EasyKnock Explains What a Sale-Leaseback Is — and Why Cash-Strapped Homeowners Should Consider One

For generations of Americans, homeownership has often marked significant life milestones. When a young adult graduated college, entered the workforce, or started a family, they were expected to buy (or upgrade) a home. In later years, empty-nest parents often downsized to a smaller home or a convenient condo.

Concurrently, homeownership has often been considered a good financial investment. Overall, homes typically appreciated, frequently enabling the homeowner to sell at a profit before purchasing a new property. However, the 2008 housing crisis disrupted this pattern. Today, United States homeownership dynamics look substantially different.

A homeowner’s home equity is still considered a sought-after source of cash. However, increasingly strict lending criteria often make it difficult to obtain a home equity loan. With these barriers in place, many homeowners are thinking outside the box, looking for innovative methods of converting their home equity into cash.

But New York City-based real estate technology firm EasyKnock has a way to give inflation-weary homeowners some relief.

EasyKnock is a real estate technology firm that provides customers with home equity solutions. The company’s premier product is a residential sale-leaseback program.

In a home sale-leaseback, homeowners can sell their property while continuing to live there as renters. As a result, homeowners can access their home's equity while remaining in the home post sale.

EasyKnock Explains How Its Customers Can Easily Convert Their Equity

When considering EasyKnock's programs, it's helpful to compare them to traditional home sales. In a conventional sale, homeowners must typically move out before or immediately after closing, which can be stressful and disruptive. Qualified EasyKnock customers can select from two residential sale-leaseback programs. For those actively looking for their next home, MoveAbility allows customers to stay for up to one year; for those desiring more flexibility, EasyKnock's Sell & Stay allows customers to stay up to 5 years and even offers the customers the ability to repurchase the house. In either program, customers are able to capture any future appreciation of the home.

For both programs, the customer (or their immediate family members) must live in the home as their primary residence. The customer, along with family members living in the home, must appear on the lease. (EasyKnock is unable to buy currently rented homes or houses used for investments.)

Qualified customers who want cash for a specific purpose may choose EasyKnock's Sell & Stay solution. First, the customer receives “up to 75% of the home’s fair market value in cash, with the remainder in the form of an Option which allows the customer to control the timing and next sale.” Afterward, the customer will remain in the home as a renter, with a 12-month lease that auto-renews for “up to five years total.”

During this period, the customer can decide to repurchase the property for the agreed-upon buyout cost. If the customer declines that option, they can request that EasyKnock sell the home on the open market.

Customers with plans to move into their next home within 12 months may opt for EasyKnock’s MoveAbility solution for homebuyers planning to sell their current home, using the proceeds for their next property. Each MoveAbility customer signs a 12-month, nonrenewable lease while retaining rights to any appreciation. That way, they avoid the need to move into a short-term rental property.

Within the lease’s first nine months, the customer instructs EasyKnock to sell the home on the open market. Once this directive is in effect, the customer can move with no early termination fee.

Each MoveAbility customer must engage a real estate agent to sell the home. Once the house sells, the customer keeps the applicable home value appreciation. At the transaction’s conclusion, the customer receives the home’s entire sale price less the buyout cost and the agent commission.

3 Benefits of the Residential Sale-Leaseback Models Like EasyKnock’s

As homeowners search for new home equity conversion solutions, the residential sale-leaseback model offers several advantages. Qualified customers will receive three notable benefits.

Because the residential sale-leaseback model isn’t a loan, stricter home equity loan criteria don’t apply. The sale-leaseback model enables qualified homeowners to easily convert their home equity into cash.

During the residential sale-leaseback’s duration, the former homeowner will remain as a renter. This enables them to maintain community connections and avoid lifestyle disruptions.

Residential sale-leaseback customers can use the home equity conversion proceeds to cover unexpected expenses or pay down debt. Alternatively, they can use the cash to pursue other opportunities. These options provide the customer with more financial stability and flexibility.

Throughout 2024, EasyKnock will enhance its homeownership solutions platform. By the year’s end, the company expects to offer game-changing home purchase, sale, and new home equity solutions. When combined with EasyKnock’s residential sale-leaseback programs, homeowners will have innovative new ways to engage in the homeownership journey.

These new solutions could potentially address other pain points in the real estate market, such as helping first-time homebuyers enter the market or assisting homeowners in upgrading to a new property without the traditional constraints of buying and selling simultaneously.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes