What Can You Negotiate Aside from the List Price? Real Estate Negotiation Tips for Home Buyers and Sellers

When you think about home buying and selling, the first thing that probably comes to mind is the price. Whether you’re trying to sell your home for a profit or purchase a new house at a discount, real estate negotiation typically revolves around the sticker price on both ends. However, there are plenty of other real estate negotiation tactics. In this blog, we’ll explore the aspects of home buying and selling that you can negotiate aside from the purchase price, on whichever side of the negotiating table you’re on. 

Real Estate Negotiations in Home Buying 

You’re purchasing a home, congratulations! This is an exciting milestone, whether it’s your first home purchase or simply the next one. Hopefully you’ve been able to negotiate a fair purchase price with the seller, but there’s still more you can discuss in order to sweeten the deal. 

Furniture and Appliances 

Real Estate Negotiation Furniture

Had your eye on something when you went on a home tour? Don’t be afraid to ask the seller if there are any pieces of furniture or appliances they’re willing to part ways with. In many cases, sellers will be happy to leave items behind in order to make the move easier. Plus, their next house may come with brand new appliances, so they won’t need to lug their refrigerator, stove, or laundry unit with them. The seller might charge you an additional fee to keep the items in the home, so do the math to see how much you’d be saving by purchasing their items vs. buying brand new ones. Also ask for a warranty on appliances so you’re covered if anything breaks.

When it comes to furniture, there’s a chance the seller is looking to buy all new stuff for their next place; if you liked what you saw, ask them if you can keep the pieces that stood out to you. 

Repairs 

You found a house you absolutely love, but it needs some work to make it worth purchasing. This is something you can negotiate. As a buyer, you should always complete a home inspection on the home you’re buying. When you do, you’ll gather up your main concerns and share those with the seller. From there it is a negotiation.

Ask the sellers if they’d be willing to complete repairs on their own before you buy the house so you don’t have to worry about getting things fixed upon move-in. Studies show that sellers usually spend around $6,500 on preparations to get their homes market-ready. Be firm in your negotiations for home repairs, because if the seller is looking to make a move, they may be willing to put in the necessary elbow grease.

Even if the seller isn’t interested in making any upgrades for you, they might be willing to issue you a monetary credit, in the form of a concession, so you can get the work done on your own. If the sellers are motivated to move, they’ll do what it takes to get the house sold, so don’t be afraid to ask for what you want! 

“At this point of negotiation, the buyer and seller usually have the same goal at heart - to complete the transaction. But, the health of the contract depends on those inspection repairs and whether or not the negotiation is successful and there is a meeting of the minds." 

Knockstar Stephen Freudenberg

There are both risks and rewards when it comes to negotiating on repairs. Allowing the seller to leave certain items as-is, such as an old HVAC system, at the time of the sale could get you a significant discount off of the purchase price. But, keep in mind that you’ll have to schedule (and pay for) the replacement of these systems, which is a large undertaking, especially as a first-time buyer. Decide whether it makes more sense to take care of repairs on your own for a potentially lower purchase price or if you’d rather have the seller resolve any outstanding issues before the house is officially yours. 

Closing Costs

As a buyer, you can negotiate closing costs with the seller of your new house. Closing costs are the additional fees you’ll have to pay aside from your down payment on the house; these can include loan application fees, prepaid homeowners' insurance, an appraisal fee, inspection fees, transfer taxes, escrow fees, attorney fees, recording fees, prepaid interest, prepaid private mortgage insurance, title insurance, and title search costs. They might also include the cost of obtaining a credit report, processing fees, courier fees, and paperwork preparation fees.

Oftentimes, closing costs can be upwards of 3% to 6% of the purchase price of the home; keep in mind that this total does not include the real estate commission. To put it into perspective, let's say you purchase a $300,000 home and your closing costs are 5% of that purchase price; you’ll be paying around $15,000 just in closing costs. 

Real Estate Negotiation Closing costs

Seeing your closing costs might result in sticker shock, especially after crunching the numbers on what you’ll have to put up for a down payment and monthly mortgage.

Asking the seller to pay all or a portion of your closing costs can help offset upfront monetary responsibilities for you. In some cases, sellers will agree to pay all of the closing costs, and in others, they will pay a portion; however, sellers' concessions can never pay more than the amount of the closing costs. If the seller is eager to get the transaction completed, they may be willing to take on these additional costs. 

Buying a Home & the Knock Home Trade-In 

If you’re selling an existing home at the same time you’re buying, Knock can help you secure the new home of your dreams with our Home Trade-In program. On the buy side, we purchase your new house on your behalf with an all-cash offer. This offer is attractive to many sellers and usually gets you 2% to 5% off the list price; instant savings! Not to mention, cash offers help you win bidding wars so you don’t lose out on your dream home to another buyer. Lastly, they eliminate mortgage contingencies, so you don’t need to wait for your old house to sell before securing your new one. 

Real Estate Negotiations in Home Selling

Real Estate Negotiation Selling

You’re selling your home and moving onto the next chapter. You want to maintain a solid profit, but also don’t want your home to sit on the market for months, or even years. Negotiation is an important tactic when selling a home. 

Below are some aspects you can negotiate when it comes to selling your home, outside of the sell price. 

Closing Date Flexibility

There are usually 30 to 45 days between contract and closing. But, if you need extra time to pack up and move out, ask the buyer if they’d be willing to push back the closing date. This will give you more time to get things in order without feeling rushed. Conversely, if you want to get out of your old house as soon as possible, push for an earlier close date (if it is possible between all parties). Your buyer may be even more eager than you and willing to move in sooner. 

Note: When Knock purchases your new home on your behalf, the average closing time on that transaction is 21 days, which means you’ll be in your new place sooner rather than later! 

Due Diligence Fees

In most states, a due diligence fee is a strong negotiating factor for the seller. The fee, collected from the buyer, is a safety net for the seller in case the buyer decides to back out of the deal. The average due diligence period is 10 days, but can be anywhere from 7 to 15 days, depending on how competitive the situation is. Once the transaction is past due diligence, if the buyer terminates, they will forfeit that fee to you. 

You can also negotiate with the buyer to make the due diligence period shorter, to eliminate extra waiting time for the deal to close; if the buyer has their heart set on your house, they might be willing to make it a shorter due diligence period to get the deal one.  

Offering a Home Warranty

Offering the buyer a home warranty as part of the purchase deal can help you seal the sale. You can purchase the warranty for around $300 to $600, and it will last for up to a year. The warranty gives the buyer peace of mind that if any appliance or home system breaks, they’ll be covered.

The home warranty is a great selling tool, especially if you’re selling or giving your current appliances to the buyer. It is also greatly attractive to first-time homebuyers, since they’ve never dealt with maintenance of an owned property before. 

Selling a Home & the Knock Home Trade-In 

The Knock Home Trade-In is the most convenient way to sell your home for many reasons. Because we purchase your new house on your behalf, you can move in right away and avoid the hassle of home preparations and showings. 

Real Estate Negotiation New Home

Plus, when it comes to pricing your home to sell, we have a dedicated team of data scientists, home valuation specialists, and local real estate experts that help value your house and determine the necessary days on market to sell it. Our proprietary algorithm also incorporates current homes for sale, recent transactions in your neighborhood, and our 200-point on-site home visit to ensure any improvements and unique features of your home are used to price it accurately. 

Lastly, if your house is in need of upgrades, Knock will advance you up to $10,000 and coordinate with contractors to get your home in the best possible shape for listing. These can help get you an ROI on the sale price that goes beyond the amount you spent. We’ll then settle with you at closing, so you don’t need to worry about spending the money upfront. For these reasons and more, Knock sells its customers' homes to the best offer twice as fast as the rest of the market on average!

In Closing (Whether You’re Buying, Selling, or Both)

Whether you’re buying a new home, selling your old place, or doing both at the same time, there are many real estate negotiation points outside of the price of the home. You might be interested in furniture and appliances you saw in your new house, or maybe you need more time to move out as the seller; whatever the case may be, there are ways you can make the transaction more advantageous to you. 

If you are not a real estate professional, all of these real estate negotiation tactics probably sound overwhelming. Don’t worry; you’re not expected to be an expert in the field. Your real estate agent, like those we employ full-time at Knock, will be there to give you advice and guide you throughout the process of both buying and selling. That’s why it is extremely important to find an agent or brokerage, like Knock, that can help you get the biggest bang for your buck on both sides of the transaction. 

If you’re interested in trading in your current home for a new one, Knock can help!

Knock Knowledge: How Does Financing Work at Each Stage of Your Home Trade-In?

A Q&A with Better Mortgage

So, you’re in the market for a new home. And you’re at the stage where you’re weighing your options between traditional real estate and using a technology-driven real estate company like Knock. At Knock, we’re revolutionizing the buying and selling process with our Home Trade-In. Instead of waiting impatiently for your old home to sell so you can buy a new one – or waiting to get started entirely – we’ve flipped the switch; you move into your new home first (that we buy on your behalf) so you can skip the hassle of home preparations and showings, and months of uncertainty. Then, we list your old house on the open market to get you the most offers and the best price. It’s truly the easier way to buy and sell, and the best way to get you into your dream home faster. 

Home Mortgage Lender

But, how does financing work at each step in the process? Throughout your journey, we partner with lenders who help get you to the finish line as far as financing goes. Mortgage financing on its own is a pretty complex concept to wrap your head around. Plus, the Home Trade-In model is most likely new to you, and there are multiple financing pieces to understand, which is why we’ve teamed up again with our friends at Better Mortgage to break down the Knock process, the finances behind it, and how mortgage providers are involved at each phase. 

Read on for a step-by-step guide on what you need to know about how finances come to play in the Knock Home Trade-In process. 

Knock Rep

The first step in the Knock Home Trade-In program is, of course, getting in touch with us! Once you’re confident you want to make a move, you can fill out our form at knock.com. From there, a Knock team member will reach out to you to further discuss your unique situation and explain how we can help. Let’s talk financing. Below, you’ll find some common questions (and their answers from Better) about how finance comes into play at this stage.

K: What should people consider when it comes to financing with the Home Trade-In?

B: It makes sense to do the Trade-In based off the equity in your current home. Since Better will look at 80% of the estimated sales price when underwriting the VPAL (verified preapproval letter), it’s important to have wiggle room. 

You also typically need a credit score of at least 620, debt to income ratio of less than 50% (but preferably 45%), and enough assets to cover the down payment and closing costs.

K: When does the lender get involved?

B: As soon as you (the borrower) signs the contract with Knock, Better gets involved to get you the VPAL for the next step of the transaction. 

K: What is the initial interaction/conversation with the lender after the hand-off? 

B: The mortgage lender will look over your file with you and make sure everything is correct. We’ll discuss how we fit into Knock’s Trade-In process. 

In order to get the ball rolling to make your dream home a reality, you’ll need to get pre-approved and fully underwritten with a lender. This step allows you to find out how much new home you can afford so you can get to the fun part, shopping for your new place! Although Knock partners with lenders, like Better, to help expedite the process, you can choose to work with any lender you prefer. 

K: What should be considered when choosing a lender to work with? 

B: Some key points to consider include the loan estimate, closing costs, and rates. You also can’t forget the value of transparency and a great customer experience.

K: What kind of rates and incentives do mortgage providers offer?

B: It varies from lender to lender. 

K: What happens during the pre-approval process?

B: You’re in luck; we already have a blog for that! In our previous collaboration, we discussed everything about the pre-approval process. Check it out here.

Financing a New Home

You’ve been pre-approved, you know what your budget is, and now you can find your new house! Knock will help you search for and purchase your new home so you can move in as soon as possible. 

K: What is the lender’s role in the new home purchase?

B: The lender will provide consistent communication throughout the buying process with everyone including the borrower, the Knock licensed agent, and your Transaction Manager.

The lender will also perform a third party appraisal of your new home. And they’ll do what they do best, lending! This means they’ll be working on underwriting for your mortgage approval.

K: What will the closing costs and fees associated with the new home look like?

B: The Knock fees and closing costs vary lender to lender and are unique to each situation. You can speak to your Knock representative to discuss your costs. 

You’re already comfortable in your new place, and now it’s time to sell the old one. Knock will advance you up to $10,000 for you to pay for necessary home preparations to get the house list-ready (which we’ll then settle at closing). We also make recommendations on what changes will give you the most ROI on your home sale, and can manage the entire process for you.

Once the house looks its best, we’ll list it on the open market to get you as many offers as possible from excited buyers. The lender’s role is minimal at this stage, but they’ll still be there to provide communication when necessary. 

K: What is the lender’s role in the sale of the old home?

B: The lender is not as involved on the sale of the old home, but will still provide communication throughout the process. All they’ll need is a closing disclosure once the house sells so they can close on the new property. 

Knock Family

After your old house is sold, you buy the new home from Knock. At this point, you begin to pay the mortgage on your new home. 

K: What documentation/process is involved when the customer buys the new home back from Knock? 

B: Check out our blog on documentation. This is the most extensive answer you’ll get!

K: What is the final step with the lender?

B: Closing is the final step, which is the signing of documents with the title company or lawyer, depending on your local rules and regulations. 

K: What does the customer owe to Knock at this time?

B: We’ll actually take this one ourselves! At final closing, the Knock customer pays a 6% commission on the sale of their old home, half of which goes to the agent representing the buyer of your home, which is typical to a traditional transaction. Knock also settles with with the customer for any costs that Knock covered on their behalf during the process. These can include the up-to-$10,000 Knock advances for repairs mentioned earlier, and costs Knock incurred on the new home during the time it took the old one to sell. 

Conclusion 

The Knock Home Trade-In program is a great solution for anyone looking to buy a new home at the same time they’re selling an existing one without the hassle that typically comes along with traditional real estate. The model provides the convenience and certainty that the traditional route simply doesn’t. Plus, for borrowers with a lack of liquid assets but a lot of equity in their home, it’s a good option to explore when upsizing or downsizing. Throughout the process, you’ll be working with a lender, like Better, to get your finances aligned with the Trade-In. To get started, go to www.knock.com and see how we can help you achieve the home of your dreams!

Renting vs. Buying a Home - Which is the Better Option for You? We Explore the Pros and Cons of Each

It’s an age old debate: Rent or buy? And if the latter, when? Depending on who you’re talking to, where you live, and what phase of life you’re in, you’re likely to get some varying answers. In celebration of June being National Homeownership Month, we’re helping you cut through the noise by analyzing the pros and cons of renting vs. buying a home. There are plenty of factors to consider when deciding whether to rent or buy, including the financials and your personal preferences, and we’re breaking them all down for you below.

We’ll give you the 411 on renting vs. buying a home, as well as a snapshot of how buying and renting financially compare within each of our Knock markets. Our Knock Local Licensed Experts (LLEs) and other Knock employees will also provide insights on the renting vs. buying debate.

Buying a Home: The Pros and Cons

Becoming a homeowner is one of life’s major milestones; it’s an exciting time, but also a major event that has a lot of moving parts (literally). Patience, diligence, and understanding are needed throughout the process, but in the end, is being able to move into your dream home worth the wait? Let’s take a look at the pros of purchasing a home.

Pros:

It’s an Investment

Owning a home means you’re investing in something that will build your overall net worth. With each mortgage payment you make, you’re building equity, instead of giving the month’s rent away to another owner and not gaining any ROI. Even when the market is in a recession, home values continue to rise year after year. This means that as you’re paying your mortgage down, the value of the home will continue to increase, which is a major positive when it comes time for you to sell. Plus, even if you don’t plan to sell for quite some time (or ever) you can use your equity in other ways, like receiving additional lines of credit for other big purchases.

Renting vs. Buying Home Investment

Further, as long as you make mortgage payments on time, owning a home will help to improve your credit score, which is needed in many financial situations, and is important to your overall credibility.

Doyle Williams, Country Financial executive vice president told CNBC,

“Purchasing a home is much more than paying for a place to live; it’s a major investment of both time and money. Once you’ve done that, there’s a benefit to being a homeowner: You are building equity with every mortgage payment.”

It’s Your Living Space

Your newly purchased home is truly your oyster. It’s a space that you own, and in turn, a space that you can do whatever you want with. In an owned property, you have free rein, from customization of the layout to landscaping to major additions (in most cases, depending on local laws and permitting). Feel free to repaint, redecorate, and install a pool if you wish (of course, it’s wise to consider the overall cost and ROI of your projects). Having ownership over your space gives you a sense of pride that doesn’t usually come with renting. Plus, when it comes time to sell, these updates can help you win more profit.

There are Some Tax Benefits

We talked about the tax benefits of owning a home in an earlier blog that you can check out here. When tax season rolls around, you can write off your property taxes and the interest on your mortgage loan (in some instances). You can also save on taxes on your capital gains when you decide to sell, which leaves more money in your pocket.

You Gain a Sense of Community

When you buy a home, you’re not just moving into the four walls, but the neighborhood as well. It’s safe to say that if you made the choice to purchase a place, in most cases, you’re planning to stay for a while. Having this sense of ownership allows you to become immersed in your community, make long term friends, and establish yourself as part of something bigger. Often times your neighborhood may have a homeowners association (HOA) through which you can get to know people, or even community amenities like a pool where you can meet your neighbors. Renters tend to stay for shorter periods of time than owners do, so they don’t stick around long enough to form that bond with their neighbors and other people in town.

Knockstar and Transaction Manager Shay Frazier said,

"Even though we have seen a slight increase in interest rates, it is still more beneficial and cost effective to buy vs. renting if you are planning on putting down roots somewhere long term. Purchasing a home is an investment in you!"

Cons:

You Need Enough Upfront for a Down Payment

couple debating renting vs. buying down payment

Buying a home will take a big chunk of change out of your pocket, especially if you’re a first-time homebuyer. There are many upfront costs associated with buying a home, including not only the down payment but closing costs and real estate commission. It’s suggested that you make a 20% down payment, which depending on the price of the home, can be much more than you already have saved up. First-time buyers have the option to put a lower percentage down, but you’ll need to pay additional private mortgage insurance (PMI) each month in order to make it work. Buying a second home is typically much easier, since you can utilize the equity you have in your starter home to buy the next one.

Of course, it can be a challenge to buy a new home in today's competitive market if your new mortgage is contingent on the sale of your current home. If you’re one of those people who’ve outgrown your starter home and are looking to make your next move, Knock can help! With our Home Trade-In program, you’ll know how much new home you can afford before you shop, and you’ll move in before the old one sells. Then, we’ll list and sell your old home for you while you’re busy making your dream home your reality.

Your Funds Aren’t Liquid

When you own a home, the majority of your net worth is tied up in that home, rather than as cash in your bank account. Having your equity tied up can pose an issue when you need money for other things, since you don’t have liquid funds available in an emergency or other situations. In order to access that money, you’ll have to wait for your home to sell, which could take months in a slower real estate market.  

There are Other Fees Besides the Mortgage

When considering buying a house, the monthly mortgage payments aren’t the only costs to take into consideration. Being a homeowner means you’ll need to pay annual property taxes, homeowners insurance fees, monthly bills (think water, gas, electric), and HOA dues in some situations. Tallying up the monthly numbers ahead of your purchase will help you understand how much you can afford to spend on being a homeowner each month.

There Will Be Constant Upkeep

If you are a homeowner or know someone that is, you know it comes with a heavy responsibility. When you’re the owner, that means you’re in charge, whether there’s a leak in the roof, a broken appliance, or extensive cleanup after a major storm. You have to be prepared to take on the costs and sweat equity that are associated with these unforeseen factors. When considering purchasing a house, don’t just think about the down payment and monthly bills we mentioned above, consider the outlying factors that are beyond your control. You never know when you’re going to need to buy a new stove or replace the sink!

Renting a Home: The Pros and Cons

Renting is a great option for individuals who like to move around a lot and don’t want to be tied down to one place; it’s also a solid choice for people who don’t have the funds necessary to purchase a home. But, is living in a place that’s not yours ideal?

Pros:

Upfront Costs are Low

When you rent, the upfront costs are much less than when purchasing a home. You typically need a security deposit and first month’s rent at signing, which is significantly less than a 20% down payment. This is attractive to young individuals just starting out who haven’t saved up enough yet, or for those not looking to put all of their savings into one basket. Your monthly rent will most likely be cheaper than a mortgage payment and other homeownership expenses, but keep in mind that you’ll never own the place with your monthly rent payments.

Daren Blomquist, former ATTOM Data Solutions vice president told MarketWatch,

“The buy-versus-rent calculus is shifting toward renting being more affordable.”

As a renter, you also have the opportunity to keep your savings as cash or invest it elsewhere, since you’re not putting a large lump sum toward purchasing a home. Having liquid money saved comes in handy when purchasing other things like a car or paying off a student loan. Investing your money outside of real estate also gives you another path to building your wealth.

You Can Move Freely

Couple moving out of rental home

Are you someone with wanderlust or have a job that requires you to move often? Renting is the perfect solution for someone in need of a short-term living situation. Although most leases require you to stay for one year, you can choose shorter terms, like three and six months, giving you the freedom to pack your bags and go whenever you need to. When owning a house, you have to worry about subletting or selling before you can move, which adds responsibility and stress to the mix.

There’s Less Upkeep and Included Amenities

Unlike the added responsibility of maintaining a home that homeownership requires, renting is as stress-free as it gets when it comes to upkeep. You don’t need to worry about landscaping the grounds, taking out the trash, or keeping the common areas outside of your apartment clean. Relying on a landlord to keep the space in shape is an attractive perk of being a renter. Plus, many rental complexes come with amenities at no additional fee, like fitness centers, pools, and recreational areas.

Cons:

You’re Not Investing in the Property

Of course, renting a property that isn’t yours means you’re not investing in something that you own. Some people argue that renting is a waste of money, because your monthly payments aren’t going to result in ownership or an ROI later on. Once you’ve paid off your mortgage, you’ll have an owned home to show for it; after renting for a year, you still won’t be any more of an owner than you were a year ago.

Further, if you’re making monthly rental payments, you’re technically giving away money that you could have saved to use towards a home purchase. Not to mention, the rent price you're paying might be more than what you'd owe if you owned the place.

Knockstar and Licensed Local Expert Victoria Hurd notes,

"Renters typically pay a premium per month vs. if they owned the property themselves."

It’s Not Your Space

If you’ve ever rented, you know that living under someone else’s roof comes with its fair share of rules. Many landlords don’t want you making major changes to the living space, including paint, wall hangings, or major renovations. A rental isn’t truly your own, which means you usually need to abide by strict rules and policies. When it comes to rentals, even if you are allowed to make cosmetic edits, you typically have to return the living space to its original state, which is time consuming and inconvenient when you’re trying to move; plus, this requirement can make the temporary changes you made feel like a wasted investment.

And it’s not just the cosmetics you need to worry about. Some rental properties don’t allow you to have pets and even ban some household items like outdoor grills (say goodbye to summer barbecues). You’ll have to commit to a lease that states all of these dos and don’ts, so make sure to read it thoroughly before signing on the dotted line.

Payments Never Stop & Rent Could Rise

When you’re renting, there will always be a payment waiting for you at the beginning of each month. Conversely, when you’re paying a mortgage, you’re working toward a goal of paying it off for good. In a rental situation, you’re always paying for a place you’ll most likely never own, which is discouraging to some. Plus, rent prices rise often, due to inflation and the increased cost of living. As a renter, you need to be prepared to face higher rent costs as the years go on.

So, to Rent or to Own?

When choosing between becoming a homeowner or being a renter, there are clearly plenty of pros and cons to consider. Homeownership gives you the opportunity to invest in your property and the freedom to do what you want to your home, among other things; at the same time, down payments and monthly expenses can be costly, and you have less freedom to move around as you wish. Renting is great for individuals who like to move often, who don’t mind landlord’s rules, and who don’t want to (or can’t afford) to put a lump sum down to purchase a home. At the same time, a rental is not a personal investment and comes with a fair share of restrictions.

Determining whether to rent or buy a home is heavily dependent on your own personal and financial situation. Think about the short-term, like the amount of money you have saved, and the long-term, like where you picture yourself living for the next few years. Owning a home is a long-term commitment, whereas renting can be a short-term or extended solution.

The Financials

renting vs. buying financials

When it comes to the financials, home ownership will most likely cost more than renting, so consider whether the cost is worth the outcome. According to the U.S. Census Bureau’s 2013-2017 American Community Survey five-year estimates, because of added expenses, like maintenance, property taxes, and insurance, owning a home is more expensive than renting, but the difference in the amount varies by state.

The New York Times has a comprehensive calculator that can help you determine what’s best for you based on mortgage costs, rental prices, and other additional fees.

Renting vs. Buying a Home in Knock Markets

Knock currently operates in six markets throughout the U.S., where we’ve helped thousands of customers make their dream of owning a new home a reality. Below, based on information provided by CNBC,  is a comparison of renting vs. buying a home when it comes to overall cost in each Knock-occupied state.

Renting vs. Buying a Home in Arizona (Phoenix Market)

Median Rental Cost Per Month: $972

Median Homeownership Cost Per Month: $1,354

Difference between renting and buying: $382

Renting vs. Buying a Home in Georgia (Atlanta Market)

Median Rental Cost Per Month: $927

Median Homeownership Cost Per Month: $1,351

Difference between renting and buying: $424

Renting vs. Buying a Home in North Carolina (Charlotte and Raleigh Markets)

Median Rental Cost Per Month: $844

Median Homeownership Cost Per Month: $1,261

Difference between renting and buying: $417

Renting vs. Buying a Home in Texas (Dallas and Fort-Worth Markets)

Median Rental Cost Per Month: $952

Median Homeownership Cost Per Month: $1,484

Difference between renting and buying: $532

Clearly, becoming a homeowner will cost you more than being a renter, but is owning your own place worth the extra cash?

Renting vs. Buying: Which Wins Out?

couple debating renting vs. buying a house

The decision between renting vs. buying a home is entirely up to you. There are pros and cons to each, so before you make a decision, consider all the factors that go into both situations. A major consideration will be your personal finances, but also keep in mind your living preferences and long-term plans for the future.

Do thorough research before making a commitment to either buying a home or renting one; having all the facts and considerations in mind will help you make the right decision for your family’s needs. Victoria Hurd adds,

"No one size fits all when it comes to renting vs. buying. Each person will have different goals, but the common denominators that buyers and renters share are location, budget, and lifestyle needs. At the end of the day, if you are contemplating whether to buy or rent, it is best to consult a licensed local expert/agent and lender."

At Knock, we believe in the value of owning a home, which is why take pride in helping our customers reach their homeownership goals everyday. If you’ve made your decision and are interested in purchasing a new home and selling your old one, get in touch with us!

Home Improvement Month: What Updates are Important When Buying and Selling?

May is Home Improvement Month, but we think giving your home a few upgrades is important no matter the time of year! Making sure your home is in top shape is especially important when you’re putting it on the market in order to get the best return on your investment (and of course, the most money in your pocket). When buying a home, it’s also important to consider what home improvements have been made to the house you’re about to purchase.

Knock advances you up to $10,000 in order to make any home improvements your current home may need in order to get it list-ready. This ensures you can maximize your profits without trying to find the funds right then and there. We understand the importance of showcasing your home in its best light, and we even do the work for you!

Because we employ a whole team of dedicated home preparations and listing experts, we have a wealth of knowledge about what upgrades matter and what you should consider before putting your home up for sale. Read on for tips and tricks of the trade to find out what matters when it comes to home improvement.

Selling Your Old House

Neutralize Your Space

So, what should you pay attention to in your own home when looking to sell? We chatted with Home Preparations Manager Cody Chastain;

Cody Chastain Knock Home Prep Manager
Cody Chastain

“General wear and tear is always going to happen on a home when it’s been lived in. Simple fixes like a fresh coat of paint throughout the house and replacement of old and worn carpeting can go a long way.”

Think about it, if you were going on a tour of your potential dream home, would you want to see stained carpeting and wall colors that didn’t jive with your personal decor? Giving the home a neutral feel helps the new potential homeowner envision themselves there. Of course, decluttering the space and removing your belongings helps as well.

This exact scenario happened with Knock clients, the Fernandez family. Their cheerful personalities matched the brightly painted walls that were present in every room of their old house. Knowing that their unique style wouldn’t be for everyone, they enlisted Knock’s help to neutralize the space.

Knock customers Home Improvement
The Fernandez Family

With 2 kids and thoughts of growing the family, Alex and Jessie F needed a bigger home, and found it in the perfect 4 bedroom with an office space for them to work remotely. Before they could settle into their new life, they needed to sell their current house. With its colorful walls and kitchen, the house needed quite a few updates before it could be ready for a buyer to envision the home as their own. But once they made some stunning upgrades, the house went on the market and received over 12 offers in the first weekend.

Our piece of advice? Put yourself in someone else’s shoes. You may think your bright yellow bedroom is the bee’s knees, but it could be a major deal breaker for another family.

Consider Major Cosmetic Elements

So, what are the biggest cosmetic problem areas you should address? Kitchens and bathrooms. Chastain said,

“In order to get the best ROI, you should consider making upgrades to any outdated kitchens and bathrooms.”

Countertops, appliances, and even tile can go out of style quickly. If a potential buyer sees that you haven’t updated your powder room since the pastel tile days of the 1970s, you might just lose an offer.

Of course, a bathroom overhaul will be more costly than a simple paint job, but the results are arguably worth it. According to a 2018 report from Realtor.com, a bathroom remodel is a top investment when it comes to ROI, yielding a 70% return.

The same report shows a mid-range kitchen remodel yielding around 60% return. But, you don’t need to invest in a complete overhaul if you don’t want to lose that much capital; instead, focus on the details that need the most help, like outdated cabinets and counters.

The Outside Counts, Too

curb appeal

Don’t just think about the space within your home’s four walls. The external curb appeal is what makes a first impression on a buyer. Invest in a landscaping service or go the DIY route to make sure your house is presentable. Consider the age of your siding, the condition of any decks or stairs, as well as the doors and garage. You want to showcase the total package of the home, so consider the bigger picture.

In a recent Knock transformation in Atlanta, we gave one house a major facelift. The outside was in desperate need of new siding; after years of wear, the previous facade looked run down and unimpressive. The house was completely re-sided, leaving it looking good as new! The improved curb appeal helped find a buyer interested in making the home their own; it was sold within four days of going on the market!

before and after of a Knock home with new siding
Before & After - Siding Transformation

Buying a New Home

What to Look Out For

About 61% of people who are selling a home are also trying to buy their next one one at the same time (which is why Knock is the perfect solution for the majority). So, you don’t only have to consider the condition of your current home, but be aware of what the potential new houses offer. Buying a home is a big purchase, and you want to feel confident in the property you’ll be spending the next phase of your life in.

What are the elements you should ask about when doing research and home tours? The structure of the home.

“The quality of the roof and structure are the key things to consider when buying a new home. They’re the most expensive to fix and arguably the most important; the structure holds your house up and the roof protects everything in it.”

-Cody Chastain

The Sooner, The Better

Creating an open and honest dialogue about the home’s condition helps to avoid problems later. And this applies to the house you’re selling as well! Be upfront about any issues or concerns you’ve had so they can be addressed properly. If you fail to disclose information, you can end up with a terminated contract and a delay in either the selling or buying process.

Of course, you’ll also want to consider other elements we spoke about above, like paint, carpet, fixtures, and updates. If you’re not afraid of some DIY projects, you may just want to take these upgrades on yourself in order to negotiate a better purchase price. Or, if you want the work done for you, use it as part of the negotiations with the seller to see if they’ll address (and fund) fixing your pain points before the sale.

The Knock Process

Are you considering a move but know your current house needs some updating before it’s listed? As mentioned above, Knock can help! Our process is unique because we invest our time and money into your home to get it in the best possible shape it can be for the sale.

Kelly and Lauren F Knock customers
Kelly and Lauren F

Having home preparations completed on your behalf is a huge help for many of our customers who would not have been able to sell their homes without Knock. Take Kelly and Lauren F for example. Kelly is a pilot, and his job has him traveling for extended periods of time. Plus, the couple had two small children and one more on the way. They needed a bigger home, but didn’t have the bandwidth to get it ready to list, until Knock stepped in. Knock completed home preparations including a full paint, replacement of countertops with granite, and removal of rotten structure. The house was ready to list and Kelly and Lauren accepted an offer shortly after. Read more about the family here.

So, how exactly does the Knock Home Prep process work? Read on for the step-by-step series of events.

Getting the Lay of the Land

First, we get to know you! One of our team members will reach out to discuss your unique situation, what you’re looking for in a new home, and what you need in order to sell. Once you sign with Knock, that’s when the ball gets rolling.

Our Licensed Local Experts, or full-time salaried agents on our team, will then use their knowledge of the current market and comparable homes in your area to determine what preparations will be most beneficial to you as a seller. We’ll do an inspection to come up with a list of items (and the cost of each) that we believe you should consider fixing in order to get the highest sale price.

We send out a member of our Home Prep team to take a tour of your home, assess the current state of it, and provide feedback to the rest of the team. From there, we generate a report that lets both Knock and you know what areas are in need of improvement.

Of course, as the homeowner, you have the final say on what you want to move forward with. If you don’t believe your home needs a new paint job, we’ll leave it as is. But, we will provide guidance and explain the ROI of each home improvement.

Hitting the Pavement

Once the scope of the work is complete, we send the contract over to you for revisions and final approval. Then, we get to work! Knock will coordinate and schedule all contractors on your behalf and manage the entire process for you, all while you’re comfortably in your new home. You can also choose to use your own contractors, or complete the upgrades yourself if you’re handy. Giving you these options allows you to remain in control to get the job done however you see fit.

Wrapping it Up

Once your home is in tip-top shape, we schedule a final walk through and a photographer to come take your updated MLS pictures for listing. From there, the listing goes live and you sit back and wait for the offers to roll in.

Knock’s mission is to make the buying and selling process as efficient and convenient as possible. This is why we step in to coordinate and execute home prep on your behalf. Moving is crazy enough - let us make it that much simpler!

In Closing

May is Home Improvement Month, but we know that making sure a home is in the best shape it can be is important no matter the time of year. The health of the home should be considered on both sides of the real estate transaction, when putting your old house up for sale and finding a new one to buy.

With the Knock Home Trade-In program, we help you prepare your house for listing, so you can minimize your efforts while maximizing your profit. Looking to make a move?

Buying a Home or Selling a House this Spring? Tips for Real Estate’s Busiest Season

The real estate market is already in full “spring,” with many homeowners inspired to change their address during this time of year. In most markets, real estate’s busy season kicks off in March and extends through late August, right before the new school year. A combination of pleasant weather, families’ desire to move at the end of a school year, and more housing inventory make spring and summer a popular time for both home buying and selling, but also increases competition all around. Because the stakes are high this season, we’re giving you tips to keep in mind whether you’re buying a home, selling a house, or doing both at the same time!

The Current State of the Market

Home for sale in spring home buying and selling

If you keep tabs on the real estate landscape, you’ve probably heard about the current low mortgage rates and growing inventory of homes on the market. This combination shifts the market in favor of home buyers as we get into the thick of the spring season.

Job growth and a strong economy have also given individuals more buying power; this power, coupled with low mortgage rates, boosts confidence when it comes to buying a home. Keep in mind, mortgage rates are reasonable but fluctuate week by week, so you may want to jump on the opportunity to purchase sooner rather than later.

When it comes to home prices, we’re seeing less growth than we did in 2018, with increases at a six and a half year low. Although prices continue to steadily go up, they’re doing so at a lower rate than in past years, making the purchase of a home more affordable. In fact, our most recent Knock Deals Forecast found that 72% of homes sold below their original list price in Q1 2019, and predicts that number will increase to 75% in Q2, yet another reason to consider making a move now.

Although the overall state of the housing market is shifting more in favor of buyers, spring proves to be an advantageous time for sellers as well. With so many people on the house hunt, you may just see more and better offers coming your way than if you’d listed in the winter.

Home Buying Tips

Now that we’ve covered the technicalities, let's talk tips! Whether you’ve bought a dozen homes in the past or are just starting out, these pieces of home buying advice from Knock’s local experts can help you secure the home of your dreams this season.

Be Competitive

All of us have some level of competitiveness, some more than others. But, when it comes to buying your next home in the popular spring season, you might need to let your competitive side shine through in order to win. What exactly does that mean? In many cases, a higher offer. When the buyer’s market is hot, many potential buyers may be interested in the same home, with some being sold the same day they’re listed! If you really love a house enough to commit, make an offer the seller can’t refuse, and keep other potential offers in mind.

“Spring is here so the market is now more competitive and many homes will have multiple offers. This means in order to have the advantage and win the home of your dreams, you may have to submit an offer higher than the list price.”

-Francine Bethune, Knock Licensed Local Expert, Atlanta

FYI: Luckily, with the Knock Home Trade-In program, we put an all-cash offer in on your new home to help win bidding wars and even get a potential discount off of the list price (on average 3%-5%).

Negotiate Strongly

Although competition is fierce, you should still be able to negotiate in order to get a fair deal. Remember, buyers have an advantage in the current market, and as our Forecast predicted, many homes will sell below their original list price. In fact, our Knock Deals Forecast data shows that in Q1 of this year, nearly 60% of homes sold at a discount of 2% or more.

“When buying during the spring selling frenzy, it's more important than ever to find a licensed agent who’s an expert negotiator in your local market. Homes are moving quickly so time is of the essence. Once you find the house with the features that are most important to you, they can help you put in a strong but fair offer in as soon as possible.”

- Christy Narsi, Knock Licensed Local Expert, Phoenix

FYI: Knock provides you with an entire team of professionals who specialize in the various phases of the home buying and selling process, including Licensed Local Experts who are agents familiar with their specific markets and the current home price trends in those areas. With a full team behind you, these agents can focus on what they do best: Getting you an awesome deal. Their expertise helps you gain knowledge about your neighborhood, comparable homes on the market, and the offers you should submit.

Be Prepared Before Going on the House Hunt

Couple looking at bank statements pre-approval buying a house

We’re already in the midst of the spring buying season, but before you set out on a hunt for your new home, be prepared. In order to make a serious offer on a house, you’ll have to prove you can actually afford it. With houses getting bought quickly in spring, come equipped with everything you need to make an offer as a strong, pre-approved buyer. Don’t know where to start? Check out our Q&A with Better Mortgage on the topic of Verified Pre-Approval to learn about the minimum requirements for obtaining a mortgage, and the documents you’ll need to get pre-approved.

Before you start your search for a new home, you should also have a wishlist in mind. Prioritize what you need (i.e. the number of bedrooms and bathrooms) and think about what you want (i.e. granite countertops or a finished basement) so you can narrow down your options quicker. If you’re indecisive about what’s important to you in a house, you’ll keep missing out on the potential home of your dreams. Plus, knowing what you’re looking for ahead of time allows you to take action as soon as something great catches your eye.

FYI: One of the first steps on the home buying side of the Knock Home Trade-In process is helping you get pre-approved for your new mortgage. After gaining an understanding of your priorities for your new home, we also help you set up alerts through our Knock Deals home search tool that not only show you homes that match your criteria, but give you insights into how much the house will sell for and when, as well as when price drops occur, so you can swoop in and grab the deal.

Home Selling Tips

Thinking about putting a “For Sale” sign in front of your home? Before you do, here are some things to consider that will help your home sell quicker and for a higher profit.

Curb Appeal Counts

Wheelbarrow standing on a neat manicured green lawn alongside a flowerbed while planting a celosia flower garden around a house with fresh spring plants

The age-old phrase warns us not to judge a book by its cover, but when it comes to homes, it’s hard not to. A first impression is everything to a potential buyer, and you should strive to show your home in its best light, starting with the exterior. Major upgrades, including new siding and exterior add-ons (porches, decks, roofs, for example), may be necessary if your home has experienced wear and tear. But, if your house is already in great shape structurally, you might just need some minor preparations, like power washing and landscaping. Even the slightest change, like repainting your front door, can make a huge difference, leading to the potential of more money in your pocket.

“Curb appeal can make big impact on a home's value. Sellers can easily help draw in more buyers with small, inexpensive improvements. Sprucing up your home's landscaping with some simple items such as flowers and mulch, and clearing out weeds can be a cost effective way to increase your home's chance of selling quicker and for a higher price. It’s also a good way to work as a family together outdoors in the beautiful weather this time of year."

- Chris Menegay, Knock Licensed Local Expert, Dallas-Fort Worth

FYI: Did you know that Knock advances up to $10,000 that you can use on preparations for your home before listing? Our team of experts will assess your house and give you suggestions on what to update in order to get the best ROI. Then, we’ll get the work scheduled and executed after you’ve moved out, so you don’t have to deal with the hassle!

Spring Sprucing is Key

You want potential home buyers to envision themselves living in your house, right? The last thing they want to see are your personal items and lived-in clutter! Clearing out your space and giving it a deep clean is a surefire way to make tourers feel, well, at home.

Start by packing up the items you don’t need in your everyday life, like family photos and home decor. The more you can get into boxes and out of the home, the better! Don’t forget to dust, scrub, and mop the place to give it a fresh feel. If you have pets, eliminate any odors that may be lingering. If you have kids, get rid of the toys that take up space (and could cause a safety hazard!). You might even decide to stage your home to give buyers an idea of your house’s design potential.

“You want your house to stand out from the crowd to attract a bigger pool of buyers. Spring cleaning is your friend! Begin packing, clear the clutter, and freshen up the inside and outside of your home to appeal to a wide range of potential buyers.”

- Montana Aydlett, Knock Licensed Local Expert, Charlotte

FYI: The beauty of the Knock Home Trade-In is that you move into your new home before the old one sells. That means you can fully move your belongings out of your old space, leaving it a blank canvas for potential buyers. As mentioned above, Knock will help you coordinate and execute home prep and cleaning to get your place into its best shape. Learn more about the process from our Listings Manager Justyne, who coordinates home prep and listing for Knock customers!

Be Strategic About Pricing

Of course, you want to sell your home for a great price, but you should also be reasonable when it comes to determining what you list it for. The most common reason a house stays on the market for an extended period of time is overpricing. Our Q2 Forecast took a look at the rate of deals (homes selling below their original price) by market in Q1, and made predictions for this quarter. The data revealed that certain areas of the country see a higher rate of home discounts than others, proving that buyers aren’t willing to pay the original list price in those areas.

Our newest market Phoenix was in the Top 10 list of deals in our Q2 Forecast, with 80.33% of homes there expected to sell below list price this quarter. Clearly, with such a large percentage of houses being discounted, original asking prices are too high for potential buyers, forcing sellers to go lower. Conversely Raleigh was ranked the 13th most competitive market for deals, showing that homes there are priced more fairly.

If you put an overly high price tag on your home when it’s listed, you risk scaring away potential buyers, and will deal with your house being on the market for much longer than you planned. This can actually result in your home being sold for even less than it would have if it had been priced at its current market value from day one. For example, 92% of Phoenix homes that sold in Q1 2019 that had been on the market for two months or more sold below their original list prices, according to our Forecast. Over half of these homes sold at a discount of 5% or more – meaning at least $12,500 off the sale price on a $250,000 home! That doesn’t even account for the time, money and stress that comes from waiting months for a home to sell. We all want to get the highest price, but you don’t want to become your own worst enemy by asking too much.

FYI: At Knock, we use a high-touch, high-tech approach to pricing your home, incorporating a variety of factors to determine what the list price should be in order to avoid discounting and extended days on market. To do so, we have a dedicated team of data scientists, home valuation specialists, and local real estate experts that help value your house and determine the necessary days on market to sell it. We also have a proprietary algorithm that incorporates current homes for sale, recent transactions in your neighborhood, and our 200-point on-site inspection to ensure any improvements and unique features of your home are used to price it accurately!  

It’s Time to Spring into Action!

belongings packing unpacking in new home, happy playful children having fun together enjoying relocation

The busy spring real estate season is in full swing, and whether you’re buying a home, selling a house, or doing both at once, these tips can give you an advantage in an otherwise competitive market. When it comes to buying a new home, be prepared to negotiate, but remain competitive with your offer in order to secure your dream home. When selling, getting your house in top shape will help you attract more interest. Simple upgrades like landscaping and clearing your clutter can make a noticable difference. Above all, finding that sweet spot for pricing right at the start will make all the difference.

When it comes to buying and selling this season, Knock can help you at both ends of the spectrum. Our Home Trade-In program was designed to make the entire real estate process easier for you as both a buyer and a seller. With our all-cash offer on your new home, we help you beat out the springtime competition so you can move into your new home as soon as possible. As for your old home, we have the team and resources to get it market ready in order to get you the best price – all while you’re already living in your new one.

Interested in our Home Trade-In program?


Knock Knowledge: Everything You Need to Know about Real Estate & Taxes Whether You're a Buyer, Seller, or Homeowner

Tax Day is right around the corner. And although you’ve probably (hopefully!) already filed for 2019, there’s still a lot to learn about taxes when it comes to homeownership that can be useful all year long. We’ll discuss the link between homeownership and taxes, the tax advantages of being a homeowner, and how the Knock Home Trade-In benefits you when it comes to paying Uncle Sam.

Homeownership and Taxes: What You’ll Pay

When buying a home, you should be aware of what you’ll have to pay on top of just the mortgage. With knowledge about what you’ll owe when it comes to taxes, you won’t be faced with any hidden surprises that seem like a blow to your bank account.

The amount of taxes you’ll pay are based in the assessment of your property. A property tax assessment is what determines the market value of your piece of property. Assessments are usually done once a year, but the timing varies by jurisdiction, and properties are reassessed when a home is sold to a new buyer. These assessments are performed by the government and they're most often based on recent sales of comparable properties in the area.

“When there is a transaction, the property taxes get reassessed based on the purchase price. You have to report what price you bought the home for, and the property tax is assessed from there.”

- Jamie Glenn, Knock Co-Founder & COO

Of course, when it comes to purchasing a home, a major factor is the area you choose to buy in. Many states, counties, and municipalities have their own laws and regulations when it comes to taxes.  Be sure to research the tax requirements of the area you’re moving to and consider the current property taxes there.

Knock Property Accountant Tiffany Scott said, "I would advise for buyers to become as familiar as possible with “SALT” (state and local taxes) in the area that they would like to complete their real estate transaction. Great savings are out there if you know where to look."

Here are some tax fees you can expect:

real estate and taxed key terms

Property Taxes

Property taxes are typically paid either twice or four times a year and are paid in advance. Because of this, as a buyer, you will reimburse the seller for the property taxes they already paid from the date of the sale until the end of that tax period. You’ll see these property taxes as part of your overall closing costs. Keep in mind that you can deduct up to $10,000 in property taxes from your income tax filing, as long as they are itemized.

Real Estate Transfer Tax

It may be required by your state, county, or municipality that a tax is added onto the cost of a home when the property is transferred from one owner to another. Typically, this will be a percentage of the purchase price of the house. For example, in Knock market Atlanta's state of Georgia the transfer tax “is based upon the property's sale price at the rate of $1 for the first $1,000 or fractional part of $1,000 and at the rate of 10 cents for each additional $100 or fractional part of $100.” Although the seller is liable for this payment, the buyer typically picks up the cost.

When it comes to selling a home, although you typically won’t pay sales tax, you could face taxes on your capital gains.

Capital Gains

Capital gains are defined as the difference between what you pay for an asset and what you sell it for. When tax time comes, you are allowed to exclude up to $250,000 if you’re single ($500,000 if you’re married) from your gains, as long as you’ve lived in the home for more than two years. Note that if your home isn’t your primary residence, these exclusions don’t apply.

Homeownership and Taxes: The Benefits

Now we may have got you nervous thinking about the taxes you’ll have to pay, but don’t worry – there are definite benefits to being a homeowner. Owning your own space and building equity along the way are obvious perks. But, there are also advantages when tax time rolls around. Below, we’ll discuss some of the ways you can save money as a homeowner when it comes to filing your annual income taxes.

Interest on Your Mortgage Loan

Did you know that you can write off the interest on your mortgage? As long as your loan is $750,000 or below, you are entitled to receive a deduction on the entire interest payment you made within that tax year.*

Property Taxes

As mentioned above, you can deduct property taxes from your income tax, up to the amount of $10,000, as of 2018. Both your main residence and other owned real estate properties are eligible.

A Home Office

If you have a space within your home that is designated as an office, or is a storage space for business-related items (like merchandise), you may be able to claim a deduction.  

Energy Efficiency Improvements

Although you typically can't benefit from home improvement costs at tax time, being energy efficient can help. Making changes to your home like adding solar power or wind energy can not only help your energy bill (and the environment), but also come tax time.

"Taxpayers who make energy-saving improvements to a U.S.-based primary residence may be able to take a credit to offset the cost of repairs if the work is completed in 2018," writes Jerry Gaddis, founder & CEO of Tropical Tax Solution in U.S. News & World Report.

Make sure you take advantage of these homeownership benefits when filing your yearly income taxes.

*If you took out your mortgage prior to December 16, 2017, your interest deduction limit is for a loan of up to $1 million. The Tax Cuts and Jobs Act (TCJA), effective 2018-2025, has lowered the limit by $250,000.

What You Can’t Deduct at Tax Time

Although there are various ways you can claim deductions as a homeowner, there are some things you can’t add to that list. Keep these items in mind when you’re considering a new home purchase:

Taxes and the Knock Home Trade-In

Now you know what you can expect when it comes to taxes associated with owning, buying, and selling homes. So let’s discuss how using the Knock Home Trade-In program can help you financially when you are selling one home and buying your next – at the same time.

Selling Your Old House

Selling your old home with Knock means that we’re prepping your house and listing it on the open market in order to get you as the seller the best price possible on the sale. When it comes to pricing your home, Knock has a dedicated team of data scientists, home valuation specialists, and licensed real estate experts that help value your house. We also have a proprietary algorithm that incorporates current homes for sale, recent transactions in your neighborhood, and our 200-point on-site inspection to ensure any improvements and unique features of your home are used to price it accurately. Because you are not selling your home directly to Knock, you’re able to entertain all offers to maximize your profits.

“Because we’re selling your home for fair market value instead of buying it directly from you at a price below what it’s worth, you’re able to get the most capital gains from the sale.”

- Jamie Glenn, Knock Co-Founder and COO

Knock currently operates in six markets across the United States. And moving across state lines may help you save even more come tax time. With the new tax reform laws, as mentioned above, you can only deduct up to $10,000 in property taxes ($5,000 for a single filer). Therefore, considering a new location with lower property taxes could help your wallet.

Buying Your Next Home

home with two car garage brick exterior real estate

The costs associated with buying and selling at the same time add up, and most people have the majority of their funds tied up in the home they are selling. With the Knock Home Trade-In program, Knock first buys your new house on your behalf with our cash so you can move in as soon as possible. Our all-cash offer is attractive to sellers, and typically gets us an average 3-5% discount off of the list price of the home. To illustrate, let’s say the house you love has a list price of $300,000, but Knock’s all-cash offer allows us to secure it at a price of $285,000. That’s a significant savings that can help offset some of the other costs of buying and selling at the same time, like taxes. If you didn’t leverage Knock’s all-cash buying power, you may have paid asking or above asking price for the home. By saving on the purchase price, Knock helps you maximize the amount of money in your pocket.

Even in a situation where competition is pushing bids up on the new home and Knock cannot get our typical discount, there are still tax-related benefits to using our Home Trade-In program. For instance, say you are trying to move into your new home in a different school district before the academic year starts, so you can enroll your children in their new school on time. On your own, you may not be able to afford and time getting into your new home before your kids need to start at their new school. With the Home Trade-In, Knock covers all costs on the new home, like property taxes, until your old home sells, and then settles with you at closing. By covering these costs upfront, Knock makes it possible for you to afford moving into your new home before the old one sells. That way, you can focus on what’s most important to your family’s timeline.

Summing It Up

filing taxes calculator

Buying or selling a home is a major life event that requires decision-making, effort, and patience. There are plenty of exciting elements of being a homeowner, which is why at Knock, we strive to make the entire process of buying and selling easier than ever before. Of course, homeownership comes with major responsibilities, like paying required taxes. Luckily, the Knock Home Trade-In program helps you on both ends of the spectrum, to maximize your profits when you sell and save you money when you buy. Get started today at knock.com, and reap the benefits come tax time next year.

This article is meant to provide a high-level overview of select points tied to taxes and homeownership, home buying and home selling, and should not be viewed as comprehensive. Any and all questions should be directed to an accountant or financial advisor for details and clarification.

Make sure to speak with your lender about any additional questions you may have about your mortgage and taxes.

Many tax laws are based on state, county, or municipality. Research your specific location’s tax laws and requirements.

Knock Knowledge: What Is Verified Pre-Approval?

A Q&A with Better Mortgage

We know that home buying and selling are extremely important life events, as well as one of the biggest financial decisions of most peoples' lives. At Knock, we’re on a mission to make this major milestone more certain, convenient and cost-efficient for our customers. With our Home Trade-In program, we buy your next home on your behalf before the old one sells, so you can move in and avoid the inconveniences of getting your home prepped for market and living through showings. Then, we help you sell your old home on the open market. We are there to guide you and this process every step of the way. One of the very first steps? Helping you secure financing for your home purchase.

How much home can I afford?

When customers are embarking on a Home Trade-In, we often receive questions about the process of securing financing for their new home. With Knock, the first step is your verified pre-approval so you know exactly how much you can afford to pay for your next home. Getting pre-approved helps the entire buying and selling process move along more quickly and easily.

Luckily, Knock partners with great mortgage providers, who help us make our customers’ dreams of moving into a new home a reality. With these partnerships comes a wealth of information about what it takes financially to buy and sell homes, and we want to share that knowledge with you.

Breaking it down with Better

Julien Fraiha Better Mortgage
Julien Fraiha
Purchase Manager, Better Mortgage

We asked one of the experts: Julien Fraiha of Better Mortgage, a direct lender that uses technology to make the mortgage process more transparent and easier for consumers. Better is one of Knock’s partners that regularly helps our Home Trade-in customers with the mortgage pre-approval process. In this blog, Julien answers the most pressing questions customers have about verified pre-approval, one of the first steps in the Knock Home Trade-In process.

1. How does financing of the Knock Home-Trade in work?

There are technically three transactions involved in the Trade-in process:

1) Knock buys the customer’s new home on their behalf.

2) Knock helps the customer sell their old house.

3) The customer buys their new home back from Knock.

Mortgage providers like Better are involved with both steps 1) and 3). Before Knock even begins to take the customer shopping for their next home, they need to make sure they have enough equity both inside and outside their current house to afford their new one. That’s where Better comes in.

“The customer will need to get underwritten and pre-approved with a lender for the buyback of the new home from Knock,” says Fraiha.

2. What exactly is a verified pre-approval? (and how does it differ with other kinds of mortgage pre-approval/qualification)

The verified pre-approval is an underwriter-reviewed pre-approval, or in layman’s terms, when your finances—your income, debt, assets, and credit history—have been reviewed by an underwriter, or a financial risk analyst, to determine how much money you can borrow, how much you can afford per month, and what your interest rate will be.

As Fraiha explains, “At Better.com we are quickly able to verify a borrower's tax returns, W2s, pay stubs and creditworthiness, resulting in a fully underwritten verified pre-approval. With a verified pre-approval you gain the confidence of a cash buyer. Your Knock agent needs a verified pre-approval to submit Trade-In offers on your behalf. ”

3. What do I need to be eligible?

Being in solid financial standing is wise for any homeowner looking to make a move. There are certain terms of eligibility customers must meet in order to use our Trade-In program. These may include things like savings for a down payment, or “good” credit. Here’s the nitty-gritty*:

*Note these underwriting guidelines are mandated by Fannie Mae for conventional financing.

4. What documents will I need to submit?

We get it, no one likes sifting through paperwork. But, having the below documents ready to submit will help expedite the process.

verified pre-approval documentation checklist

5. When can I lock in my rate?

Says Fraiha, “A buyer can lock their rate as soon as they are under contract for a new home. Rate locks range from 30 days to 75 days. For Trade-In customers, a great time to lock is as soon as the customer’s listing goes into contract, to then plan for a same-day closing of the old home and new home. ”

This timing is perfect for the overall Trade-In program. With the program, we wait until you move into your new house to start the preparation and listing of the old one. This saves our customers the stress and inconvenience of repairs and showings; it also ensures they’re getting the most value out of the costs of our program by lining up both closings.

6. How long will it take to get my verified approval?

We know that time is of the essence. And we also know that you’re especially excited to start looking for your new home! But, we don’t want you to fall in love with a house that’s outside of your budget. Luckily, we are able to move the process along quickly.

“A buyer has access to an official Loan Estimate as soon as they complete an online application,” Fraiha explains. “After submission of all documents to Better.com, an initial review can be conducted within 1-2 business days. Better may need more information after the initial review to issue a decision. ”

When you’re ready to find your new house, we suggest checking out Knock Deals. You can set up alerts for your dream home based on your desires and requirements and we’ll alert you when you can get it for the best price.

The Financial Finale

Knock’s Home Trade-In program is a great solution for any homeowner looking to sell their current home and buy their next one – whether you’re upgrading, downsizing, or just looking for a change of scenery. And the first step in the financial process when getting started with Knock is your pre-approval. Although you can always choose to use your own mortgage lender, we have solid partnerships with companies like Better that are familiar with our process and whose mission is to improve access to home finance.

Ready to get started? Before you can get your verified pre-approval from a provider like Better, the first step is to submit your current home for a free market price estimate at Knock.com and talk to a Knock representative.

For questions regarding Trade-In specific costs please discuss with a Knock representative.

Are These Three C's The Key To The Real Estate Revolution?

As we head further into the fourth quarter of the year — a year that has seen rampant inventory shortages, rising mortgage rates and sellers bombarded with offers within hours of listing — we are beginning to experience the usual winter season cool-down. So this is a perfect time to look ahead, and I find myself reflecting every day on what the real estate industry will look like in the years to come. For an industry that has historically remained stagnant, the pace at which technology is evolving will expedite change at an unprecedented rate. As such, this is an exciting time for consumers and agents alike, but we need to adjust our mentality and approach to real estate transactions accordingly.

You’ve likely heard of the four C’s of buying a diamond. Well, in order to directly address consumer demands, we as an industry need to modernize real estate by embracing three pillars: certainty, convenience and cost-effectiveness — our own three C’s, if you will.

Certainty

Until now, most aspects of a real estate transaction have involved a high level of subjectivity. Consumers find this frustrating because they aren’t familiar with the process and want concrete answers, and agents are challenged by the lack of consistency. Some websites offer a wide swath of information for consumers, but they lack depth. Today we have the power of data science at our fingertips — this is a game-changer.

For example, my data science team has developed algorithms that take into account hundreds of data points, including list prices, interior features like marble countertops, historical sales transactions and individual agents’ track records, and then apply machine learning to rank the quality of each listing price. When real estate companies use this kind of information, it empowers consumers with insights they can trust. But perhaps more importantly for everyone involved, it reduces time and friction by adding a level of transparency that reduces the high-emotion subjectivity involved in the traditional process. When sellers and buyers have a more accurate and realistic point of view heading into a deal, there will be less need for negotiating and price drops that extend days on market.

The insights of local, on-the-ground experts will remain important, but when paired with this kind of data, the combination of high-tech and high-touch gives you the recipe for certainty.

Convenience

The selling side of real estate functions essentially the same way it did in 2008, or even in 1998 — almost entirely paper-based, laborious and opaque. In a world of Ubers, Airbnbs and Carvanas where instant gratification is status quo, that’s just crazy.

Consumers are increasingly showing interest in — and will soon demand — a digital transformation of the transaction of home buying and selling that is more simplistic, transparent and consistent. A digital real estate marketplace has started to take shape over the past several years, with companies facilitating transactions online and agents bidding for clients, for example. Some sites and apps take a step back from the transaction to help consumers find the right neighborhood first. And new players have begun the transformation of the buy side, providing the convenience and instant gratification many consumers desire. However, none of these models solve for the 360-degree problem. I believe the ultimate way to provide that is by facilitating an end-to-end marketplace that considers the customers’ needs for selling and buying over the course of their entire homeownership life cycle.

Overall, it is essential that the modern real estate process is consumer-centric, which can only happen when it is grounded in data and the correct balance of technology and human insight.

Cost-Effectiveness

As I look at other global markets, what jumps out at me is their ability to offer the same services to their clients at a lower commission rate. For example, average commissions in some regions of Australia can be as low as 2%, and even lower in the U.K., where they average about 1.5%, compared to the typical 6% here in the U.S. In some instances I see commissions around 4.5%, but not consistently enough.

Working toward a future where homebuying and selling is more affordable to consumers is advantageous for everyone. Agents will benefit from an influx of buyers and sellers, consumers will save their hard-earned dollars and we’ll see increased fluidity in the overall market. Eventually, I envision a sort of real estate dating service, where consumers are matched with agents based on preferences, budgets and more, ultimately lowering commission rates. But with no one real estate company — or even type of company, for that matter — dominating the industry at this point, it is nearly impossible to see quick and impactful change.

If we are going to truly evolve and improve the transaction as a whole, transforming the standard commission structure as a collective industry will be a turning point, and it’s one of our biggest opportunities. By finding the right combination of tech and human touch for each consumer’s unique needs and budget, we can both bring down the average cost of homebuying and selling and deliver a more premium service to those who want it.

I believe these three C’s have the potential to double market momentum in the U.S. If certainty, convenience and cost-effectiveness are optimized simultaneously, the number of homes bought and sold every year could double at a time when inventory shortages are only being alleviated at a slow rate and buyers are increasingly frustrated. For consumers, I consider these the keys to unlocking a process that eliminates much of the stress, frustration and opacity often associated with real estate transactions.

After all, the home is most people’s largest asset, and they deserve the same level of innovation they’ve come to expect from so many other industries. The sale of one home and purchase of a new home is a momentous occasion that should be enjoyed, and it is our job to deliver that for consumers.

*This article originally appeared on Forbes

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