By Vanessa Saunders, MBA, MIMC, Broker Owner, Global Property Systems Real Estate.
The real estate industry has long been plagued with a particular conundrum that gets in the way of buyers. Very often, a buyer must sell a home before they can buy another one. Now active in 18 markets around the country, Knock has introduced its Home Swap program to help families secure a new home without having to rely on the proceeds of selling their current house.
Knock, a darling of the investment world and funded in the hundreds of millions of investment dollars was founded in 2015 and is led by a trio of respected scions of the property tech industry. Its first product was called Home Trade-in. Buyers who’ve found a home to buy would engage Knock which would secure it with cash on their behalf. At the same time, Knock would buy the home the client is hoping to sell and prepares it to go on the market. The buyer would then refinance the new home and buy it back from Knock.
Knock Home Swap is a “perfected” version that’s evolved from the home-trade-in concept. In it, Knock is the mortgage provider, and it pre-approves clients for a traditional mortgage offering competitive rates. Buyers can thus shop the market with the power of having an all-cash offer. If necessary, the Home Swap Loan provides the down payment, pre-market home prep and covers the mortgage as part of a $250,000 interest-free bridge loan. The seller can use the loan to reconcile any loan costs when it sells the previous home.
One of the biggest advantages of the Home Swap model is its down payment service. It can take years for a home seller to save up enough money for a down payment. In some markets, it can take over a decade for a buyer to squirrel away the thousands necessary to buy a home. Having cash on hand eliminates a significant hurdle in the buying process.
Home Swap is a solution for the long-standing dilemma homeowners face who need a way to use the equity in their homes to make their next move. It frees up billions of dollars worth of equity, transforming it into a new source of capital for the real estate industry.