Knock, Inc., a venture-backed start-up, has plans to disrupt the housing market, and it has picked Atlanta as one of its first two targets.
The San Francisco-based company, which just set up shop in Atlanta, works with homeowners who wants to sell their property, then buy another. The company handles transactions at a customer’s previous and future homes.
The idea is to appeal to consumers who want both help and convenience, Sean Black, Knock’s co-founder and chief executive, said in an interview with The Atlanta Journal-Constitution. “People hate the listing process.”
When a house-hunter finds a new home, Knock buys it, allowing the client to moves in right away. Knock then takes charge of selling the previous property – much like a traditional agent. But Knock recommends repairs, advancing the homeowner up to $10,000 to help pay for improvements. When the old home sells, 6 percent of the money goes to Knock and the buyer’s agent.
The customer then buys the new home from Knock.
Disruption in tech speak is shorthand for using technology to shave costs and time, undercutting “traditional” competitors. Disrupters – think Amazon, Airbnb, Uber – especially love attacking markets that are labor-intensive and entrenched in their ways.
The larger the better.
And when it comes to real estate, the stakes are pretty high: The nation’s housing stock is worth a cumulative $31.8 trillion, rising about $2 trillion last year, according to Zillow. The value of the homes sold during 2017 was about $236 billion, according to the Census Bureau.
In an effort to capture some of those sales, Knock has more feet on the street than the typical internet-centered disrupter, many of which do their work digitally and from far away. Knock has 28 half of its 66-person workforce in Atlanta, and 10 of them are agents, Black said.
Unlike some of the digital-centric start-ups, Knock has agents who can work face-to-face with clients, Black said. “Zillow is not physically in houses, but we are physically in houses.”
Of course, traipsing around to show houses to clients is costly. So Knock agents screen the options. Since they’ve vetted the buyer, they know what he or she can afford. They know – at least they think they know – what he or she is looking for. The idea is to show prospective buyers fewer choices than they would see from typical agents.
“We can’t drive everybody around to look at houses,” Black said. “That’s too expensive.”
The company tries to avoid hitting the road until the odds are pretty good, he said. “Instead of the 35 houses you might look at otherwise, you just look at three or four. We cut out the riff-raff.”
Knock, which has raised $33.5 million in funding, operates in just Atlanta and Charlotte with plans to launch soon in North Carolina’s Research Triangle.
Atlanta, one of the nation’s largest metro areas, is a juicy target. Knock is far from the only Internet-centric companies already in the Atlanta market. Among them:
Zillow – an online, real estate database, with a small group of analysts and economists.
Trulia – another online site with listings of homes for sale and apartments for rent.
OfferPad and Opendoor – online home buyers.
Lenda – an online mortgage lender.
Divvy – a company that buys clients the houses they want but can’t yet afford, then leases it to them, with the idea that they’ll eventually buy it.
And, of course, the traditional real estate companies like Redfin, Re/Max and Coldwell Banker are increasingly aggressive about uses of the internet in finding customers and pricing properties.