It’s not your parents’ real estate market anymore. Gone are the days when you’re only limited to working with a traditional real estate agent to navigate the buying and selling process.
With new technology, more and more new methods of selling and buying a home have cropped up promising to sell your home quickly, allowing you to skip the major hassles like finding serious buyers, negotiations, or showing your home at open houses.
And Knock real estate is one company evolving beyond the “We buy houses for cash” or fix-and-flip models, revamping the way you can sell a home. However, as Knock and other iBuyers find their footing in the real estate game, they can only offer their services in limited markets along with non-negotiable fees.
Even if you need to sell fast, a full-service local agent can be a great option. Top agents can help you sell fast and often for more money than with an iBuyer like Knock. To give you freedom and flexibility, get in touch with a top-rated local agent.
Let’s learn more about Knock Real Estate and how it works.
What is Knock Real Estate?
Modifying the iBuyer method, Knock operates on a trade-in model consolidating the buying and selling process into one package. They take on the role of both real estate agent and short-term lender where they will buy your new home outright using their own funds, before they repair, list, and resell your old home.
With this method, Knock guarantees you can secure and move into a new home before they sell your old home, mitigating concerns about waiting to close or paying two mortgages at once. When your old home sells, Knock will settle for any costs incurred in purchasing your new home, as well as any costs for repairs on your old home.
So how exactly can Knock purchase your new home and cover repairs on your old home while still making a profit? Here’s a breakdown of how Knock works.
How Knock Real Estate Works
As your representative in both the sale of your old home and the purchase of your new home, Knock helps you find and secure a new home before they list your old one. Knock will use their funds to purchase the home and then you can move in immediately.
Knock will cover up to $10,000 for repairs on your old home, prepping it for sale and marketing your home using MLS, Zillow, Trulia, Facebook, Google, yard signs, plus other popular listing sites and marketing methods. Once your home sells, you settle all the incurred costs at closing and Knock transfers the title of your new home into your name.
Here’s your step-by-step breakdown:
1. First, you’ll submit your home information and photos to Knock for a price evaluation. To assess your home’s value they use comps in your area, tax records, and consult with local real estate agents in addition to their own algorithm that takes into account both online and on-site information to price your home.
2. Next, you’ll schedule a phone consultation to be partnered with a Knock Licensed Local Expert who knows your specific market and can answer any of your questions whether you’re curious how they priced your home or want more details on the process.
3. Knock will begin the process of finding your new home and get you fully underwritten for a new mortgage so you have an idea of how much house you can actually afford.
And while Knock isn’t a mortgage lender themselves, you’ll work with a lender of your choice to ensure you’re pre-approved and have enough equity to purchase the new home and mortgage.
4. Knock buys your new home using their own funds, making an all cash, non-contingent offer on your behalf.
Knock manages the new property taking care of all the bills and mortgage payments, so you’re only responsible for continuing to cover the payments on your old home. Once everything is finalized, Knock will settle any acquired expenses with your new and old home such as mortgage payments, taxes, and other fees at closing.
5. Now, you get to move into your new home. As you get settled into your new space, Knock will begin the process of prepping and selling your old home.
6. Knock will send out an inspector to determine any needed repairs on your old home looking at both the interior and exterior, specifically checking the roof, plumbing & electrical systems, and major appliances such as A/C units.
Knock will provide you with a list of recommended fixes and estimated costs. You can fix the repairs yourself or let Knock take care of the repairs, covering up to $10,000 in repair costs that will be settled with you at closing.
7. Knock will sell your old home, marketing through the MLS and other listing sites. Typically, Knock is able to sell your home within eight weeks but if it doesn’t sell by then, Knock will keep your home on the market up to a year before looking at other options in the case it doesn't sell.
Once your home sells, Knock will transfer the title into your name and settle all costs.
How Knock Is Different from an iBuyer
While both Knock and iBuyers offer speed, convenience, and simplicity, Knock takes the iBuyer concept a step further with their trade-in model. The main difference between Knock and iBuyers like Opendoor and Offerpad, is that iBuyers will only help you sell your home — there’s still the risk and uncertainty of finding a new home.
With Knock you have the security of paying one mortgage at a time, moving only once, and the guarantee of securing your new home without the typical fears that the seller may back out, unexpected repairs, or financing falls through — iBuyers cannot promise that certainty.
Does Knock charge any fees for a trade in?
The speed, convenience, and peace of mind does come at a price. On par with traditional real estate agent rates, you’ll pay a 6% commission for the sale of your old home with half of the commission going to the buyer’s agent.
On top of the commission you’ll be responsible for costs related to financing charges, taxes, insurance, any HOA dues on the new home, and the money Knock advanced to you for preparing your old home for sale including those repairs.
Like a traditional sale, you’ll also be on the hook for standard closing costs that can include your lender’s fees, HOA fees, your attorney fees, escrow charges, transfer fees, and more depending on your particular market.
And you’re not done quite yet. Be prepared to pay for appraisal costs on your new home which typically amounts to about $500 — plus, you’ll need to cover the expense for an inspection on your new home as well.
How does Knock Real Estate make money?
Between the cost of purchasing a new home plus making repairs and prepping your old home, it seems that it would be difficult for Knock to make a profit. However, because Knock represents both the buyer’s agent and seller’s agent on a single home, they are able to stay in the black by collecting on both commissions.
Knock will receive a 6% commission from you, the seller, plus the 6% commission from the buyer who ends up purchasing your old home. And in addition to commission, Knock works on volume, selling and buying a large number of homes and turning them around quickly in a manner of weeks where a traditional sale can take months.
Knock Real Estate Pros and Cons
1. A Guaranteed New Home
One of the biggest perks of Knock is that their trade-in business model guarantees you can secure and move into your new home before you worry about selling your old home. And with Knock’s all-cash offer, you’re more likely to win the bid as sellers know a cash deal isn’t likely to fall through.
2. Home Options
With Knock, while there’s some criteria your home must meet to be considered, you’re able to look for upgraded homes that have more space than your current home, you can downsize from a home to a condo, or you can swap for a similar home but in a different city or neighborhood.
3. No Overlapping Mortgages
Unlike a traditional sale, you don’t have to worry about paying for more than one mortgage at a time. Buying and selling a home can be a difficult balancing act, trying to time out closing and move-in dates.
With Knock, they take care of the bills and mortgage on the new home while you only worry about the mortgage on your old home until it sells. This way, you don’t have to be concerned about going into debt if your old home doesn’t sell right away.
1. No Negotiations
There isn’t much wiggle room for Knock’s prices and fees. For instance, while you can discuss the pricing and valuation of your home, ultimately, Knock will offer a price to purchase your home that you either take or leave.
And, unlike a traditional sale where you can negotiate commission, repair costs, closing costs, and other fees, Knock’s fees are set. You’ll be responsible for appraisals, inspections, holding fees, transfer fees, and other additional costs that crop up.
2. Repair Costs
While Knock offers to help with repairs, again, it’s more of a take it or leave it situation. Knock will provide you with a list of needed repairs and cost estimations and if you opt to not make one of the repairs, they’ll do it anyway taking the cost of the repair out of the total sales price of your home.
Knock will cover up to $10,000 in repair costs, though keep in mind that amount will only cover minor fixes. If there’s something truly wrong with your home such as a bad roof or foundation issues, $10,000 won’t cover the entire expense — you may still have to pay out of pocket.
3. Limited Service Area
Even if Knock’s services seem great for you, don’t get too excited. Knock only operates in a few markets: Atlanta, Charlotte, Raleigh, Durham, Dallas, Fort Worth, and Phoenix. You’re limited to buying and selling homes within these few cities.
Knock Real Estate Reviews
Looking at the reviews on Zillow and Trulia, Knock seems to overall receive high praise and positive reviews with most comments acknowledging helpful customer service and the ease of their buying and selling process.
However, other reviews noted concerns about high fees and complaints concerning the home valuation and pricing being well under market value.
Alternatives to Consider
Knock can be a good option if you want to avoid the hassle of working with realtors and want one company to help you through the buying and selling process. However, you won’t save as much time as you would with iBuyers like Opendoor and Offerpad and your offer will be lower than you’d get selling with a traditional real estate agent.
While Knock’s trade-in option is unique (although Opendoor has a similar service), real estate agents can leverage their network of professionals to ensure you close on selling your home before buying a new one, avoiding the need to pay two mortgages at once. You’ll also pay less in fees overall, especially if you work with a full-service discount realtor.
If you haven’t spoken to a local agent yet, it’s definitely worth seeing what they can offer before you sell or trade-in to an iBuyer like Knock.
If you’d like to learn more, Clever Real Estate can help — reach out to interview local agents who can help you sell your home and buy your dream home. Our referral service is 100% free and there’s no obligation when speaking to us.
There’s no right answer to using an iBuyer or a real estate agent — it depends on your specific situation and current needs. It’s possible using Knock could be the right choice, but you should explore every option so you get the best outcome for you.
Top FAQs from Home Buyers and Sellers Considering Knock Real Estate
What is Knock home buying?
Knock home buying is part of their trade-in process. Most will partner with Knock during the home search process where Knock will ensure you’re pre-approved and have your finances in order before making a bid on a new home.
However, you don’t have to initially work with Knock when house hunting. If you find a home you love on your own, you can then work with Knock and use their all-cash offer to secure the sale. If you do go this route you’ll still be required to sell your current home with Knock — you won’t be able to use a third-party agent.
Can I trade my house for a new one?
With Knock, as long as you’re pre-approved and have enough equity, you’re able to purchase a new, upgraded home. Knock also allows purchases on new home construction by guaranteeing the builder an all cash, non-contingent offer. Once the home is completed you can move in and Knock will proceed with the rest of the selling process.
What is Offerpad?
Offerpad is an iBuyer company that offers to take your home off your hands quickly. They will make an all cash offer on your home within a day, allowing you to skip the hassle of finding a serious buyer, prepping your home for open house, making your own repairs, or waiting weeks in escrow.
Similar to Knock, Offerpad also provides a trade-in service although you’re limited to purchasing homes only owned by Offerpad.
To make a profit, Offerpad operates on the fix and flip business model, so be prepared for their offer on your home to be well under market value.
How does Opendoor work?
Opendoor is another iBuyer credited with actually starting the iBuyer movement. Offering both speed and simplicity, Opendoor will make an offer on your home within 24 hours based on their own algorithm along with information and photos you provide to them online.
If you accept their offer, an assessment team will come out to evaluate your home and look for any needed repairs. Then, you simply choose a closing date and seal the deal. Opendoor then takes your home and resells it for profit.
Keep in mind, to meet their bottom line Opendoor traditionally charges higher fees and will price your home under market value, although it is closer to market value than most other iBuyers.