(Image source: Houwzer.)
Houwzer, a real estate brokerage startup offering the proposition of helping consumers to save money while enjoying a home-buying better experience, has announced a $9.5 million Series A investment round led by Edison Partners, a Princeton, NJ-based growth capital firm. The startup will use the funding to expand into new markets, launch title and home insurance divisions, and enhance its end-to-end home services technology platform. The firm also plans to double its workforce over the next 12 months and enter the Greater Orlando market later this year.
Houwzer identified a business opportunity having noted that while the internet has greatly reduced the cost to advertise homes, antiquated real estate brokerages continue to push exorbitant commission rates as high as 6 percent of the final sales price of a home. In addition, clients struggle with commission-based agents that often lack the training, coaching, and resources required to consistently deliver exceptional service. This can lead to misaligned financial incentives, according to Mike Maher, CEO and Co-Founder, Houwzer.
“Consumers continue to prefer human advisors, especially for a transaction this significant; but they also believe that advances in technology should translate into savings and a better experience,” Maher comments. “Our solution resonates because it puts the customer first, reducing chaos in the transaction without sacrificing service. We’re really excited to have found the right partner in Edison, who shares our vision and will help us bring a new real estate model to the masses.”
Innovate as Underwriter and Carrier
A Houwzer source tells Insurance Innovation Reporter that the company will initially setup a title insurance agency and a homeowners’ insurance brokerage. Over time, the company will consider ways to innovate around becoming an underwriter and carrier. “The former options allow Houwzer to test and learn while shopping various underwriters and carriers for their clients,” the source says. “Over time, by offering a one stop shop, Houwzer can take on more risk and will be able to lower prices and enhance the value that clients receive through these offerings with the ultimate goal of shrinking the costs sellers’ bear and buyers have to bring to the closing table. All of this will be done with a salaried labor model with a focus on service and savings.”
With salaried agents and an end-to-end home services technology platform, Houwzer says it provides a better customer experience and significant savings across all aspects of the home buying and selling process. Unlike a traditional 1099 agent, salaried agents at Houwzer don’t have to spend time on business generation, marketing, and other administrative work that can take time away from the customer, the firm explains. Instead, they’re supported by a specialized team and advanced technology allowing them to exclusively focus on customer experience.
In contrast to the traditional 6 percent fee, Houwzer reports that charges a flat $5,000 listing fee paid at closing plus 2.5 percent for the buyer’s broker. This saves their home sellers an average of $15,000 in commissions. Houwzer says its home buyers enjoy a pressure-free experience with the company’s highly-trained buyer agents and loan officers who focus on buyer goals, not commissions. The company is also the first residential real estate brokerage in the country certified as a B Corporation leveraging a triple-bottom line approach to its business.
“We’re really excited about what Houwzer has built and where the company is headed. I’m incredibly impressed with CEO Mike Maher’s team, the company’s significant growth and strong customer reviews,” comments Michael Kopelman, General Partner, Edison Partners. “I’m confident that Houwzer is positioned nicely to deliver on a differentiated customer service promise with its salaried labor model and tech-enabled platform.”
As part of the funding round, Kopelman will join Houwzer’s board.