employees listed on LinkedIn.
Flyhomes in September announced the acquisition of Home Sale Assured, which helps customers buy their new home before selling their old one. Flyhomes acquired host-to-own startup Loftium in February of last year.
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