Homeward Raises $371M for All-Cash Home Offers

Navigating a Competitive Housing Market

The process of purchasing a home in a highly competitive market is often cited as a significant source of stress for adults.

Facing numerous competing offers on properties that are quickly taken off the market can be disheartening. A new startup is aiming to empower home buyers with a stronger position by enabling them to make all-cash offers. This company has recently secured substantial funding to facilitate its continued expansion.

Homeward Secures Series B Funding

Austin-based Homeward, focused on accelerating the home buying process, announced today a $136 million Series B funding round. This round was led by Norwest Venture Partners, valuing the company at “just over $800 million.” Additionally, Homeward has obtained $235 million in debt financing.

The equity financing also included participation from Blackstone, Breyer Capital, and existing investors such as Adams Street, Javelin, and LiveOak Venture Partners. This brings Homeward’s total equity raised since its founding to $160 million.

Growth and Market Traction

Homeward’s business model is proving attractive to both prospective homeowners – including first-time buyers – and real estate agents. The company has experienced considerable growth since May 2020, when it raised $105 million in debt and equity.

While Homeward has not disclosed specific revenue figures, it reports a gross merchandise value (GMV) run rate that has increased by over 600% year-over-year.

Furthermore, as of March, the company saw a fivefold increase in the number of homes transacted and a ninefold year-over-year growth in new customers. Since January, 161 employees have been added, bringing the total headcount to 203, up from approximately 33 at the same time last year.

The Core Concept: All-Cash Offers

CEO Tim Heyl established the real estate startup in late 2018 based on the understanding that sellers generally favor all-cash offers due to their higher likelihood of successful completion. Financing contingencies can lead to deals falling through, whereas cash provides certainty.

Heyl’s experience in the industry, initially as a broker and later as a title company owner, revealed common pain points. A frequent challenge was buyers hesitant to make offers without guaranteed home sales. This issue has been amplified by the COVID-19 pandemic, where demand has exceeded supply in many major U.S. cities.

“The pandemic has significantly boosted demand for our services,” Heyl stated to TechCrunch. “We are witnessing a historically strong seller’s market with unprecedented buyer demand and historically low inventory levels.”

Future Expansion Plans

The newly acquired capital will be used to “double down” on the existing offering, scale operations to meet “significant demand,” and expand into new markets. Currently, Homeward operates in Texas, Colorado, and Georgia.

“We currently have a waiting list in every market nationwide, and this capital will allow us to address that demand,” Heyl explained. The company’s long-term objective is to make its services available to agents across the country.

Homeward also intends to expand its title and mortgage teams in the second half of the year to provide clients and partner agents with “a streamlined, unified experience.” The company is also working to integrate its consumer and internal software systems to streamline approvals, offers, and closings, aiming to “create a single platform and eliminate confusion and inefficiencies,” according to Heyl.

How Homeward Works

Homeward makes an all-cash offer on a property on behalf of a buyer. The buyer can then engage a real estate agent – from brokerages like Redfin or Keller Williams – to list their current home without the pressure of a strict timeline or the need for a discounted price.

Once Homeward acquires a property, it leases it back to the buyer until they sell their existing home, secure a mortgage, and repurchase the property from Homeward. Throughout this process, Homeward provides a guaranteed price for the buyer’s home, and if it cannot be sold for at least that amount, Homeward will purchase it.

The company charges a “standard convenience fee” to the buyer, which varies depending on the state and services utilized. Buyers may also receive a closing credit when using Homeward’s mortgage services.

A Different Approach to iBuying

Heyl believes Homeward’s “alternative iBuyer” model offers a better value proposition for customers, as it does not acquire their existing homes at below-market prices. Furthermore, the company collaborates with agents rather than competing against them.

Homeward’s services are accessible to all agents, but the company “strategically” partners with leading brokerages and teams, offering them “dedicated support, white-label branding, and digital marketing tools to help them differentiate themselves and attract more clients.”

“Most alternatives to traditional real estate either minimize or eliminate the role of the agent,” Heyl said. “However, we are agents ourselves, and we have designed this platform specifically for agents.”

Financial Performance

Homeward is profitable on a per-unit basis, considering transaction revenue minus the costs of acquiring and completing each transaction, according to Heyl. However, the company is not yet profitable on a net income basis.

Jeff Crowe, managing partner at Norwest Venture Partners, will join Homeward’s board of directors as part of this funding round.

“Homeward is driving innovation at the intersection of real estate and fintech – the next major growth area,” he stated. “Homeward’s cash offer addresses critical challenges for homebuyers in all market conditions, and the team has developed a winning strategy by collaborating with agents and their clients.”

Jim Breyer of Breyer Capital recognizes Homeward as one of Austin’s most innovative companies.

“We are inspired by the company’s commitment to developing home finance solutions that overcome the limitations of traditional mortgages, and we are proud to support their rapid and efficient scaling,” he said.