@sam__cash I think you mean OpenDoor, as Nextdoor is the social network. First, Knock pays to promote your home on the open market for 6 weeks to attract multiple offers and maximize your price. This gives the seller confidence they got the highest price possible driven by the market, not us. This ensures we are aligned with the sellers' best interest. With Opendoor you can only consider their price in isolation without running a competitive process that oftentimes drives the price higher. Opendoor ultimately takes 15-20% of the sale price in order to buy the house outright: 6% Service Cost, 3-6% Market Risk Charge and they purchase the home 5-10% below the price they ultimately sell it for if you look at public records. We charge a flat 6% success fee, equal to the traditional listing commission. Most homeowners aren't so desperate to sell that they need to give up 15-20% of the value of their home. Most homeowners just need a guaranteed price and sale date for their home so they can make an offer a new one, put deposits down on schools, furniture, the moving truck etc without worrying their house won't sell in time. We believe the current cost of selling a home is already way too expensive. But we are offering a lot more convenience and certainty than traditional listings while building the technology necessary to put this incredibly laborious, inefficient and mostly offline process completely online and make it as automated as possible. As we do, we will attack more of the cost of selling a home at every point in the transaction.
@seanblack founder of Opendoor here. This is not true. Our average total service charge is 8.5% with over 1/3 of our homes having 6-7% total fees, and that proportion is increasing. On top of that, we don't offer below market price (we track very closely). Our resale delta you cite is likely accounted for in repairs and upgrades we invest.
@seanblack Thanks. Was admittedly surprised you'd get those numbers so off given the amount of time your team spent on Opendoor.com getting inspiration 😂
@justindross we are actually going by public record data, which doesn't jive with the numbers you mentioned or publish on Opendoor.com. Public records show Opendoor selling homes for a pretty decent premium above the price at which it buys them from homeowners. It's only fair to assume that homeowners are giving up the difference.
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@daveambrose how do you plan to compete with Opendoor, and do you think other large real estate startups will jump into offering something similar, such as Redfin?
@benbowdene@daveambrose See my response to @sam_cash above on Opendoor. As for Redfin, they built their brand, infrastructure and cost structure over the last 16 years around being a discount brokerage. It would be difficult for them on multiple levels to operate two models at the same time. This a massive, $1.3T industry with 5M people buying/selling homes each year under different circumstances. There is room for different innovators offering different value props to different segments of the market. This is not a winner take all or even winner take most market. It is just too big and nuanced.
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@seanblack@daveambrose@sam_cash I understand people want different options, but I believe it could be a huge shift in how people buy and sell homes which would allow you or someone similar to take a majority of the market. If you provide a superior experience from a cost and length to sell/buy perspective, then there's no reason everyone wouldn't at least go to you first to see what they can get for their home. Redfin could "easily" pivot since most of their real estate agents aren't on contract and rather are full time. Which is why they might one day shift into the ring if the business model is working out, especially since they have the capital and users to do so. Love the business Sean, will be watching quite regularly on the sidelines :D, love the real estate market, it's rather exciting!
@benbowdene very well could be! If others start following our lead then we are doing our job of making the world a better place! Thanks for the encouragement!
Thanks @daveambrose. Hello Hunters! Knock offers a radical new way to sell a home quickly without risk and uncertainty. Homes are our largest purchase and most valuable asset, but they are also the most difficult and expensive to buy and sell. 2.5 million home buyers a year must sell their current home quickly to get the down payment and mortgage for their new home. If they don't sell in time they lose the new home to another buyer, lose their kids' place at a new school, job opportunities and deposits, to name a few. Knock guarantees homeowners that we can sell their home in less than 6 weeks or we buy it ourselves for market price. We guarantee homebuyers that our homes are rock solid with our 200-point home-inspection, certification and extended warranty. Knock uses data science to price homes accurately, technology to sell them online quickly and a dedicated team of professionals to guide you every step of the way.
@seanblack@daveambrose As someone who recently sold a house, this is a great idea. I'm curious - How do you decide what market price is for a house if you can't sell it in 6 weeks?
Thanks @sbyrnes! The data science that determines the market price is part of our IP. We obviously put a lot of resources into automated valuation models (AVMs) at Trulia and Zillow (aka the Zestimate). But those models are limited by the fact that they never put eyes on the property. At Knock, we do an in-person inspection of every home that provides 200 proprietary data points never before used to price homes. If our algorithm is wrong we buy the property after 6 weeks, so we are very motivated to make it world class:-)
"Over 200 million buyers search our partners Zillow, Trulia & Realtor.com every month" --> Should put a number there that's a little more believable given there are only 5 million sales a year, total.
@drewmeyers this is the real number of unique monthly visitors to all 3 sites combined each month. You can actually fact check this as all 3 are public companies. I'm sure there is overlap as people tend to search multiple sites, but it's not possible to dedup. While you are correct that 5 million homes are bought/sold each year, we as a country are obsessed with real estate and spend a great deal of time searching, browsing, tracking, dreaming and researching. Also, if you assume there are an average of 3 people in each household and there is a household on both the buy and sell side of those 5 million transactions, you are talking about multiple millions of people involved in the purchase of those 5 million homes. Furthermore, people search an average of 9 months before buying a home, so a great deal of online activity on any given month includes people buying over the next few years.
@seanblack How many of those 200 million combined visitors searching/buying in the Atlanta area? Even if you assume 3 people per transaction, that's only 15 million a year per side / 30 million total - across the whole country. How many sales occurred in your market last year?
All I'm getting at is that in these early days, you have early adopter / industry insiders attention -- and we all know those numbers aren't close to reality of actual buyers. You need a number that's believable by people in the industry, specific to a startup that's operating in one market.
@drewmeyers fair points Drew. We are thinking nationally while acting locally, thus the nationwide numbers. We are going to take it under advisement. We will clarify that those numbers are nationwide on the site in the meantime. Thanks!
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@seanblack as an active real estate buyer/seller I think this is a great idea. how are you deciding what markets to go to? Is it just finding the right patrner or something else? How do interested parties contact you about partnering in other markets?
Cool to see another competitor to Opendoor in the market, w. Knock focused first on the greater Atlanta metro area. Buying and selling a home is one of the most frustrating and time-intensive processes in our lives, so services like these are really fantastic for consumers.
I was a huge fan of @seanblack's Crunched platform for sales teams a few years ago but looks like he's getting back into real estate w. Knock alongside @jamieglenn.
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