Knock Soon to be Knocking on Doors in Texas With Trade-In Platform

 
Yesterday, we learned that Opendoor snapped up discount brokerage Open Listings, giving the iBuyer platform company a huge foot up in not just the buying but the selling of real estate.
 
Today, we learn that Knock has expanded to Texas with the start-up’s first-ever Home Trade-In platform: buy and sell at same time, in North Texas.
 
Knock?
 
Know that in order to create an online iBuying or selling platform company, the first requirement is a catchy name clearly associated with a house: Brick, Door, Opendoor (do not confuse: Door is a locally-based flat fee brokerage. Opendoor is an iBuyer now armed with a discount brokerage. Shall we soon see Shingle and Front Porch?)
 
Knock is “a revolutionary new approach to home buying and selling that is certain, convenient and cost-effective.”
 
Launched by some of the founding team members of Trulia, the company says it uses data science to price homes accurately (that’s their AVM), technology to sell them quickly, and a dedicated team of Licensed Local Experts (agents) to guide consumers through every step of the process. Knock employs real estate agents, offering vacations and benefits.

Like Opendoor and Open Listings, Knock’s bank account is flush with top tier investor funds including RRE, Redpoint, Greycroft, Corazon Capital, Correlation Ventures, Great Oaks Venture Capital and FJ Labs. The company has offices in New York, San Francisco, Atlanta, Charlotte and Dallas, with expansion plans. 
 
Knock claims to be on a mission to make the home buying and selling process certain, convenient and cheaper. Knock’s signature Trade-In empowers customers to buy and sell a home at the same time, as the company finds and buys their next home on the customer’s behalf, then sells their old home on the open market. This all but removes the waiting for a buyer contingency and speeds up the process.

“As we expand nationally, we are eager to apply the benefits of our Home Trade-In to different regions of the U.S., where the environment may vary but competition is still fierce,”said Sean Black, Co-Founder and CEO.

Knock employs Realtors: the company hires multiple Licensed Local Experts, or LLE’s, salaried agents with benefits. These are local licensed real estate veterans saturated in “technology-driven real estate solutions.”

Adrienne Kieschnick, formerly Redfin’s number one performing agent in Dallas, was one of Knock’s first Dallas agents. 

“I joined Knock because I want to help the consumer, and I believe our Home Trade-In program solves for problems other brokerages do not,” said Kieschnick, a ten year real estate veteran. “Dallas is a sellers’ market, which creates a significant bottleneck issue for people buying and selling at the same time, which Knock solves. It’s brilliant, and I’m excited to be a part of it.” 

Dallas home prices are up 5.2% year over year, with out-of-state buyers attracted to the area’s booming jobs market and the relatively low cost of living. Buyers from states like high-property-priced California can easily make cash offers on our area’s relatively low-priced homes. That creates a challenge for local home buyers, who are often selling a home at the same time, and forced to make contingent offers.

Knock’s home search engine which uses proprietary algorithms to highlight “Awesome deals on the market”, Knock Deals,  shows that on average, Dallas homes priced $500,000 and under, the bulk of Knock’s price point, have the potential for savings of 3.79% off list price. By making a non-contingent cash offer on the customer’s behalf, Knock helps customers move quickly and reap savings, and compete with cash-infused buyers fresh from the closing table. This gives consumers more moving freedom as they make home changes based on life changes be it jobs, schools, or family size.

Knock has come out of the starting gate with 20 top-performing agents, some formerly of Redfin.

“Redfin is a great company, a great example of a disruptor that asked, could we do it cheaper in real estate?” says Sean Black. “But in reality, people want certainty and convenience and cost is not the first factor. Really, none of the zero models have taken off.”

But the point of most of these disruptors, to be perfectly honest, is to chip away at the Real Estate agent’s commission, then pass the savings back to the customer somehow.

“We came at this in 2005 thinking the 6 percent commission was ridiculous,” says Sean. “Now, 13 years later, as the internet has made it so much easier to find and buy a home, let’s pack a whole lot of value into that commission if we are going to continue it.”

If? For now, three percent is where Knock is starting.

“Over time, as we get critical mass, we can bring that commission down,” says Black.”We are building a platform to make the home selling process much less laborious.”

Sean notes that real estate agents earned $60 billion in commissions in 2005 and are on track to earn $80 billion in 2018.

“But in 2005, you were basically at the mercy of the Realtor for all information. Not anymore: we can do something in two seconds it used to take an agent a whole day to do,” says Sean .

The Knock model was actually designed on the real estate economics of Dallas in 2008: a market with liquidity and stability, in a city with enough economic diversification to withstand a downturn.
 
“We are sure not going to be in NYC or multi million dollar areas,” he says.  98% of homes in US are priced under $200,000, Sean says; he will leave the remaining two percent to Sotheby’s and Compass.
 
Q and A with Sean coming up.