Compass, the well-funded national real estate brokerage, launched a bridge loans program in October 2019, in an effort to help existing homeowners more easily purchase a new home.
Carly Litzenberger, the senior director of new ventures at Compass, gave more insight into the impetus behind launching the program and how Compass built its bridge loan platform at Inman Connect on Friday, during a session titled, “Removing Financial Barriers to the Home Sale.”
Bridge loans, according to Litzenberger, were the number one request from Compass’ roughly 15,000 agents in 2019.
“Agents said to us they are working with a lot of homeowners today that would move tomorrow if they had the cash on hand to do so,” Litzenberger said. “What that really means is, that a lot of U.S. homeowners today, have the majority of their equity tied up in their current home.”
“We wanted to build a program to address that and unlock their ability to move,” Litzenberger added.
After hearing from agents about the need for a bridge loan program, Litzenberger said the first key for Compass was to develop a program that kept the agent at the center of the deal.
“An agent, all they care about is the client, so we were trying to figure out, how do we create solutions that enable the agent to deliver, in this case, a solution that the client may not even know they need,” Litzenberger said.
Compass is not a lender, so the company tapped Better.com and Freedom Mortgage to act as the lenders for the platform. Through a relationship with the two lenders, Compass clients get dedicated access to the lenders and a direct customer service line, so they’re not waiting in a queue with other clients of the lenders.
Litzenberger said homeowners using the program should have roughly 20 percent equity in their existing home. The program is available nationally, in smaller markets and major markets like New York and San Francisco.
Compass also accompanied the program with a service where the company will make the first six months of payments, interest-free, with no additional fees, for the clients, to help make the move simpler.
Compass bridge loans program is the latest in a long line of efforts by the real estate brokerage industry to open up access to homeownership and encourage consumers to transact more. Bridge loans historically, however, have a slighter higher interest rate than a typical mortgage and are usually a term of about six months.
UPDATE: Story updated to include last sentence, which was previously cut short.
