How Does Houwzer Make Money?

Posted on Mar 04, 2019

A lot of things in life are too good to be true. As hundreds of our customer reviews show, Houwzer is not one of them. Understandably, our potential clients frequently ask us "how does Houwzer make money?" Answering this question starts with explaining how the commission in real estate works.

In most cases, a buyer and seller are each represented by real estate agents, both of whom make their money on commission. But where does that commission come from? The sales price of the home. Each real estate agent receives a 3% commission on the sales price of the home, but more importantly both of these fees come out of the seller’s profit. To put that into perspective, for a $400k home a seller will shell out $24,000.

For buyers, this is problematic. It creates an incentive for the buyer agent to promote homes above their customers’ budgets in order to increase their own commission.

For sellers, it’s downright unfair. With the rise of social media and websites like Zillow, 98% of home buyers start their search online. As a result, homes have become much easier to market and it no longer costs 6% of a home’s value to sell it. To be honest, it probably never did.

So as it seems, brokerages are pretty broken. 

To create trust with our buyers, Houwzer opted to pay all of our employees a salary. When agents work for clients instead of commissions, you’d be amazed at the level of customer service you receive.

To address the second issue, we did something that made many people raise an eyebrow — we dropped the 3% listing commission and replaced it with a flat $5,000 listing fee collected at settlement. And instead of requiring our sellers to pay the buyer's agent a 3% commission, we ask them to pay 2.5%. 

In addition, we give all Houwzer sellers the Bundle rebate, a $2,500 no-expiration buyer rebate, they can use to buy their next home with our expert buyer agents. Selling your home and not buying another one? No worries — you can also gift the full $2,500 rebate to a friend or family member to buy with us.

Houwzer collects a 2.5-3% commission by helping buyers find and close on homes and that is how we make money.

So there you have it. Houwzer makes money by providing home sellers with the highest level of service and helping buyers find a new home. It's not a discount — just a fairer way of doing business.

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