The home exchange company, once merged with iBuyers, is charting a new course and partnering with agents to do it.
Hit, a well-funded real estate technology company, announced Thursday the launch of a Knock Home Swap, a reimagined version of the company’s platform that serves consumers looking to buy and sell a home at the same time. The company settles down mortgage, bridging loan and concierge while moving to a model where it partners with real estate agents instead of directly addressing the consumer.
“We have always intended to create this integrated solution for people who buy and sell at the same time” Sean Black, CEO and co-founder of Hit, as well as a founding member of the team Trulia, said Inman.
Knock’s Home Swap platform includes a fully integrated mortgage, at what the company says is a competitive rate. The funding is unconditional, which Black says will save consumers money on home purchases, bringing what is essentially a cash offer to the table.
The company also offers a bridging loan solution to help cover the down payment on the new home, as well as the initial mortgage payments, while Knock prepares the old home for the market. The bridging loan is free for consumers.
Knock, according to Black, makes most of its profits as a lender, the same way any other lender would in the back. Knock also has an integrated securities firm. The company charges consumers a 1.25% convenience fee on the new home.
“Agents keep their commission and the brokers they work for [get their money]. We’re making money as a lender and as a securities company and that’s it, ”Black said.
By preparing the home for the market, Knock gives consumers access to its network of licensed contractors to ensure the home is getting the best price on the market. The company manages the work itself and will carry out work up to $ 25,000.
“We make sure the job is done on time and we pay the contractor,” Black said. “That way it’s pretty integrated.
“The agent controls it in a way, the consumer says okay, it’s done to my satisfaction, then we pay the bill so that there is accountability and transparency through it. “
Knock, which calls itself a trading marketplace, once looked more like a backward iBuyer, helping homeowners buy with an all-cash offer. The business would buy a house in cash for consumers, and then the consumer would buy that house from Knock, creating a double deal. The pivot eliminates the need for two transactions and the associated friction and cost that comes with it, according to Black.
“By essentially removing that and making the loan, we can take that friction away and they can not only get the house right away in their name, but they can also build equity in that house,” Black said.
The company is no longer buying homes – which essentially created false cash, according to Black – but it will still give homeowners a guarantee to buy their home if it doesn’t sell after six months. The company said 90 percent of Knock’s homes sell in 90 days or less.
Knock was a direct-to-consumer business in its early years, Black explained, so the company could understand what aspects of the user experience could be better improved and automated. During that time, the company amassed nearly 700 five-star reviews on Zillow, which was a source of pride for Black.
But now the company won’t even market to consumers anymore. In fact, consumers who contact Knock directly will be redirected to an agent.
“We have clients coming to us now, but more and more we’re going to refer them to the agent network,” Black said. “We do not intend to charge [agents] a referral commission because it’s not our business model. We just want to make sure that we give the client the best local person who can handle it. “
The new agent and brokerage partnerships will allow many more users on the platform and many different types of consumers to access Knock’s services, according to Black. The company initially launched with 10 partner brokers, including Atlanta Communities Real Estate Brokerage, JP Real Estate Agents & Associates in Dallas-Fort Worth and Berkshire Hathaway HomeServices in Arizona.
“By partnering with Knock we are able to eliminate many of the issues homeowners face when it comes to buying and selling.” Mark Johnson, the CEO of JP & Associates Realtors said in a statement. “They can make a solid unconditional offer, travel according to their schedule, and don’t have to deal with repairs or visits. We are delighted to offer this service in Dallas.
The change in the company’s product offering was not a response to the pandemic – the transition began late last year – but Black believes it is the perfect solution for the current climate.
“Customers now want a better home more than ever and they don’t want to do it with people crawling through their space, so it has worked well,” Black said.
Knock’s revamped service is live in Atlanta, Dallas-Fort Worth and Phoenix, with at least eight more markets expected this year. The company expects to have a presence in 21 markets by the end of 2021.
Send an email to Patrick Kearns