What is Houwzer and how does it work?

Houwzer is a discount real estate brokerage operating on the East Coast that helps home sellers and buyers save money when listing and buying homes. Using Houwzer is an intriguing option for people selling expensive homes due to its 1% listing fees, but it’s not the best choice for everyone.

How does Houwzer work?

Until April 2023, Houwzer’s business model leaned on a flat listing fee of $5,000. Historically, most home sellers end up paying 5% to -6% in fees, so depending on the final price of the house, Houwzer’s flat rate could save a seller a lot of money. However, if you sold a less expensive home through Houwzer, there’s a good chance you would lose money.

Today, Houwzer charges sellers a 1% listing fee that is paid at closing, and exacts a 2% to -3% fee for the buyer’s agent. Some quick math says that’s a total of 3% to -4% of the home’s total cost in fees — less than the traditional 5% to -6%.

Let’s say you sell a home for $600,000. A traditional home sale could amount to 6% of that, or $36,000, in closing costs. With Houwzer, it could be as low as $18,000.

Houwzer can afford to keep fees so low by pursuing quantity. Houwzer’s licensed real estate agents pull less per commission, but they’re generally expected to manage three times as many customers as a traditional Realtor. For most sellers, that’s a fine price to pay to end the transaction with more money in their pocket, but if you’re selling a home that needs some marketing touch and finesse, Houwzer is probably not the best choice.

Essentially, as a discount brokerage, Houwzer aims to give sellers the lowest fees possible, which makes them different from a traditional brokerage that puts service first in exchange for a higher fee at closing.

Bundle and Save Rebate

Houwzer also offers a special service to buyers who use their platform for the entire buying experience. If you use Houwzer mortgage and title services, the company will give you $2,500 back at the closing table. It’s an easy way to lock in some additional savings, especially if you’re using Houwzer to sell your home and then buy a new one.

Where does Houwzer operate?

Houwzer is not a national organization. The company launched in Philadelphia in 2014 and has managed more than $1 billion worth of real estate transactions over the last decade. Today, it operates in Florida, Maryland, New Jersey, Virginia, and Washington, DC.

Pros and cons of Houwzer

Houwzer is a very useful option for many, but not for all. Let’s look at some of the potential benefits and disadvantages.

Pros

• Lower fees: The biggest pro, of course, is that Houwzer could save you money on closing costs. The 1% listing fee is a major draw for many home sellers as it could potentially save you up to 50% in closing costs.

• Potentially quicker sale: Because Houwzer is a business that operates on quantity and agents receive bonuses based on the number of homes they sell, their agents are motivated to sell as fast as possible.

• Potential discounts: With Houwzer’s bundling options, you can also get discounts on closing fees when you buy with them, as well.

Cons

• Less service: Because there’s so much incentive for agents to move houses quickly, there’s a greater risk for mistakes, complications, and delays. Houwzer agents tend to work on 3x as many homes as other houses, and a team-based approach can lead to communication breakdowns. Likewise, you won’t get the same personal touch as a real estate agent, which may mean you don’t get the best possible offer on your home.

• Upsells: If you don’t like being constantly cold-called and upsold, Houwzer may not be for you. In exchange for lower fees, Houwzer will try to push you into add-on services from title and mortgage divisions. It’s more of an inconvenience than anything.

• Location: Houwzer isn’t available in all areas, and if you’re trying to buy a property after selling with Houwzer, you may find that you have very limited options.

Should I use Houwzer?

Using Houwzer, like everything in real estate, is a personal decision. You have to weigh the pros and cons and decide what is most important to you.

If you’d like to save as much as possible at the closing table, potentially using those savings to buy your next home, then Houwzer may be a good choice for you. Especially now that they’ve gone to a 1% listing fee.

However, if you’re in a competitive marketplace where you think you may be able to get more than the asking price on your home, Houwzer probably isn’t the best choice. If you’re looking to get the best deal possible, you want a dedicated agent who will help you stage your home correctly, show it to high-value buyers, and negotiate on your behalf to manage bids and get the best deal for you.

Ultimately, there are a number of factors that will play into your personal decision-making, and testimonials from previous customers may be useful. 

Take the time to review customer testimonials on sites like Yelp, Houzeo, or Homebay. You can also review specific agents on Zillow.