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The premise that buying or selling a home could become as simple as pressing a button “scares the shit out of Realtors,” Inman founder Brad Inman told Black, as they chatted on stage on the final day of Inman Connect Las Vegas.
But Knock isn’t actually out to disintermediate agents, Inman noted, setting the stage for a discussion of the broader implications of real estate’s transaction revolution, which is being fueled by companies like Knock that are giving buyers and sellers new options.
A member of the founding team at Trulia, Black said many past innovations in real estate tech have primarily benefited buyers. The new wave of startups acting as “power buyers” and transaction facilitators are helping sellers join the party.
Knock’s flagship product, for example — Knock Home Swap — is aimed at homebuyers who also need to sell. It lets homeowners tap the equity in their existing home to make a non-contingent offer and close on a new home that’s financed by Knock. This happens before they put their old home on the market.
Because of the scarcity of listings in many markets during the pandemic, it’s often much easier to sell a home than buy one. Rather than cutting them out of the process, Knock Home Swap has helped many real estate agents drum up new business during the pandemic, by giving trade-up homebuyers who might otherwise be reluctant to jump into the market the ability to buy before they sell.
Knock’s latest offering, Knock GO (Guaranteed Offer), is a “cash-like” conventional mortgage product aimed at homebuyers who don’t need to sell. It lets them make a guaranteed offer on a home with no financing contingency.
Thanks to record home price appreciation in many markets, appraisals are often coming in below the contract price. So Knock GO also provides an appraisal protection guarantee, with Knock making up some or all of the difference in funds required at closing if the appraisal comes in low.
With Knock GO, Knock once again sees itself as an ally of agents, helping them put their clients in a better position to win a bidding war and preventing deals from falling through.
To take advantage of these tools, agents must first become “Knock Certified.” Knock doesn’t charge agents fees, but their clients will pay a 1.25 percent convenience fee to use Home Swap. Knock charges a $1,450 lender fee for Knock GO.
After they’ve been through a training program, agents are “certified” and get access to an app, co-branded marketing materials, and Knock’s support team.
It’s the app — which pulls together the information the agents and their clients need, and facilitates collaboration between all parties — that is reminiscent of airbnb, Black said.
“The philosophy of ‘airbnb for real estate’ is we have experiences — the agent experience, and the consumer experience, and we’re helping power both,” Black explained.
While Knock is a mortgage lender, it’s the company’s technology that makes it valuable to agents.
“The financing is the cornerstone — it’s where all the information is, it’s absolutely a necessary component,” Black said. “But really what powers it is information and transparency.”
Black said Knock is partnered with 260 brokerages with 100,000 agents in 65 markets using the platform. Knock will announce 10 new markets next week, he said, bringing the total to 75 markets.
To support Knock’s recent launch in Portland and five other Oregon markets, Knock’s been doing direct-to-consumer marketing on behalf of agents “to help them tell their stories to customers,” Black said.
In case they’re not getting the message, Knock’s booth at Connect Las Vegas sported a banner that read, “In Agents We Trust.”
That straightforward copy is the brainchild of Kate Leggett, content marketing lead at Knock, said the man staffing the booth, Scott Franco.
“Our business is building partnerships with brokerages and agents,” Franco said. While some agents may still be under the impression that they’ll somehow be displaced, “We rely on agents to make the transaction happen.”
“I don’t think agents are going anywhere,” Black told Inman of the long-term relationships Knock is building. In fact, as technology automates more of the “stupid” administrative work that agents have traditionally been burdened with, Black expects agents will come to be viewed more like lawyers — professionals with valuable expertise and insights.
In addition to giving the audience at Connect Las Vegas advance notice of the company’s plans to add 10 new markets next week, Black revealed that Knock has raised more than $600 million to date, although he wouldn’t disclose how much of that was debt when pressed by Inman.
Competitors in the space include venture-funded startups like Better, Flyhomes, Homeward, Orchard, and Ribbon, which also enable homebuyers to make cash offers to better their odds of winning a bidding war, among other services (Black, Homeward CEO Tim Heyl, and Ribbon CEO Shaival Shah shared this year’s Inman Innovator of the Year award).
Asked whether he was worried that the flood of venture capital into real estate proptech and other startups is the prelude to a crash, Black said Knock has considered that possibility.
“I can tell you, the model we’ve built is specifically meant to not only to survive another 2008, but to thrive,” he said.
Email Matt Carter