It's been said that the 7 most expensive words in business are "this is how we've always done it." Yet, remarkably, there are still a handful of billion-dollar industries plagued by an unwillingness to change.
Full of wasteful spending and overly complex processes, these antiquated and inefficient industries have cleared the path for new models to emerge. Finally, technology and innovation are giving consumers the knowledge, options, and experience they deserve.
We saw this with the terribly inconvenient and overpriced taxi industry before Uber leveraged technology and independent contractors to transform the experience for riders.
Airbnb followed shortly thereafter empowering hosts and travelers to cut out the expensive hotel industry with a peer-to-peer platform based on community and reviews.
Meanwhile, the vast real estate industry has remained virtually untouched. For decades, residential real estate brokerages have enjoyed enormous profits while providing a poor customer experience and little value, simply because consumers lacked options.
Houwzer, a modern real estate agency, is offering consumers a better alternative by saving home sellers an average of $15,000 and providing home buyers a pressure-free experience with their full service, salaried agents.
Mike Maher, Houwzer's Co-Founder and CEO, had grown tired of seeing the traditional brokerage model consistently fail home buyers and sellers.
"My wife and I started flipping houses and became frustrated by paying a 3% listing fee,” Maher says. "Websites like Zillow had greatly reduced the cost and time listing agents spent marketing properties, yet the industry hadn't adjusted its pricing because it benefited them.”
"At the same time, my friends complained about the pressure they felt from their commission-based agents who were incentivized to quickly find them a home at the top of their budget. I realized that a 100% commissioned-based agent's goals weren't aligned with the home buyer's goals of methodically finding the right home for them.”
It was time to change the real estate industry for the consumer.
In a few short years, Houwzer's team of salaried agents have guided Greater Philadelphia and DC Metro residents through over 1,500 real estate transactions, already saving home sellers over $10 million in unnecessary listing commissions.
First, they slashed thousands off the cost of selling a home.
In a typical real estate transaction, the seller pays a steep 6% of their home's selling price in commissions – 3% to their listing agent and 3% to the buyer's agent. When you sell with Houwzer, you only pay their full service listing agents a flat $5,000 fee plus 2.5% to the buyer's agent at closing. That's a savings of $16,000 on a $600,000 home.
Maher is adamant that Houwzer doesn't skimp on the quality of their service to cut costs, a claim their clients heartily support.
"Candidly it boggles the mind why everyone isn't listing with Houwzer – they will Uberize the brokerage business,” Tom, who sold with them, said. "You have no concern of ‘getting less' from their listing model. The money we saved with Houwzer is still hard to fathom.”
This begs the question: how can a real estate agency considerably cut the standard rate and still make money?
For one thing, the way people buy and sell homes today is drastically different than it was even a decade ago. Over 90% of people now start their home search online and that number is only increasing. The digital shift has enabled agents to streamline the process and get more eyes on their properties in less time, significantly reducing the cost of servicing a listing.
Sellers still get a lockbox, sign, virtual tour, HD pictures and video, open houses, access to Houwzer's listing dashboard, and are listed on all major platforms including the MLS, Zillow, and Realtor.com. Maher says those are fixed costs that do not cost more than $2,500. Rather than holding on to the steep traditional rate, Houwzer passes those savings on to the client.
Many of their sellers are so happy with Houwzer's service they decide to buy their next home with Houwzer or refer their friends. This is where Houwzer makes the bulk of their money.
Next, they trained salaried agents to improve the customer experience.
"There's a huge disconnect between what buyers and sellers care about and what a commission-based agent cares about,” Maher explains. "Trust is the most critical component of a client-agent relationship, and that starts with the paycheck.”
Unlike traditional agents, Houwzer Agents are full-time, salaried employees with benefits. This enables them to prioritize customer service over commissions.
Maher has painstakingly designed an elite team of highly specialized agents with the highest education requirements of any agents in the market.
Jacob Szewczyk of Silver Spring, Maryland spoke highly of his experience buying a home with them. "We had an idea of what we wanted in a home and knew the very basics about what the process would entail. As we started to look into the nuts and bolts of home buying, we quickly became overwhelmed.”
That all changed when they met their Houwzer agent. "We could not have hoped for a better experience,” Jacob said. "Most importantly, there was never any pressure to buy.”
He praised Houwzer's agents for their customized search process, knowledge, competence, and honesty which gave them confidence that they were in good hands.
Maher says that this superior buying experience stems from their trained salaried agent model.
"As the National Association of Realtors' commissioned DANGER Report revealed, ‘the real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents.' Houwzer solves this problem by providing a salary and continuous training so our agents can focus on their clients, not commissions.”
Maher agrees with the DANGER Report's suggestion that "the next winning model could be a technology-powered, agent-centric, flat fee, transaction-based fee, salaried, or auctioneering model.”
"We believe that highly trained, salaried agents is the answer consumers are looking for, and we're constantly evaluating what else we can do to make the home buying and selling experiences better for our clients.”
Finally, they created specialized buying and listing teams.
Unlike other real estate agents, Houwzer's Agents focus on one side of the transaction.
"At Houwzer, we don't want you to be a jack-of-all-trades. We want you to be extremely skilled at what you do. Buying and selling homes are two completely different processes that both carry massive financial implications. We opted to develop specialists so we could provide our clients with the most exceptional service at every stage.”
Many Houwzer clients rave about their agent's responsiveness and are baffled by the amount of time, attention, and care they received. Maher credits this to the company's "team” mentality and support staff who are working behind the scenes on everything from administrative tasks and accounting to marketing and operations.
"Giving our agents the freedom to be 100% focused on clients is really important to us,” Maher says, "We take care of our agents so that they can take care of you.”
Asked what the response has been to this new model, Maher quipped, "Our client reviews speak for themselves.”
He's right. After serving over 1,500 clients, their average review is 4.9 out of 5 stars. You'll be hard-pressed to find that level of client satisfaction anywhere else.