Debra Hazel
Have you ever closed the sale of your old home and the purchase of your new one on the same day? Yes, it happens, but not frequently. And certainly not for buyers who need the proceeds from the sale to fund a significant portion of their new home. The situation makes the entire home selling and buying process more difficult than it needs to be.
At least, that’s what Drew Uher, the founder of HomeLight Cash Close, believes. He founded the multi-division HomeLight after going through a stressful home purchase himself.
“When my wife and I bought our first home 10 years ago, we saw so many things that were wrong, including finding the right agent,” said Uher, the San Francisco-based firm’s CEO. “I started HomeLight as a platform to help find great real estate agents. Fast forward to 2019- 2020, and we’re now doing financing.”
Uher founded HomeLight in 2012 to pair homebuyers and sellers with local agents using an advanced algorithm platform. (Google Ventures was an early investor.) The company diversified into home loans and has now launched Cash Close, which can be used by buyers who need to sell their original home first (trade-ins), and by those buying their first home (the cash offer method).
With HomeLight Cash Close Trade-In, homeowners looking to sell their homes to fund another can apply in 30 minutes online. The firm will verify income, assets and purchasing power, visit the current home and buy it in cash. This allows the buyer to make the equivalent of a full cash offering on the home and complete a quick closing, a distinct advantage in a competitive market. A sister company, HomeLight Home Loans can underwrite the mortgage, giving extra security, before it transfers the loan to a regional bank or financial group, where the buyer will make their payments going forward. Or, the buyer can arrange their own long-term financing, though Uher notes that HomeLight’s rates are lower than national average, and HomeLight doesn’t charge lenders fees, which can total up to 3% of the home value with other lenders.
“We’re a pure tech-enabled mortgage company, which allows us to offer very competitive rates,” he said.
HomeLight then sells the client’s original home, and if it makes a significant profit, the homeowner will get all of the upside over the guaranteed price minus selling costs and HomeLight Trade-In fees, which are 1.0% for the first 30 days HomeLight owns the property and 0.5% for every 30 days thereafter if the customer uses HomeLight Home Loans. If the seller opts to use another lender, the fee is 3.0% for the first 30 days and 0.5% for every 30 days thereafter.
For Cash Offer purchases, applicants fill out an online form, and HomeLight verifies income, assets and purchasing power. It will then underwrite the purchase of the home and turn the house over to the client once permanent financing is secured. The cash offer fee is 0.5% of the purchase price if the buyer uses HomeLight Home Loans and 2.0% if the buyer works with another lender.
HomeLight Home Loans also offers a reimbursement of earnest money up to $100,000 if a closing has been delayed through HomeLight’s fault. That hasn’t happened yet.
“With Cash Offer, people are able to shop with more in their pockets,” Uher said. “For example, Southern California has been a great market for Cash Close. These are markets where buyers don’t play around.”
Technology is the key to HomeLight’s financial success, but the human element is still important, Uher said. Each buyer has a dedicated loan officer to provide a single point of contact.
“This process should be seamless,” Uher said. “But we don’t think buying and selling a home should be nameless. Great advice makes sense.”
HomeLight makes the process faster and cheaper, which is especially important when HomeLight’s average transaction is in the seven figures, Uher said. “If there’s a problem, we will take the home on our own balance sheet and sell it to you,” he said.
The company has driven well over $17 billion of real estate business nationwide and grown to 230 people in San Francisco, New York, Seattle and Phoenix. Funding has come from venture capital, including a $109 million Series C funding late last year. The company continues to add new markets for its services.
“This is the future of real estate,” Uher said. “We believe that in five to 10 years, this will be the standard for the U.S. Why wouldn’t you use it?”
