It seems that the No. 1 goal for most of the big companies in real estate these days is to offer homeowners an easier way to access the equity in their home to enable them to buy a new home faster.
That’s leading companies like Zillow, Redfin, and even Realogy, which includes Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, Corcoran, ERA, and Sotheby’s International Realty, to roll out iBuyer programs where they are either directly buying the houses themselves or facilitating the sale to a third-party buyer.
That allows homeowners to get cash for their home faster than the traditional sales process, thereby allowing them to use that money to buy their new home.
Now, one of the fastest growing real estate companies in the nation is putting its own spin on this movement.
This week, Compass rolled out a new program designed to help homeowners access their equity to buy a new home. But the company isn’t getting into the homebuying business itself.
Rather, Compass is expanding into the lending business, sort of.
Compass announced this week that it is now offering “Compass Bridge Loan Services,” a program in which Compass real estate agents can now facilitate a bridge loan for their clients, using the homeowner’s equity as the collateral.
The bridge loan allows the homeowners to access the equity in their home and use that money to help buy their new home. The loan is then paid back using the proceeds from the sale of the homeowner’s existing home.
Consider it iBuyer-lite.
“We are incredibly excited to be able to offer Compass Bridge Loan Services to home buyers and sellers across the country,” said Carly Litzenberger, senior director of new ventures at Compass. “Until now it’s been far too difficult for homeowners to easily access the equity in their homes. By unlocking this capital, Compass is putting the power back in the hands of the homeowner and bringing a new group of buyers to the housing market.”
Compass is not providing the loans itself. Rather, the company is partnering with several lenders to provide the bridge loans, including Better.com and Freedom Mortgage.
“Better.com and Compass both have similar shared visions of making the homeownership process easier through best-in-class technology and superior customer service,” said Vishal Garg, CEO and founder of Better.com. “We’re thrilled to partner together on a service that combines a concierge-like customer offering with innovation.”
On its website, Compass said it decided to roll out the bridge loan program after considering the program for some time. The company also said despite partnering with Better.com and Freedom, Compass clients are not obligated to use either lender.
“After months of research, Compass has selected lenders that are offering competitive rates and dedicated service for Compass clients,” the company states on its website. “Already working with a lender you love? No problem. This unique solution lets you choose the provider that works best for you.”
Compass also states that homeowners working with a Compass agent can apply for “no out of pocket costs” for up to six months on any approved bridge loan.
“As part of the service, Compass clients can apply for up to six months of loan payments,” the company stated. “Compass is using its own funds to support the no out-of-pocket costs offering.”
As for why sellers may want to take advantage of this program, Compass lays out several reasons:
- The financial flexibility to make a down payment without having to sell their existing home
- Quickly take action when they find the home they want to buy
- Have the security in knowing where they are going to live before leaving their current home
- Sell on their terms and watch from the comfort of their new home while their old house sells at the optimal time
According to Compass, the company has already begun rolling out the service in select markets and states that early feedback from agents and clients has been “overwhelmingly positive.”
In fact, Compass states that bridge loans were the “single most-requested service from Compass agents and their clients in 2019.”
According to the company, that feedback from agents is one of main reasons the company invested “significant time and resources” into the development of this program.
The offering is the latest from Compass, which has been attracting real estate agents away from competitors in droves with its technology tools. And now, the company’s agents can offer bridge loans to their clients too.