Start-up Knock withdraws from real estate brokerage and turns to credit

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Start Hit announced Thursday that it was withdrawing from the real estate brokerage business and becoming a lender.

This morning, the company unveiled a major shift in strategy with its new Home Swap program, where Knock serves as a lender to help a homeowner buy a new home before selling their old home. She previously worked with partner lenders, but is now an approved lender herself.

In other words, the company now offers built-in financing – the mortgage and an interest-free bridge loan – in an effort to help consumers make solid unconditional offers on a new home before they fix and put up. their old house for sale on the open market. .

With this new move, Knock scrapped its Home Trade In program, where it helped consumers buy before they sell by using their own money to buy the new home on behalf of the consumer before preparing and listing the old home on behalf of the consumer. consumer in the free market. Underneath that
Trade-in model, the owner used the proceeds from the sale of his old home to buy Knock’s new home and reimburse the company for everything
repairs he made to prepare the house for sale.

Earlier today we covered the news that another startup in the real estate sector had also extended to credit: Orchard (Previously Perch). With over $ 600 million raised in debt and equity, Knock is one of the best-funded players in the industry.

The move represents Knock’s first foray into lending. Under the new Home Swap program, homeowners have access to home repair capital, which the company manages through its janitorial service, and they work with a local agent.

Knock co-founder and CEO Sean Black (who also co-founded Trulia) described its new Home Swap program as a “redesigned version” of its swap offering.

In a telephone interview this afternoon, Black told HousingWire that the company decided to walk away from its exchange program in part because it was capital intensive and required shutting down. a house twice.

“It added friction to the experience,” he said. “And now, especially during COVID, it can be awkward to try and sell a house at the same time as you buy one. It’s about making something possible that is not possible with any other traditional lender. We can lend money before an owner [old] house is even listed on the market.

The new program is offered exclusively by agents who have been trained as a Certified Knock Agent. Consumers get financing directly through Knock and can immediately own their new home without having to worry about getting their old home ready for sale, Knock says.

As mentioned above, the Knock Home Swap includes a fully integrated and competitive mortgage. It also includes an interest-free bridge loan to cover the down payment on the new home as well as mortgage payments and up to $ 25,000 for home preparation and old home repairs.

As part of its Home Prep Concierge, Knock provides access to its network of approved contractors and manages the payment of all invoices at the end of the work. Knock is also offering a backup offer on the old house in the unlikely event it doesn’t sell within six months.

Effective immediately, consumers can work with a Knock Certified Agent at Atlanta communities real estate brokerage, JP Real Estate Agents & Associates in Dallas-Fort Worth and Berkshire Hathaway HomeServices Arizona Properties to take advantage of the Knock Home Swap to buy their dream home before preparing and selling their old home for the best price on the open market.

With these partnerships, Knock said he would no longer market directly to consumers – a move he said underscores his commitment “to partnering with the industry and the value that a local agent brings throughout. of a real estate transaction “. Knock plans to expand the program to 11 markets by the end of the year and operate in at least 21 markets by the end of 2021.

“In today’s environment of low inventory and the era of social distancing, consumers continue to welcome innovative ways to buy and sell their homes,” said Mark Stark, CEO of Berkshire Hathaway HomeServices Arizona Properties, in a written statement. “In the midst of a global pandemic, Knock has created a platform that allows the real estate sales manager to offer more certainty and more buying power when selling and buying a home in same time. We are delighted to be able to offer this unique solution to our customers.

Knock is headquartered in New York and San Francisco and currently operates in Atlanta, Charlotte, Raleigh-Durham, Dallas, Fort Worth and Phoenix. The startup was formed in 2015 by founding team members Trulia, Black and Jamie Glenn.

The company said it doesn’t describe itself as an iBuyer. For example, she used her own cash to buy the new home, but said she was not benefiting from repair work on a consumer’s old home.

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