Meet Knock, Revolutionizing How We Buy and Sell Homes

The Offer Sheet readers —

We’re pumped to be sharing with you our recent interview with the founders of Knock, Sean Black, CEO and Jamie Glenn, COO. Knock is a fascinating platform that empowers consumers to buy their new home comfortably before selling their old home.

We discuss how the concept came about, how exactly it all works, what type of traction they’ve had thus far (in the billions of transaction revenue), how they’ve already raised $10MM+ on Wefunder, how they plan to deploy that capital, their leadership team being a real strength, their plans for the future and a lot more!

I’m very intrigued by this concept — the problem being solved is something I’ve experienced on a personal level.

Interested in joining their mission? Learn more here. Interested in a fun interview? Let’s Go! 👇

It’s one of the trickiest high wire acts to pull off in life, especially in the real estate market of the last few years: selling your primary residence while buying a new primary residence at the same time. My own parents did this 5 years ago, and literally had to have two closings on the same day to pull it off. And all the stress around the move that comes with it.

How did this concept come about and how long has Knock been around?

[Sean] My Co-founder Jamie and I have been in real estate tech for over 20 years, so we have gained lots of insights over that time.  We were on the founding team on Trulia, which was acquired by Zillow for $3.5B. We think of that period as the information revolution, whereby companies like Trulia and Zillow democratized the information consumers need to make the single largest purchase of their lives. But home sellers still have very little transparency into the process of selling their homes, so we started Knock in 2015 to create the same kind of transparency, convenience and certainty for sellers as we did at Trulia for buyers. 

How does it all work exactly? It seems like you are providing a bridge loan to allow a family the comfort of time and leverage with their current home to get the best sales price instead of having to time everything perfectly, right?

Our first-of-its-kind Bridge Loan offers convenience, certainty, and competitiveness for a simplified journey between homes. Knock partners with your agent or lender so you can use the money “tied up” in your current home to purchase your next one. You’ll work with your primary lender and apply for a new home mortgage with them. Once eligible, you’ll find out the amount of Bridge Loan funds you can access for purposes like a down payment, debt repayment, or moving costs. A Knock Loan Officer will guide and support you throughout the entire process. With the Knock Bridge Loan secured, you can make competitive offers on homes and, once accepted, move into your new home before selling your old one. Use funds from the Knock Bridge Loan for home preparation and list your old home on the open market to maximize its sale price. Upon selling your old house, the Knock Bridge Loan is automatically paid off, completing the entire process.

What has your traction looked like thus far? Any transaction volume or revenue you are comfortable sharing?

We have done $2.4B Gross transaction volume and $1.0B Loan origination. More importantly, we have been growing double digits every month over the past year as we partner with more of the largest lenders in the country to give their customers access to the Knock Bridge Loan and the ability to buy before they sell.  We have built a great deal of technology in pursuit of our goal, which has helped us grow our gross markets from ~50% this time last year to 80% currently and 89% by the end of this year.  

What is some of the feedback you have received from your customers? Is this as potentially game changing for many families as it sounds?

Feedback from both customers and partners indicate that our solution is game-changing for families and individuals that need to access the equity tied-up in their current home, to purchase their next one.

It looks like you have already raised over $10MM+ on Wefunder. Congrats and bravo! How do you plan to deploy that capital?

We are going to use this round to continue to build out our technology, including integrating closely with loan operating systems our partners use. This means homebuyers will be automatically prequalified for a Knock Bridge Loan when they apply for a mortgage making buy before you sell a default option for all homebuyers across the country. 

Can subscribers of The Offer Sheet still invest, and if so any perks for our readers?

Yes, but crowdfunding regulation limits the amount of investment we can offer to the public so invest now before we hit that limit.  Offer Sheet readers have the opportunity to invest at the same price and on the same terms as institutional investors including Foundry Venture Capital and Second Century Ventures, the co-leads in this round. 

Can you talk more about your new sales channel with third party mortgage companies and how that is a flywheel that is helping you drive CAC to near zero? 

Slide 6 in the pitch at WeFunder.com/Knock illustrates this flywheel, but  basically Knock’s loan platform drives sales and accelerates revenue for agents and lenders while helping them provide an amazing consumer experience that currently ranks higher than that of Apple Computer. Consumers get instant gratification, convenience & certainty while agents and lenders receive the entirety of their hard earned fees.  We don’t exchange revenue with our partners, in fact, regulation prevents any of us from sharing revenue, so this creates an objective, symbiotic relationship between us, agents, lenders and their customer whereby we are all incentivized to get homebuyers the best possible outcome. 

Typically when I invest in a company, I want to know more about the team running the show and what their background / experience is. Can you share more about your and the executive team’s backgrounds? What makes you perfect for this opportunity?

Slide 12 of the pitch at WeFunder.com/Knock shows the entire leadership team, but the most important thing to know is that we all have vast experience in all aspects of real estate and real estate tech and most everyone has been with us between 4 and 7 years, which is a testament to our culture and our mission. As mentioned above, Jamie and I have been in real estate tech for 20+ years, our VP, UX Allie has been with us over 6 years and previously worked at Zillow where she designed the homepage and much of the site you see today. Our Head of Product Kelly has been with us 5 years and was previously in a similar role at Porch.com.  These are just two examples of the tenor of the 10 person leadership team highlighted on slide 12 at WeFunder.

What’s on the priority roadmap for 2024, product wise and revenue projection / growth wise?

The Knock Platform is built for 3 different types of users, Customers, Partners and our Knockstars. Our 2024 roadmap is arranged along these 3 user types as follows: 

Customers - continue to provide transparency into the buying and selling process with enhanced timelines, milestones and easy communication with their agents and loan officer. 

Partners - Knock is currently working on integrations with our partners systems, for instance, when a loan officer is in their loan operating system taking an application Knock will be able to tell them in real time if that borrower is prequalified for the Knock Bridge Loan so that they can offer the program as an option to them. 

Knockstars - Knock is working to automate even more of the underwriting process and operations so that we can continue to scale through technology while providing an unparalleled experience. 

With continued focus on our technology platform, deeper integrations with our partners we anticipate revenue growth in excess of 100% year over year. 

What could a potential exit look like in 5-10 years if readers want to invest? Acquisition, IPO?

Our goal is to have Knock bundled into every mortgage issued in the US, so when we are successful there will be several options available including an IPO or acquisition by the largest companies in the industry. 

Are there any competitors doing something similar and if so, what’s your competitive advantage? 

The few companies we are aware of require consumers to work exclusively with their inhouse agents and loan officers and facilitate the ability to buy before you sell by literally buying the new house for the consumer and then selling it back to them when their current house is sold. This causes a lot of extra friction and fees in the form of paying double transaction fees and transfer tax of at least 1% in most States. 

So many startups solve problems that are hypothetical or tough to wrap the mind around. Do you feel like the fact that this problem is so real world and folks can identify with, help you both from a user perspective and an investment perspective?

The problem Knock is trying to solve is faced by the majority of Americans who are trying to buy and sell at the same time, which happens to be about 66% of all real estate transactions. 

There is so much opacity and stress in the process that many homeowners feel like they could never get out of their existing home and just sit on the sidelines. If they do enter the market they have to either sell their current home and hope they find and close on their new home in 6 weeks or move to some temporary housing till they find their dream home. This is very disruptive to families with kids and pets let alone expensive and cumbersome. The other historic alternative is to have a home sale contingency, but that makes you a less attractive buyer in today’s market let alone adds the stress of not knowing when and for how much your home will sell for. 

The Knock Bridge Loan addresses these real world problems by allowing you to tap into the equity you have built up so you can close on your new home before even listing your existing one in addition to becoming a non-contingent buyer. All the while our technology platform is providing visibility into the entire process and makes it easy to communicate with the various parties to the transactions.