As a real estate broker, I am bombarded with offers from different real estate vendors promising to create more leads, close more sales, generate more listings and a host of other “game changing” offerings. Every so often, one of these companies addresses an important need for our current real estate market that requires a closer look.
It should come as no surprise that our local residential real estate market is moving at a healthy pace with a surge in demand that is outstripping the available supply of homes for sale. One factor that is holding back more home sellers from listing their home is the concern about finding their replacement home. In the competitive buying market that we are experiencing, with often multiple offers on an available listing, it is more important than ever to present an attractive offer free of contingencies (particularly the need to sell your existing home first).
One company has identified an opportunity to solve this problem through a combination of funding and technology. Knock is a lending company that combines conventional financing along with a form of a bridge loan to help potential sellers identify and purchase their replacement home before listing their home on the market.
The Knock Home Swap program checks several important boxes in our competitive real estate market. When a seller works with a Knock-certified real estate agent, they are first pre-approved through Knock for the purchase of their identified replacement home. Now, the potential seller can submit an attractive offer on their replacement home and have better footing with other cash offers that may exist on the replacement home. If the offer is accepted, the seller moves into the replacement home and then has up to 6 months to sell their original home. By leveraging the equity in the original home (Knock typically requires 30% equity), Knock can offer up to 6 months interest free mortgage coverage on the original home plus up to $25,000 to make necessary repairs on the existing home.
Now, a seller who was originally reluctant to list their home for fear of not finding a suitable replacement home, can now accomplish both goals and provide much needed listing inventory to the market.
Of course none of this is free, but the 1.25% convenience fee, similar to an origination fee on conventional mortgages, is typically factored into the new mortgage. Knock recently entered the Tampa Bay market (extending down to Englewood) so it will be interesting to see if there is a demand for this type of lending product. I have no stake in Knock, but I do applaud this company for identifying a real need in the residential real estate market and then developing a solution that results in a positive outcome for all involved.
Peter Crowley is the president of Re/Max Alliance Group.