By Meghan Hall
The pandemic, rising interest rates and just a general supply-demand imbalance have all contributed to a hyper-competitive for-sale housing market. With buyers frequently facing bidding wars, the highest offer is no longer always the best, and buyers are employing new strategies to get their foot in the door. The Registry spoke with HomeLight President Vanessa Famulener about the current market and how tech can make home offers more competitive.
HomeLight seeks to facilitate “contingency-free” transactions. Can you define “contingency-free” for our readers, and how this impacts the buying and selling of homes.
A “contingent” offer means that one or both parties have requested that certain provisions be met before the deal closes. Waiving a contingency means a buyer is eliminating any restrictions they may have in order for the transaction to be completed.
Buyers tend to pencil in contingencies as escape hatches in the event that the home fails to appraise, an issue crops up with the title, or if they’re unhappy with the results of the inspection. One of the most common contingencies added to protect the buyer is called a “home sale” contingency. This is put into place to accommodate buyers who need to sell their current home in order to financially afford the offer they put forth.
In a seller’s market where supply is at extreme lows and demand continues to skyrocket, buyers are increasingly turning to contingency-free transactions to make their offers stand out from the competition — especially in the Bay Area.
The greater San Francisco Bay Area is one of the most competitive and expensive markets in the country, and local buyers are catching onto the contingency-free trend. In 2022, 22 percent of San Francisco home buyers removed contingencies from their offers, according to our Buyer & Seller Insights Report, compared to the national average of 15 percent.
Waiving the home sale contingency is most common among buyers who are not selling another home or who don’t need the equity from one property to purchase a new one. Two of our flagship products — HomeLight Cash Offer™and HomeLight Trade-In™ — aim to make all buyers competitive buyers, regardless of their situation.
With HomeLight Cash Offer™, we give top agents and their clients the ability to make an all-cash offer on their next home, even if they need a mortgage.
HomeLight Trade-In™ solves another issue that agents and would-be sellers commonly face: the ability to buy a new property before they sell their current home, without losing out on the full market value of their home.
Given this background, what was the catalyst that finally led to the creation of HomeLight as a platform?
We built our platform to maximize the value of the human touch, which is critical to any real estate transaction. If you’re working with the right agent, that person is critical to the entire process; our technology exists to make transactions smooth and simple so agents can provide the most value to their clients. We’ve built the most comprehensive platform of tools, technology, and services that power the best agents across the country, and ultimately help their clients win the home of their dreams.
Today, our technology makes it easier to buy and sell homes, whether that’s enabling an all-cash offer, unlocking liquidity of an existing home to buy a new one, finding a top agent, or creating certainty through a modern closing process.
Can you talk a little bit about how the platform works?
HomeLight agents represent the top real estate sales professionals in the country. When a home buyer or seller comes to HomeLight, they’re looking for the best way to sell their home. Our founder and CEO, Drew Uher, founded the company in 2012 because he thought, “There must be a better way…” — but at the time, there wasn’t. The majority of our agents and clients come to us because they’re thinking the same thing.
Our website is curated to deliver better outcomes for agents and their clients. That includes everything from finding the best agent for their property type and location, enabling an all-cash offer, unlocking liquidity of their existing home to buy a new one, or creating certainty through a modern closing process.
Our end goal is to remove as much friction as possible from the process of buying or selling a home.
Do you have any stats on how many deals HomeLight has facilitated? Or any data on how much money/time clients have saved by using HomeLight?
To date, HomeLight has worked with over 1 million home buyers and sellers in the U.S., and we facilitate more than $1 billion in real estate transactions through our platform every year.
Through our HomeLight Cash Offer™ product specifically, we have saved home buyers up to 4.4 percent on the purchase price of their home compared to offers made after securing a traditional loan.
HomeLight Trade-In™ homes, meanwhile, on average sell for 5 percent above market valuation, close 5x faster, and save clients 3.5 percent on the purchase price of their new home, compared to the traditional listing process.
What is your favorite feature of HomeLight and why?
Purchasing a home is an exciting journey, but it’s also intimidating, as it’s one of the largest financial decisions many of us make in our lives. It’s been fulfilling to see the flexibility, transparency, convenience, and success that products like Cash Offer and Trade-In have had on people’s home buying and selling experiences.
A recent example comes to mind: one of our top agents, Chris Molano, had a couple looking for their first home in Miami. After three months of searching and 10+ offers submitted, they still had no luck. As working parents of two, both employed full-time at their local grocery stores — it was difficult for them to compete in an incredibly competitive market, especially with so many people moving to the area from other parts of the country.
When they finally found the home of their dreams, they didn’t want to risk losing another bidding war, so they opted to use HomeLight Cash Offer™. These two hard-working parents secured their dream home and became first-time homeowners as a result. Stories like that — they never get old.
HomeLight announced in September it had achieved 3x year-over-year growth and raised $363 million to fuel its expansion. What aspects of the tech have made the company so successful?
We’ve worked hard to expand our platform and services to best serve our partner agents and their clients. For us, that means listening to agents’ feedback, understanding their pain points during the transaction process as well as their clients’, and understanding how we can help support them with our talent, tools, technology, and services.
The most critical factor in our success is our unique ability to remove friction from the buying and selling process for any type of buyer, seller, or listing. And along the way, we’ve built strong, lasting relationships with the top real estate agents across the country, while helping so many people achieve the dream of homeownership.
With funding in-hand, what strategies will HomeLight employ to continue on its upward trajectory?
Since we raised our Series D in September last year, we’ve been focused on expanding our platform to new markets across the country, with a particular focus on our flagship financial products, HomeLight Trade-In™ and HomeLight Cash Offer™.
We also plan to continue hiring and opening new offices. We’ve grown the team by more than 180 percent year-over-year and plan to hire aggressively in 2022 and beyond.
The U.S. housing market has had quite a year, with skyrocketing prices and demand. Can you talk about what you think is in store for the sector as we head into the second quarter of 2022?
It will continue to be a seller’s market not only in the second quarter of 2022, but for the rest of the year. A whopping 98 percent of top real estate agents say that the market leans in favor of the seller, but that’s not scaring off buyers from purchasing homes. We’ll see buyers continue to compete for homes in Q2; 55 percent of our agents say that buyers are still fiercely in the home-buying game and are continuing their search. Twenty-two percent of agents are actually seeing the rate increase as adding fuel to the fire because buyers are rushing to get in before rates get even steeper.
Innovation in home buying and selling will continue through the second quarter of 2022; buyers are more willing than ever to try new platforms and strategies designed to give them a leg up against the competition. The hottest bidding tactic we’re seeing right now is cash offers. In the last year, one third of buyers used cash to purchase their homes, and more than half of agents reported a significant increase in cash offers in Q1 2022 compared to the previous quarter.
Another trend we’re seeing heading into the summer is an increase in non-romantic co-buyers. Over 60 percent of agents have seen family members, friends, and roommates invest in a home together in order to counteract high prices. The most common types of non-romantic co-buyers HomeLight agents have seen include parents, grandparents, and adult siblings.
How do you think the world of real estate will continue to evolve as tech-based platforms like HomeLight become more popular? Why?
If the last two years have taught us anything, it’s that digital transformation will continue to shape consumer buying habits. We rely on technology for almost all of our daily needs – grocery shopping, business meetings, banking, working, traveling, and more. The pandemic was a tipping point for the real estate industry; it has revealed that there are ways to bring technology into the buying and selling process to empower agents – not eliminate them.
The same way that technology is able to add convenience to every other aspect of our lives, it adds ease and certainty to home buying and selling. Technological innovation will not only accelerate the transaction process, but also provide greater accuracy and security in the process.
We’re constantly speaking with agents to build tools and make improvements to our platform that solves the very real needs of our agents who are busier than ever! Through outreach, training and education, products like HomeLight Trade-In™ and HomeLight Cash Offer™ are becoming mainstream to help agents scale their businesses. Agents who utilize these products will continue to command premium leads on both the buy and sell side in their local markets.