Real Estate is changing the way we buy and sell houses. Working on a unique trade-in model, Knock's Home Swap program offers sellers a way to buy their new home before selling their current one.
With new technology, more methods of selling and buying a home have cropped up to allow you to skip the major hassles of a traditional real estate transaction.
Knock real estate is one company providing a new way to buy a house before you've sold the one you already own. However, they only offer their services in limited markets and have non-negotiable fees.
Let's learn more about Knock Real Estate, how it works, and if it's the right option for you.
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What is Knock Real Estate?
Knock operates on a trade-in model, consolidating the buying and selling process into one package. They underwrite your purchase of a new house, then prep and list your old house.
With this method, Knock guarantees you can secure and move into a new home while 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 Works
Knock helps you find and secure a new home before they list your old one. If you qualify, they'll advance you enough money to buy a new house with a non-contingent offer. Once the purchase is closed and you move in, Knock will list your old home.
Knock will front up to $25,000 for repairs on your old home, prepping it for sale and marketing it. 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 yours and your home's information to Knock for pre-qualification. If you meet Knock's criteria, you'll have the funds — including a down payment — to search for and make a non-contingent offer on a house.
2. Once your offer is accepted and the transaction closes, you can move in and will only be responsible for your new mortgage payment.
3. Knock will then prep and list your old home for sale. If there isn't a buyer after six months, Knock buys your house for a pre-agreed upon price.
4. When your old house is sold, you'll pay Knock back for any mortgage payments, repair costs, and other expenses it advanced you. You'll also owe Knock a 1.25% convenience fee for its services.
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, is that most 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.
What does Knock charge in fees?
The convenience and peace of mind Knock offers do come at a price. You'll have to pay back any money Knock advances you for a down payment, covering your old mortgage, or repair costs once your old house sells. Plus they charge a 1.25% convenience fee.
Like a traditional sale, you'll also be on the hook for standard closing costs that can include your lender's fees, HOA fees, attorney fees, escrow charges, transfer fees, and more depending on your particular market.
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Pros and Cons of Knock
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 non-contingent offer, you're more likely to win the bid as sellers know the deal isn't likely to fall through.
2. Home Options
With Knock, while there are 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 old home while you only worry about the mortgage on your new home. Of course, once your old house sells, you will have to pay Knock back for those costs.
1. Repair and Prepping Costs
While Knock will advance you up to $25,000 to fix and prep your home for sale, you will have to pay that back. And since Knock hires the contractors and people who prepare your house, you have no control over what's done or how much is spent.
It's possible if you took on the repairs yourself and listed your house on the open market, you'd spend less on preparations.
2. Limited Service Area
Even if Knock's services seem great for you, don't get too excited. Knock only operates in a few markets: Phoenix, Denver, Orlando, Tampa, Atlanta, Charlotte, Raleigh-Durham, Austin, Dallas-Fort Worth, Houston, and San Antonio. You're limited to buying and selling homes within these few cities.
Knock Real Estate Reviews
As of October 20, 2020, Knock's average customer rating is 4.8/5 based on 710 reviews.
Alternatives to Consider
Knock can be a good option if you want one company to help you through the buying and selling process. However, there are other options to check out and see if they'll better meet your needs.
Learn more about other iBuyers:
If you haven't spoken to a local agent yet, it's definitely worth seeing what they can offer before you trade-in your house with 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.
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Top FAQs about Knock
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 a 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.
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.