Disruptive business models continue to make inroads into traditional real estate, which in the past heavily relied on face-to-face communication and in-person interactions. But as innovation increasingly impacts the industry, more and more agents and brokers are incorporating new products and technologies to pave the way to success.
Real estate startup Knock, for example—led by founding team members of Trulia Sean Black and Jamie Glenn—is introducing a new way to buy homes with a trade-in platform that melds together the buying and selling process. Currently, Knock is in the Atlanta, Ga., and Charlotte, N.C., markets, but has plans to expand.
“From our experience working in online real estate at Trulia and Yahoo, we recognized the need to utilize technology to streamline the home-selling process,” said Black, CEO and co-founder of Knock, in a statement. “We sought funding and advisors from business leaders, such as Sam Yagan of Corazon Capital and Raju Rishi of RRE, who successfully transformed industries at iconic, multibillion-dollar companies like Match, Netflix, TiVo, Trulia and Houzz. Together, we’re fundamentally changing the face of home-selling by utilizing data science to price homes accurately, technology to sell them quickly and a dedicated team of professionals to guide homeowners through the selling process.”
Step one? The trade-in price for the current home is determined and the listing is marketed. Step two? The new home is identified and purchased in cash by Knock. Step three? Well, that’s it—a seamless swap if the initial property sells within one year of the contract date. That’s what its business model is promoting, leaving behind having to sell a property and potentially stay in temporary housing before purchasing and moving into a new home.
Where does that leave traditional real estate agents? Knock promotes the use of its “Licensed Local Experts,” who are paid a salary instead of commissions, to function as buyers’ agents, transaction managers and more. Additionally, Knock itself is a registered broker/agent and member of the local MLS, taking the place of the traditional listing broker, according to its website.
“We strongly believe that homeowners should not have to give up a significant percent of their home’s equity and their personal time to ensure a quick and painless move,” said Glenn, COO and co-founder of Knock. “Our platform is available for the same fee as one would pay a traditional real estate agent, with the added benefit of total transparency and a sales guarantee.”
The pros? If the service works seamlessly as promoted, sellers can look forward to buying their next home without having it be contingent on the sale of their current home, reducing the risk of a loss in a multiple-offer situation. With that end goal in mind, sellers won’t need to wait for the new home to close, eliminating the need for temporary housing, which can be costly and inconvenient. For those that have the funds to own two properties outright, they won’t need to worry about tying up cash reserves on a second mortgage.
The cons? The intricacies of trading-in properties add a hurdle to the appraisal process. Home values and Knock’s categorizing of condition—from “awful” to “awesome”—are based on a proprietary algorithm and the use of data scientists and home valuation specialists. While a lot of data is used to determine the value of the home, the sale of the property is not guaranteed, leaving homeowners with an added challenge if Knock buys their new home, but cannot sell their previous one.
Additionally, with a traditional brokerage, clients typically work with either a single agent or a small group of individuals if dealing with a team. With a larger operation such as Knock, individualized customer support and attention to detail may suffer.