Concerned that closing costs have discouraged would-be clients from taking advantage of its cash offer product, Flyhomes says it will help cover expenses associated with its short-term loans such as title insurance and appraisal fees — but only when homebuyers work with a Flyhomes Brokerage agent.

Homebuyers represented by Flyhomes partner agents will still pay closing costs — and could also be on the hook for a 1 percent convenience fee.

Seattle-based Flyhomes provides end-to-end homebuying services through subsidiaries including Flyhomes Brokerage, Flyhomes Mortgage and Flyhomes Closing.

Flyhomes has been offering the Flyhomes Cash Offer since 2017, providing short-term loans that allow homebuyers to make cash offers to sellers before refinancing into a long-term loan provided by Flyhomes or another lender.

Homebuyers don’t have to work with a Flyhomes Brokerage agent. But if they do, they’ll now earn a brokerage credit that’s intended to offset incremental closing costs on their short-term loan.

When represented by an agent who participates in the “Flyhomes for Agents” program but doesn’t work for Flyhomes, homebuyers will continue to pay not only the closing costs associated with the short-term loan, but a 1 percent convenience fee.

The 1 percent convenience fee charged to homebuyers represented by non-Flyhomes agents amounts to about $3,500 on the median priced home. But if they take out their long-term financing with Flyhomes Mortgage, homebuyers receive a credit that covers the fee on the short-term loan.

Regardless of their agents’ affiliation, homebuyers taking out their long-term mortgage from Flyhomes Mortgage earn a lender credit that’s aimed at offsetting “the majority, if not all” of the closing costs on their long-term loan, including title, escrow, and other settlement costs.

Although Flyhomes offers incentives that encourage homebuyers to work with its real estate brokerage and mortgage subsidiaries, the company claims in a press release that it has “never charged our borrowers an additional fee to use the Flyhomes Cash Offer or mandated which mortgage lender our clients ultimately use.”

In a phone interview, Flyhomes executive Adam Hopson said that the company’s claim that it has never charged borrowers an additional fee pertains to the company’s core business, in which Flyomes Brokerage agents represent clients.

The Flyhomes for Agents program “emerged organically” after agents at other brokerages approached the company wanting to use its cash offer product for their own buyers.

“It’s good for the agent, and it’s good for their client,” Hopson said of the Flyhomes for Agents partner program. “But because we’re not making money on the brokerage commissions, we have to charge something,” he said of the 1 percent convenience fee.

Flyhomes claims that more than half of homebuyers using the Flyhomes Cash Offer to win bidding wars don’t make the highest offer, saving an average of nearly 3 percent compared to the highest bid.

Hopson said Flyhomes decided to start offsetting the closing costs associated with the short-term loan for Flyhomes Brokerage clients because it deterred some would-be clients from moving forward with a Flyhomes Cash Offer — even in instances when they stood to recoup those costs, and more.

So Flyhomes will now provide a brokerage credit to Flyhomes Brokerage clients to help offset incremental transaction costs of the short-term loan provided by the Flyhomes Cash Offer program. The brokerage credit is available in all current Flyhomes markets except Oregon, where clients will instead receive a lower interest rate on the short-term loan from Flyhomes Mortgage.

The Flyhomes Cash Offer brokerage credit, which only applies when a buyer works with Flyhomes Brokerage, appears on the settlement statement as a credit from Flyhomes Brokerage.

“With the Flyhomes Mortgage lender credit and the Flyhomes Brokerage Cash Offer credit, most of our clients currently pay little to no closing costs out of pocket,” Justin O’Neill, Flyhomes’ head of public relations and communications said in an email to Inman.

Flyhomes for Agents is available to real estate brokerages and their agents statewide in California, Colorado, Idaho, Maryland, Oregon, Texas, Washington State, and Washington D.C.

The Flyhomes Cash Offer is offered through Flyhomes Brokerage in Washington, Texas, California, Colorado, and Oregon, with rollouts planned in Massachusetts, Utah, Maryland, Virginia and Washington D.C.

Asked if the incentives Flyhomes is offering to homebuyers who use a Flyhomes Brokerage agent might alienate potential partner agents at other brokerages, CEO Tushar Garg told Inman that the Flyhomes Cash Offer is “a very, very friendly product. We never take the customer from the agent. The philosophy of the company is that we are working together.”

The growing prevalence of integrated platforms that provide end-to-end services — including real estate brokerage, mortgage financing, and closing and settlement services — could ultimately save consumers money, but complicate the task of shopping for the best deal.

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Email Matt Carter