In partnership with Better.com and Freedom Mortgage, Compass aims to help homeowners make a downpayment on a new home before they sell their old one.
In partnerships with Better.com and Freedom Mortgage, the new program allows consumers working with a Compass agent to apply for a bridge loan that includes no out-of-pocket costs for six months.
“We are incredibly excited to be able to offer Compass Bridge Loan Services to home buyers and sellers across the country,” Carly Litzenberger, senior director of new ventures at Compass, said in a statement. “Until now it’s been far too difficult for homeowners to easily access the equity in their homes. By unlocking this capital, Compass is putting the power back in the hands of the homeowner and bringing a new group of buyers to the housing market.”
The bridge loan program is one of the first offerings of Compass’ new ventures division, which was announced at the time of an executive reshuffling back in June. At the time, former Compass Chief Operating officer Maëlle Gavet was shifted to overseeing the division, which a Compass spokesperson described as mostly focused on “ancillary services” such as mortgage, title and escrow.
Bridge loans are short-term loans that allow homeowners to tap into home equity to secure a new home before selling the old home. According to financial services firm Bankrate, they’re typically paid back over six months to a year and aren’t used in place of a traditional mortgage.
The terms of the specific loans are decided by the lender, and the homeowner still needs to qualify for the loan.
Compass touts the solution as a way to close “the financial gap between the home you own and the home you want to buy,” and says the program offers competitive rates, faster processing and dedicated support from lenders. Better.com, a fintech startup aiming to digitize and streamline the mortgage, is partnering with Compass for the new platform, along with Freedom Mortgage.
“Better.com and Compass both have similar shared visions of making the homeownership process easier through best-in-class technology and superior customer service,” Vishal Garg, CEO and founder of Better.com, said in a statement. “We’re thrilled to partner together on a service that combines a concierge-like customer offering with innovation.”
Like iBuyer solutions, bridge loans are another way brokerages are attempting to reduce friction in the homebuying and selling process, by allowing existing homeowners to take action when they see a home they want to buy instead of waiting for their current home to close.
It’s unclear if Compass is offering any protection or guarantee in the event an agent fails to sell the home.
Offering bridge loans was one of the big requests from Compass agents as part of its recent “Learn from Reality” agent feedback challenge.
The service has already rolled out in select markets and Compass reports the feedback from agents has been positive.
“This is exactly the type of innovative programming I came to Compass for,” Andrew and Jennifer Oldham, Compass agents in the San Francisco Bay Area, said in a statement. “We have two existing clients that are buying homes solely as a result of Compass Bridge Loan Services. Being able to offer this type of program is a true game-changer for our clients, as well as our business.”