Homelight expands equity product with $20M funding round

Homelight is greatly expanding the reach of its Buy Before You Sell offering following a $20 million capital funding round. 

The product allows loan officers to review a homeowner's property and tap up to 70% of their home's equity toward a quick, non-contingent offer on a new house. The tech company's artificial intelligence-powered offering will now be available in 46 states and Washington, D.C., up from just 7 states previously. 

"Our Buy Before You Sell product is exploding in a good way despite the rate environment," said Drew Uher, founder and CEO of Homelight. "It's a unique product that is really bespoke."

Homeowners have collectively tapped more than $655 million of equity with the product since it launched 18 months ago, Homelight said. 

Buy Before You Sell offers customers a loan to unlock a portion of their home's equity. Consumers then receive the remainder of their equity after their home sells minus transaction and program fees, the company states. The process includes a flat fee of 2.4% of the prior residence's sale. 

The San Francisco-based firm says it works with 40 lenders and over 10,000 loan officers. The company began in 2012 with a product to match high-performing real estate agents with consumers, and today also operates a title and escrow business. Its real estate network spans 28,000 agents. 

Lenders have become more important partners for Homelight with Buy Before You Sell, although agents are still central to the company's operations, Uher said. 

"The agent really prefers to let their lender figure out how (consumers) are going to afford the new home," he said. "The best thing we can do for our agent partners is really onboard their lender and let them manage that."

The product is not offered in Alaska, New York, Massachusetts or Rhode Island, but Uher said Homelight will eventually be available in those states. 

Homelight's Series D extension was led by Zeev Ventures and participants included Menlo Ventures and STCAP, also known as Stereo Capital. The backing comes at a time when venture capital funding has dried up as the economy reckons with higher interest rates. 

Federal Reserve Chair Jerome Powell Friday hinted at a future rate cut, which would provide a major boost for the sluggish housing market. Uher was optimistic for a market rebound, after what he described as a "couple of false starts" in the past year-and-a-half.

"Rates don't have to go back down to 3% to make things really exciting in real estate," he said. "There's so much pent-up demand to move."