While many proptech companies have struggled to adapt to the slower housing market conditions and challenging venture capital environment, Flyhomes is viewing this as a time to grow.

In October 2023, the firm — which is known for its “buy before you sell” product that enables a mortgage lender to treat the client’s current home as sold while giving them the ability to sell their home on the open market for up to 90 days after buying their new property — launched a partner channel. The new channel gave partnered lenders and mortgage brokers access to Flyhome products, including “buy before you sell” and short-term bridge loan products.

In January, Flyhomes took things a step further by quietly launching a wholesale channel.

The wholesale channel allows third-party mortgage brokers and lenders to leverage a wholesale product behind the scenes, while they are still the originator of record. This means they take the loan application, submit it and earn compensation for the transaction.

“We felt that was a really strategic move to both simplify how third parties can use the product, as well as just being able to streamline the consumer experience,” said Dan Richards, executive vice president of mortgage at Flyhomes.

“To my knowledge, we are the only ones who set this up as a traditional wholesale channel, which makes it easier for these third parties to add it as a product in the suite that they already have access to — all of their agency loans, government loans, jumbo, non-QM, construction. This is just one more arrow in their quiver.”

As of mid-March, Richards said the company had signed up more than 20 clients with an aggregate total of more than 5,000 mortgage originations. The firm is currently working to grow the channel by leveraging existing relationships in the industry and through word of mouth. By the end of second-quarter 2024, Flyhomes hopes to be licensed and operational in 40 states.

“So, we are just going through that process now and on track to hit that target. The 40 states we have chosen will really maximize our coverage,” Richards said. “Based on 2023 numbers, that will give us 94% coverage of all purchase transactions that have happened in the country. It will be a good first step toward being a national provider.”

Franny Yen, a San Jose-based mortgage specialist at The Loan Story, signed on to the Flyhomes wholesale channel earlier this year. She learned about Flyhomes and its products through her broker.

“Inflation has significantly increased housing prices, especially in Silicon Valley,” Yen said. “It has reached a point where many clients have substantial equity in their house, but they don’t have enough funds to buy a new home before selling their current one, and this is where the power of this program really kicks in.”

While Yen likes the product, she feels it is best handled by senior loan officers like herself, a nearly 30-year veteran of the industry.

“The loan officer must carefully assess the borrower’s ability to repay and consult with the client’s Realtors to determine the resale value and condition of the departing home,” Yen said. “This assessment is crucial to transition from the bridge loan to refinance after the sale of the departing residence.”

Richards noted that bringing on partners like Yen has been quite influential to the continued growth of Flyhomes. Since its founding in 2015, Richards said the majority of feedback from consumers about Flyhomes and its products has been positive, but the firm has struggled to increase its brand and value awareness among consumers.

“The challenge for us — and for most, if not every other proptech — has just been the horrendous costs on direct-to-consumer acquisition,” Richards said. “It is just really difficult to own the entire vertical stack, and own that value proposition all the way down to the consumer and change their thinking on how a transaction should work.

“By going out as a wholesale provider to existing loan officers and agents, who are already working with buyers and sellers, and have those established relationships — it has been a game changer for us. The cost of acquisition, the sustainability, the scalability of the model — all of that is allowing us to meet our goal of making ‘buy before you sell’ much more pervasive throughout the country.”