Adena Hefets of Divvy Homes and Sean Black of Knock talk about how their platforms help agents increase their addressable market during a Connect Now session.

Real estate is in the midst of a “transaction revolution” and agents should take advantage of it to grow their business and help their clients, according to panelists at Inman Connect Now on Tuesday.

In a session called “Putting New Business Models to Work for You in 2021,” Sean Black, CEO of Knock, a company that helps homeowners buy a new home before they sell their current home, and Adena Hefets, CEO of rent-to-own startup Divvy Homes, urged agents to use platforms like theirs to make the transaction process smoother for their clients.

“We’re in this transaction revolution, so it’s really important for agents to understand that they need to help consumers get through the transaction,” Black said. “It’s not enough to give them information, to be the expert. Now there’s options at consumers’ disposal, whether it’s selling at a discount to an investor or, for example, using Knock to do a home swap more immediately and certainly.”

The old mortgage system is no longer supporting average Americans, Hefets told conference attendees, pointing out that the median FICO score to get a mortgage is now 740, up from 700 historically.

“Credit has really tightened. You can’t offer [customers] that same starter mortgage for a new home purchase that you could have offered them 20 years ago. As a result we’re seeing a lot of alternative ways to finance the purchase of a home,” Hefets said.

“You have folks who are doing things like down payment assistance, which is a category that’s starting to explode for folks who maybe don’t have a full down payment. And then you have folks like Divvy. Divvy’s basically redefining the way you can actually finance the purchase of a home. What we let you do is we pick out a home, we’ll buy it for you and we let you actually rent that home back from us and you can build equity while you rent it, and you ultimately have a buyer right on it.”

The benefit of using platforms like Divvy and Knock is that agents can increase their addressable market, according to Hefets.

“If you are a brokerage in … Atlanta, today there’s a certain percentage of people in Atlanta that can actually purchase a home. By actually expanding the products that you use, you’re increasing your addressable market, and maybe now 2X or 3X the number of potential customers are available,” she said.

Most of these new tech startups do this using all-cash offers, thereby turning an unqualified lead — say, someone who doesn’t have a down payment or has a lower credit score — into a qualified lead, according to Hefets.

“At Divvy we go from signup to actually sending an offer [in] on average 14 days on our platform and we’re an all-cash offer,” she said. “So you just took a customer who historically would have been a rental tenant and you would get one month’s rent commission on that and you can turn them into an all-cash buyer in 14 days and make a full buying agent commission.”

Black noted that different alternative business models will suit different customer needs. While Divvy might work for a first-time homebuyer, Knock helps sellers buy their new home before selling the old one, he said.

“For us you can take someone who’s on the fence who may not want to go through the buy and sell process at the same time, and give them a solution which gets them into their new home first,” Black said.

“[We] basically pre-fund them to get their new mortgage before they even list their old home where no bank would even think about it. We bridge … all the other financing needed to get to the new home so they’re earning equity in the new home as an owner. We get them out of their old home, we fix it up, put it on the market with the agent and it gets the most offers in the shortest period of time. They get full market value for the home and the agent doesn’t pay a dime and the customer gets a better deal and it’s more convenient, more certain.”

Knock has a Knock-certified agent (KCA) program with 24,000 agents in its network and those agents have a badge that they can add to their email signature and also co-branded marketing materials they can use to post on social media, according to Black.

Divvy doesn’t offer badges, but gives agents a custom affiliate link that then links a customer to a particular agent, according to Hefets.

“It’s the same way that you would send a customer to get financing from a bank. You just send them to and you have your affiliate link on the end of it. Then we just underwrite them and approve them the same way that a mortgage would approve, just a lot quicker and a lot easier than a traditional mortgage company,” she said.

Knock also gives its agents a custom link and has increased double-side transactions for agents because they’re attached to both the purchase and selling transactions, according to Black.

“You get 100 percent of those commissions. We charge no fees,” Black explained. He added, “We pay up to $25,000 to fix up the old house, whatever they want done, whatever the agent recommends.  We even pay their old mortgage for a couple of months. From the agent point of view, it’s easy.”

These new platforms help agents to focus on their most important job: comforting the customer who is going through the buying experience, according to Hefets.

“Divvy takes care of everything else on the back end. Everything down to running an asset value model,” she said. “We take care of the inspection. We send out all purchase agreements you have to take care of and any of the documentation or paperwork.”

“Your job is find the customer, take care of that customer, build up the relationship and be the emotional support that they need as they’re trying to buy this home. Let us take care of all the backend paperwork annoying stuff so you don’t have to worry about that.”

Hefets and Black recommended that agents pick a platform and invest in getting to know it well.

“Making sure that you’re familiar with the ins and outs of how they work is important for you to be able to then be the advocate of that platform for your customers,” Hefets said.

Email Andrea V. Brambila.

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