For us miles and points collectors, in a perfect world, we’d earn miles/points on every single purchase that we make. But in reality, that just isn’t possible. In some instances that may be because the sandwich shop you like only takes cash, or because your purchase is large enough that a credit card is only accepted for a portion of the payment, like when buying a car. Well, unless you’re fortunate enough to have enough money and an American Express Centurion card to do what this guy did.
One category of spend that rarely come into play in the miles/points hobby is housing. For renters, you typically can’t pay monthly rent with a credit card without incurring fees that typically range between 1-2%. And for home purchasers, other than mileage promotions for using certain mortgage lenders, cash (including financing) is really the only way to buy a home, which means that you won’t be earning any miles/points.
That is, until now. Via Flyertalk I started looking into FlyHomes, where they are offering customers a unique value proposition. Use them as your broker, and you’ll get 1 Alaska Airlines mile for every $1 you spend on a new home. So if you buy a $500,000 house, you’ll receive 500,000 Alaska Airlines miles.
I read through the website and it there doesn’t appear to be any sort of catch and no limit to the number of miles you can potentially earn. Based on the FAQ, it appears that FlyHomes is only available to those who are looking for homes in the Puget Sound area in Washington state and just recently launched in July 2015.
Is this a good deal?
In the example above, while earning 500,000 miles on your $500,000 home purchase sounds amazing, let’s take a step back to see if it’s actually a good deal. Depending on how you value Alaska Airlines miles, which many believe to be in the 1-2 cents per mile (CPM) range, you’re essentially receiving a rebate of $5,000-$10,000, or a 1%-2% cash-back equivalent.
While the miles may be tempting, even though I’m certainly not a home-buying expert and have been through the process just twice, here are some things you need to think about before jumping into this:
- A good real estate agent is absolutely essential in the home-buying process and by using FlyHomes you will be forced into working with one of their agents. You should interview FlyHome’s agent carefully while also considering other agents. Move forward with the one you feel best about, even if that means you won’t end up earning miles by selecting one outside of FlyHome. The purchase of a home is too important of a decision to place in the hands of someone you don’t have 100% faith in.
- A home is the largest purchase you’re ever going to make. And with such a big sticker price, the negotiation process becomes even more important. A good agent can negotiate the best deal for you, and those savings can easily be in the 10%+ range, trumping the 1%-2% mileage rebate. We learned this lesson the hard way when we used a ZipRealty agent, specifically because they a offered 2% cash-back rebate, only to find out once the data became public that we left about 5% on-the-table when we compared the purchase price of our condo to what others paid.
- Don’t forget that the purchase price isn’t the all-in price of buying a home. In addition, there are closing costs which can typically add 2%-5% to the purchase price. And usually, the vast majority of closing costs are paid by the buyer. Related to #1, a good agent can often negotiate a more favorable split of the closing costs, which could even involve having the seller pay the entire amount.
Should you try FlyHomes?
In short, in my opinion you should definitely not use FlyHomes solely for the benefit of earning miles for your home purchase. Even if you are intrigued by the idea, make sure to consider a range of real estate agents beyond just FlyHome’s to find one that you trust. There are so many ways that a good real estate agent can save you money when buying a home, and those cash savings can far exceed the value you’d receive in Alaska Airlines miles.
But if you are able to find a FlyHome agent that you trust and who you believe can negotiate the best deal for you, then by all means go for it, and I hope you celebrate with some Dom Perignon and a shower (or multiple showers) in Emirates First Class!