Flyhomes says it is profitable after wholesale pivot

"A lot of the proptech and fintech players, including us, were venture backed with a lot of access to capital, and we were leaning into that capital to drive fast growth and acquire consumers. Garg said they and others in the space were building companies with the assumption that access to venture capital would always be there, but that suddenly changed when the housing market began rapidly cooling in 2022."

"This put a lot of pressure on models like ours that were heavily invested in growth with a direct-to-consumer platform, Garg said. A lot of these models are built around fixed costs, so when the customer acquisition costs started to increase dramatically, it fundamentally challenged the profitability and scalability of models like ours."

"In its early days, Flyhomes operated both a mortgage lender and real estate brokerage, as the company looked to create an end-to-end experience for consumers, using its own loan officers and agents to connect homebuyers and sellers with its lending products, including the buy before you sell mortgage product the company is still known for."

"So, the leadership made the decision to home in on their buy before you sell product offering and in early 2024 they shuttered their own lending operation in favor of launching a wholesale lender channel. This move enabled third-party mortgage brokers and lenders"

Venture-backed proptech and fintech companies relied on ongoing access to venture capital to drive rapid consumer acquisition. When the housing market cooled quickly in 2022, venture capital funding tightened, increasing customer acquisition costs and challenging profitability and scalability for models with fixed costs. Flyhomes initially operated as both a mortgage lender and a real estate brokerage to provide an end-to-end consumer experience, including its buy before you sell mortgage product. As rates rose and industry conditions deteriorated, Flyhomes faced a choice between pivoting or ending operations. Leadership focused on the buy before you sell offering and, in early 2024, shut down its own lending operation to launch a wholesale lender channel using third-party brokers and lenders.

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