Power Buyer Knock is adding jumbo mortgages to its offerings, a move that will allow it to serve more buyers as it partners with a number of local real estate brokerages to expand into the pricey Seattle area.
Buyers using Knock GO to buy a home, or Knock Home Swap to buy and sell, can now qualify for loans of up to $3 million.
On the sell side, clients who want to use Knock Home Swap to buy before they sell can use Knock to tap the equity in their existing home valued at up to $2 million in the metro Seattle market and in southern California, and up to $1 million in other markets where Knock operates.
“Seattle has always been a market that meets the criteria that we set when we go into new markets,” Knock co-founder and COO Jamie Glenn told Inman. “We would have gone into Seattle sooner, but given that the median home price is approaching $700,000, we needed to be able to offer a jumbo product [or] we’d only be serving a small portion of the market. And so the jumbo really unlocked our ability to go into that market. And we’re super excited to formally announce it.”
With the addition of five metros in Washington state — Seattle-Tacoma-Bellevue, Bellingham, Mount Vernon-Anacortes, Bremerton-Silverdale-Port Orchard and Olympia-Lacey-Tumwater — Knock is now available in 75 markets.
To serve those new markets, Knock has partnered with a number of local real estate brokerages, more than half of which are affiliated with Keller Williams:
- Keller Williams Olympic
- Professional Realty Services International
- Keller Williams Olympic
- Infinity Real Estate
- Velocity Real Estate Inc | Keller Williams Downtown Seattle
- Vicinage Real Estate | KW Downtown Seattle
- The Warmack Group | Keller Williams Realty Greater Seattle
- Century 21 North Homes
With those new brokerages on board as partners, the company’s Knock Home Swap and Knock GO services are now available through 300 real estate brokerage firms with approximately 117,000 agents nationwide.
In announcing $220 million in new funding in March, Knock said it would lay off close to half its workforce in a bid to become profitable, but that it planned to be in 90 markets by the end of the year.
Glenn confirmed that Knock will announce more markets this year, but that the company won’t grow at the same pace as it did over the past 18 months, a period over which the company expanded from 14 to 75 markets.
“You’ll see continued growth this year but not at that clip,” Glenn said. “Really what we’re focused on this year is building out our broker partnerships and agent partnerships within each of those markets, and going deeper. We have a really good footprint now across the country.”
Knock GO, which stands for Guaranteed Offer, is a “cash-like” conventional mortgage product that allows buyers to write an offer on a home without including a financing contingency.
For buyers who have a home to sell, the Knock Home Swap provides the funding to buy a new home before listing the old house, including a mortgage and an interest-free equity advance loan which covers the down payment on the new home.
“When we underwrite a Knock Home Swap customer, we’re underwriting them for what they can afford on the mortgage, and then we’re also underwriting their existing home,” Glenn said. “Because in the Home Swap program, we’re giving them this equity advance loan, interest free, based on the equity they have in their current home. We have to feel really good about what we think that home is going to sell for, and how long it’s going to take to sell.”
Even after spending “six-plus years building up algorithms and our data science team to really dial that in,” Glenn said, adding jumbo loans to the product mix required “tuning our algorithms and actually creating different variations of our algorithms focused on the higher-dollar properties, and tuning those so that we make sure that we have the right confidence levels.”
Glenn noted that a borrower who can qualify for a $3 million jumbo loan can buy a $4 million house if they’re putting 25 percent down.
“So that gives us a big opportunity to serve more of the market, which is what we want to see, especially with the home price appreciation that we’ve been seeing over the past few years.”