Low-fee brokerages sometimes come out swinging and then sputter or face-plant.
But Houwzer is going strong. This Northeastern startup, which claims to provide full brokerage service at low fees, recently raised an additional $4.5 million in financing, Inman has learned.
Houwzer serves homebuyers and sellers in Philadelphia and Washington, D.C., and with the new funding, plans to expand to a third, as-yet-unnamed market in the next year.
Though homebuying and selling startups such as Opendoor are hogging much of the real estate spotlight, Houwzer is among a handful of tech-powered, low-fee brokerages that are making at least some headway. Others include Redfin, Purplebricks, Homie and Trelora.
Houwzer’s latest funding round was led by Admiral Capital Group, co-founded by the former NBA star David Robinson, and will also be used to continue building a technology platform for agents and clients that integrate with mortgage and title services.
“With the funds from this round, Houwzer will vertically integrate mortgage financing, likely through acquisition, as it seeks to become a true disruptor – a better, faster, and cheaper alternative for the customer with an end-to-end residential resale platform providing a one-stop shopping experience for home sellers and buyers alike,” Houwzer CEO Mike Maher told Inman.
Like many low-fee brokerages, Houwzer has raised its pricing over time — from what was once cast as a “0% listing commission” (even though sellers were charged a $495 fee at closing) to $995 and then, most recently, to $2,500.
But the company remains highly affordable, particularly if Houwzer does, as it claims, provide the full range of services provided by traditional commission-based brokerages.
That full-service commitment is one characteristic that sets Houwzer apart from some other venture capital-backed discounters, which tend to put more work in the hands of customers.
Another, Houwzer CEO Mike Maher said, is that Houwzer serves both sellers and buyers in equal number, rather than focusing on one or the other. (Maher dubs Houwzer “the most balanced modern discount brokerage on the planet.”)
In Houwzer’s home market of Philadelphia, where the startup launched in 2015, the company sold 297 listings in 2018, up 67 percent year over year, and represented buyers in the purchase of 238 homes, up 69 percent year over year, according to Maher.
In D.C., where Houwzer touched down in the spring of last year, it closed a total of 47 transactions. Annual revenue has more than doubled every year since Houwzer debuted, Maher said.
Also differentiating Houwzer is the brokerage’s offer of “transferable” buyer rebates and its practice of employing salaried agents with benefits, rather than using agents who are commission-based independent contractors.
Houwzer also claims to have been the first brokerage to earn B Corporation certification, which the nonprofit B Lab awards to companies that meet “the highest standards of verified, overall social and environmental performance, public transparency and legal accountability.”
B Corp firms are actually “legally required to consider the impact of their decisions on their employees, suppliers, community, consumers, and environment,” Maher previously told Inman.
“The leadership team at Houwzer values their employees and communities, as much as their clients, and that’s not always the norm,” Robinson said in a statement. “They have the opportunity to disrupt a legacy industry, while also doing a lot of good.”
The new funding round — which is comprised of convertible debt, not equity financing — brings Houwzer’s total to $6.5 million, following a seed round of $2 million in convertible debt.
Other Houwzer investors include Independence Capital Partners, who co-led the the latest round, Benjamin Franklin Technology Partners and Start-Up PHL.