Page 75 - Bloomberg Businessweek July 2018

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E Cash Bomb
24 Dropping the

● In property bidding wars, seductive. Stories of house hunters “losing” sev-
buyers are desperate for an eral homes before getting a bid accepted are legion
in greater Seattle, where prices have shot up faster
edge. These startups say than any other big metro area in the country for
they’ll back you 20 months. Cash has long appealed to sellers,
because it gives them certainty and puts money
in their pocket more quickly. FlyHomes says more
The most active real estate broker in the Pacific than half its offers are accepted.
Northwest this year is a former Microsoft Corp. pro- In U.S. cities from San Jose to Charlotte, a cut-
gram manager who used to work on Bing. Tushar throat mentality has set in as a shortage of inventory
Garg isn’t the typical salesman walking would-be pushes buyers to adopt ever more aggressive strate-
buyers through carefully staged houses. He’s gies. “At first, it was love letters” to sellers declaring
co-founder of FlyHomes Inc., a three-year-old real how much the would-be buyer adored the property,
estate brokerage in Seattle that promises to turn its says Aaron Terrazas, senior economist at Zillow.
clients into cash buyers. That was followed by buyers waiving their right to
The idea is relatively simple: A house hunter back out of a deal if a home inspection turned up
hires FlyHomes as her broker. When she’s ready problems or if their financing fell through. People
to bid on a home, she gives the startup a deposit of also shortened the time in which they were willing
5 percent of the bid price. FlyHomes then makes to close. “In these markets,” Terrazas says, “buyers
an all-cash offer for the property, using its line of are doing whatever they can.”
credit from a bank. After the deal is done, it sells Seattle is adding thousands of high- paying jobs a
the house to the homebuyer once she’s gotten a year as Amazon.com Inc. and other tech companies
mortgage. In return, the company earns the typi- expand their footprints in town. Yet the supply of ILLUSTRATION: FRODE SKAREN
cal 3 percent commission from the original seller. single-family homes hasn’t kept pace with demand.
Edited by
Pat Regnier In tight housing markets, this pitch can be Homes went into contract on average in just seven