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.
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
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
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
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
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.