The Homeward Team

We’re Homeward, a new kind of home finance company. We empower agents to help their clients overcome the limitations of the traditional mortgage. We do this by buying the house they love for them with cash and then selling it back to them once they finalize their mortgage. But we offer more than cash. When they work with us, homebuyers can complete their entire transaction under one virtual roof instead of working with three separate companies. After they use the Homeward Cash Offer, they can finance your home with Homeward Mortgage, and then close on it with Homeward Title.

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The Homeward Team

A note from our CEO

Team –

I know the past few months have felt uneasy.

After a period of remarkable growth and success in our business, it’s been difficult to watch the rapid cooling in the market and the impact it’s had on our near-term ambitions. I know that layoffs across the industry, and especially at our competitors, have led many of you to wonder whether Homeward would take similar actions. As I shared in June, we’ve taken these challenges in the market seriously. But I did not want us to make knee-jerk reactions, especially one that would negatively impact our people.

However, I am now writing to you with sad news: Homeward will be laying off ~20% of its workforce today. I know that this message is hard to hear, and it’s something I had hoped never to have to deliver. People are at the heart of everything we do here. We have navigated the highs and lows of real estate – together – and built a business that helps people achieve their dreams of homeownership. I’ve always been so proud, and remain proud, of this team.

But, meeting the moment sometimes requires a business to evolve. Despite having a strong financial start to the year, we are currently staffed for more growth than we’re now forecasting. This reduction today is necessary for our future success, but that doesn’t make it easier to part with so many of our colleagues. Layoffs carry real consequences for people, and this isn’t a decision we make lightly.

We are committed to doing everything we can to support the employees leaving today, and those staying. And it’s important that we are as transparent as possible in how we reached this conclusion.

Understanding why

Homeward has built our brand around giving agents and their clients a new and better way to achieve their homeownership goals. In our early days, we helped customers simplify the buying/selling process with Buy Before You Sell. As the market intensified, we launched Buy With Cash to help customers win among a crowded pool of offers. Most companies never find product-market fit once, let alone twice. Our successes catalyzed extraordinary growth – growth that required rapid hiring to simply keep up with demand.

Thanks to your hard work, May was our strongest month ever for the business. At that time, we felt confident that we were armed with the necessary cash to keep the business humming. We planned for a future built upon our strengths and the desire to help more customers, in more states, with more innovative products. Given our Q2 results, I do not believe that our optimism and excitement about the road ahead was misguided.

But – the market has changed dramatically in recent months: high inflation has persisted, interest rates are rising dramatically, and home sales have fallen from historic highs. Coupled with affordability concerns, fewer buyers are seeking homes. There is also less demand for cash offer products that differentiate buyers in the homebuying process.

Our original product, Buy Before You Sell, remains as popular as ever — and we feel confident it will continue to be sought out by buyers and sellers no matter the strength of the market. Still, losing demand in part of our portfolio - specifically, Buy With Cash - has had a sudden and sizable impact on our business.

When we talked with you at the All-Hands in June, we believed our cash runway was sufficient to bridge this period of lower activity. We reduced our non-people costs and planned our spend to hedge against further decline. However, the continuing acceleration and severity of the market shift has forced us to consider deeper changes to our business. It’s become clear that these headwinds are part of broader challenges facing our economy. We don’t know how long real estate will continue to soften, so we must plan for a less active market.

As a result, we are refocusing on our core promise: to make buying and selling homes easier and more accessible. Customers and agents today face very different challenges than only a few months ago. And while we have great ambitions, we must stay focused. Moving forward, we will concentrate investments on more evergreen solutions that provide value to our agents and their clients in any market, while reducing our spend in areas that aren’t as essential to this promise. We're doubling down on efforts to achieve profitability and ensuring our team is properly staffed to match these goals.

I know these changes are painful and disruptive, so our leadership team has made every effort to ensure that our new roadmap can carry us through the next phase of our business.

To our impacted employees

There’s no doubt that these layoffs will introduce challenges to your lives and we want to support you as best we can during this time of transition. First, we will be offering tenure-based severance pay. While your health benefits already extend through the end of August, Homeward will contribute two additional months should you elect to extend further with COBRA.

We also want to support your efforts to find a new role elsewhere. Homeward will be offering outplacement services through our recruiting team and removing the non-compete clause for impacted employees.

Finally, we want to recognize the contributions you made here with two changes to your stock options. First, we are removing the vesting “cliff” for all impacted employees so that your stock options will now be vested based on the number of months you have worked at Homeward, even if you worked here less than 12 months. Additionally, we are extending the time period you have to exercise your stock options from 90 days to one year.

What you can expect moving forward

Over the course of today, those of you impacted by the layoff will receive invitations via your personal email to a 1:1 meeting with a leader in your department and a people team representative to discuss the details of your transition and answer questions.

For those of you remaining at Homeward, we’ll talk more as a team at our All-Hands this afternoon (invite to be sent shortly). I recognize that this news may come as a shock and will mean changes to how you work. We’ll share more about our path forward in org-specific town halls tomorrow, along with details about changes to teams and reporting relationships. We will also hold another All-Hands next Friday (August 19th) to address any questions that arise as you digest the news. It will take time to get everything right – and we want you to feel supported in the months ahead.

Closing thoughts

It is especially difficult to share this news at a time when I feel so proud of this organization. Everyone here has contributed to helping agents and their customers achieve their dreams of homeownership. You all have embodied the “One Team, One Dream” value and brought so much joy and purpose to work here at Homeward. I’m grateful for your contributions and your spirit.

For those of you staying, I want you to feel assured that I have full confidence in our team and in the future of our business. This is an incredible team that can lead us through the coming years. I remain enthusiastic about Homeward’s promise and ability to make real estate more accessible, and a better experience for the homebuyers and sellers of the future. We have a strong foundation to build on. And customers are still seeking us out to help guide them on their home ownership journeys. Your continued partnership will help everyone’s efforts live on as we build the Homeward of tomorrow.

For those of you leaving, I am sorry. I know that you put your faith in us by joining our mission. And I let you down. Please know that your time here mattered and that your contributions will continue to serve as the groundwork for the next chapter of Homeward. We are so grateful to you.

Thank you for believing in us.

Tim

9 hidden costs of buying a home — and ways to avoid them

The most expensive investment a person makes in their lifetime is most often a house. Many lenders require 20% down on a home before they’ll offer their more favorable mortgage rates. As of July 2022, the average house price in the U.S. hovers around $428,000. That means homeowners hoping to put 20% down will have to fork over a whopping $85,600.

Your down payment and subsequent mortgage are the obvious costs of purchasing a home, but hidden costs sneak up on buyers who already feel financially strained. Mortgage lender requirements, closing costs, and other lesser-known fees add up for homebuyers, especially those with little to no experience navigating the real estate market.

You’ll want to study the potential hidden costs of buying a home to better budget for your next home purchase. You won’t be taken by surprise when a hidden cost comes knocking — and you may even find a way to avoid certain unnecessary costs entirely.

Process costs

It takes an average of 45 days to close on a house. Several costs pile up within that nearly two-month window, including:

Earnest money

Earnest money acts as insurance for the seller in case you back out of the deal. It’s typically 1-3% of the home's total sale price and is due within three days of the seller accepting and signing your offer.

You forfeit your earnest money if you change your mind about buying the house. However, you’ll keep it if the seller backs out. You’ll also keep the money if the sale falls through due to a reason covered by a contingency. For example, if the home inspection fails and you have a due diligence contingency in place, your earnest money will be returned.

The good news: Your earnest money counts toward your down payment on your closing date.

Read more: Four common types of homebuying contingencies

Home appraisal fees

Your lender will want to ensure that the home you purchase is actually worth what the seller says it is. This requires a home appraisal, and (surprise!) you get to pay for it.

A designated appraisal management company (AMC) will appoint an appraiser to perform this duty, so it’s not something you can price shop. The total cost of your appraisal will depend upon several factors, including:

  • The size and value of the property
  • The type of mortgage you’re applying for
  • The property’s geographical location

Expect to pay at least $300 for an appraisal, but it could be closer to $1,000 depending on your situation.

Home inspection

Your lender won’t require a home inspection, but 85% of homebuyers still get one to avoid purchasing a house with serious structural issues. Home inspections save homeowners money on repairs in the long run, but scheduling one will cost you money upfront.

The factors that affect the cost of a home inspection mirror that of a home appraisal — namely, square footage, cost of living, and the state of the housing market. The costs between the two are similar as well, with prices averaging $300–$400 but often costing more depending on where you live and what you’re buying.

Closing costs

There’s nothing quite like sitting down to officially take possession on your closing date — and then finding out you weren’t prepared for the litany of closing costs. ClosingCorp pegs the average price of closing at $6,837 including taxes, which is a hefty bill if you’re not expecting it. These costs must be paid before you can take ownership of your house, so come to the table with your checkbook.

Loan origination fee

Your lender undergoes an intensive process to review, underwrite, and approve your mortgage — and the loan origination fee is what they charge for the work involved. Most loan origination fees cost 0.5% to 1% of the total loan rate, meaning you’ll owe a sizable $2,000-$4,000 on a $400,000 house at closing time. 

Homeowner’s insurance 

During your closing meeting, you’ll need to prove that you’ve protected your investment with a homeowners insurance policy. Lenders typically require you to have paid for a year of insurance before signing off on your mortgage. NerdWallet figures the average cost of homeowners insurance in the U.S. to be $1,784 a year, but the rates are higher in states with consistent rates of severe weather and natural disasters.

Property tax

You’ll also be expected to pay the property taxes on your new home as part of your closing costs. The amount you’ll pay is prorated based on how many months you’ll own the house for the current calendar year. For instance, if you close on May 1st, you’ll likely be on the hook for eight months-worth of property tax.

Your property tax bill will depend on two variables: the value of your new home and the going tax rate. The city, county, and state you live in all impact your tax rate. (For curious minds: as of 2020, Hawaii has the lowest property tax rate at .37%, while New Jersey ranks highest at 2.2%.) 

Escrow fees

Your escrow account is where your earnest money is held while all parties hash out the sales process. Down the line, your lender will use the account differently. They’ll put money into escrow from your mortgage every month and periodically use the funds to pay off your property taxes and homeowners insurance premiums. 

Your lender pulls funds from your escrow account, but a third-party escrow company manages and operates it. They don’t set it up for free, though, with companies usually charging 1-2% of the total sales price for their services. This cost is often split between the buyer and the seller, though these terms may be negotiated in favor of either party as part of the initial offer.

Situational costs

Other situations add to your overall homebuying cost depending on where and how you’re buying your house. These costs don’t apply to every purchase situation, which is why they often take homebuyers by surprise.

Homeowners association fees

You have to do more than join the club and follow the rules if you buy a house in a neighborhood governed by a homeowners association (HOA). You must also pay HOA fees to enjoy its benefits. 

There’s an additional cost that often catches homebuyers off guard: the HOA transfer fee. The HOA charges this fee to cover administrative costs whenever a home within the association changes possession. Most HOAs charge around $200-$250 for this fee, and the seller typically covers the cost. However, it’s become increasingly popular for the buyer to cover this fee to make their offer more attractive. Keep this fee in mind as a negotiation tactic if you’re buying in an especially hot market — and prepare to shell out for it if you include it as part of your final offer.

Mortgage insurance

Mortgage insurance offsets some of the risks a lender takes when it allows people to buy a house without substantial money down. Mortgage companies know that not everyone can afford a sizeable down payment for their homes, but small down payments equal more considerable risks for lenders. Lenders charge a small premium in the form of mortgage insurance instead of denying mortgages for cash-lacking prospective buyers.

Lenders usually require you to purchase private mortgage insurance (PMI) on a conventional mortgage loan when you put down less than 20% on your house. It shows up as a premium in your monthly mortgage cost, and you’ll typically pay it until you’ve paid off at least 20% of your home’s value. Meanwhile, those taking out Federal Housing Administration (FHA) loans without putting at least 10% down will pay a mortgage insurance premium (MIP) for their mortgage term. 

Most annual PMI and MIP rates average between 0.22% and 2.25% of your total cost spread out over monthly mortgage payments. NerdWallet has a handy tool that allows you to estimate the cost of your PMI based on factors like your total home value, down payment, and interest rate.

Lower the hidden costs of buying a home with Homeward

Homeward helps eliminate one of the highest costs of homebuying: buying a new house before selling your old one. When you find a new home on the market, waiting to sell your old one before making an offer is risky. Someone could snap up the home you want while you wait for your home to sell, but most people can’t afford to pay the mortgage on two houses simultaneously.

Additionally, many people simply can’t afford to purchase a new home until they’ve sold their old one. Their liquidity is locked up in their existing house, making it impossible for many homebuyers to put down 20% on a new home without selling first.

Buy before you sell allows you to buy your dream home and gives you time to sell your old home — without paying two mortgages. Once pre-qualified, Homeward will buy your new home for cash and let you move in for a low rental rate. Meanwhile, you can work to put your old house on the market and purchase your new home back from us once it sells. It’s that easy to save yourself stress and money as you make one of the most significant purchases of your life.

Simplify the homebuying process with Buy before you sell.

Customer story: How Karin realized her dreams of Colorado with Buy before you sell

Karin Esterhammer had called Los Angeles home for forty years. 

As a long-time resident and a journalist for the L.A. Times, she knew the city well. Despite her history with L.A., Karin dreamt for years of moving to Colorado. She wanted mountains. She wanted fresh air. She wanted to experience more of the world’s natural beauty. 

Colorado dreaming

But like most of us, Karin couldn’t simply pack up and leave. She had children and grandchildren in L.A. and couldn’t just walk away from them. Being near her family was more important than her own desire to relocate.

Years went by. Then, in the middle of the pandemic, Karin’s daughter and her family decided to move to the Denver area. After helping her daughter move into her new home, Karin’s dream solidified into a plan. She’d had enough of the noise, traffic, and pollution in Los Angeles. She’d been waiting for a good reason to get out of L.A. — and she finally had one. 

She began searching for homes in Colorado while on the flight back to Los Angeles.

A chance connection

Moving over a thousand miles is no easy feat. Karin knew she’d need help finding a home in the Denver area. But where to start? 

Karin had friends who had moved from L.A. to Colorado decades earlier. She thought they could help. After some internet sleuthing, she found someone named Kelsey Long. Her old friends’ daughter was named Kelsey, but she was only a few years old when Karin had last seen her. Could this be the same person? Karin sent an email to Kelsey, hoping she wasn’t bothering a stranger.

Karin was surprised to get a quick reply. Yes, this was the same Kelsey, but there was more to it than that: Kelsey was also a realtor in the Denver area. She could connect Karin to her parents, but she’d also be delighted to help her find the perfect new home.

The stars had aligned. All signs pointed to Colorado.

Forming a plan to buy and sell

Kelsey helped Karin understand the state of the market in and around Denver. It was the summer of 2021, and like many other markets across the country, Denver real estate was booming.

“The market was moving so fast. It was scary,” says Karin. “After an hour, a new home would have a dozen people bidding on it. The thought of selling our home in L.A. and moving to Colorado in those circumstances was really scary. Before I heard about Homeward, I pictured myself moving into my daughter’s basement and driving them crazy for a few months. I really didn’t want to do that.”

Although Kelsey knew the Denver market well, it was Karin who proposed using Homeward’s Buy before you sell solution. Her daughter had used Homeward when she moved to Colorado and had raved about the experience. “It seemed brilliant,” remembers Karin. “I’d never heard of a program like this before then. Having to sell and buy at the same time is so stressful because you’re caught in the middle and you don’t know how things are going to work out.”

Kelsey quickly saw the benefits of using Homeward:

“When you’re in a seller’s market, you know you’ll make money selling your home. But for me, I don’t want my buyers to feel the pressure of needing to find a new home quickly. That pressure forces them to make hasty decisions, and the last thing I’d want is them to buy a house and regret it a few months later. Homeward really seemed like it could ease your mind during the process.” 

Karin got approved for The Homeward Cash Offer and began house-hunting in earnest. She was a thousand miles away from Denver, so when they found a promising home, Kelsey and Karin’s daughter would visit and do video tours of the property. After seeing about ten homes, they found a home that seemed perfect for Karin. It was early September 2021. 

“When we found this house, it felt so good to know we could put in a cash offer,” remembers Karin. “We knew we’d be in a strong position so nobody would beat us out.” 

There were at least four other offers on the home, but after some brilliant negotiating by Kelsey, the seller accepted Karin’s offer. Her dream was coming true. She was finally moving to Colorado. 

Living an “exquisite experience”

After purchasing their new home with the Homeward Cash Offer, Karin and her family moved to Colorado in October 2021. They spent a few weeks repairing their old home, then quickly sold it and used the funds to repurchase their new home back from Homeward. 

Reflecting on her experience, Karin is so glad she used Homeward.

“Dustin, the person I worked with at Homeward, was just amazing. He took care of everything right away and was so prompt. It made this scary process so much easier and it was well worth the reasonable convenience fee.”

Karin says that getting out of Los Angeles was the best thing that ever happened to her. “It’s just been the most exquisite experience. Our house is beautiful and has a fabulous view. It’s perfect for our needs. Every day, I wake up and smile because I can’t believe we live here!”