Disrupting the residential real-estate-brokerage biz
Houwzer hopes its 21st century zero-commission listing model creates a more competitive marketplace for consumers.
MIKE MAHER, 32, of Southwest Center City, is co-founder and CEO of Houwzer. The startup wants to disrupt the residential real-estate-brokerage biz by creating a more competitive marketplace for home buyers and sellers. Maher and his wife, Jennifer, co-founded the Center City co-working space Benjamin's Desk in 2012. Houwzer is located in Benjamin's Desk.
Q: How did Houwzer start?
A: My partner Kevin Baird approached me in October 2013. He'd been developing townhomes here and was frustrated by big commission checks for real-estate agents when he was doing much of the work. We launched here partly because of the real-estate-transfer tax. When a developer does a [financial statement], he pays a 2 percent transfer tax when he buys a property, 2 percent when he sells, plus 6 percent in commissions.
Q: The startup money?
A: We bootstrapped it with $100,000 of our own money.
Q: What's Houwzer do?
A: It's a residential real-estate brokerage, more startup than brokerage. We are the industry's first listing model predicated on selling people's homes for free in exchange for social currency. Listings are valuable because they generate leads and ultimately buyer closings.
Q: The biz model?
A: It costs us $345 to list a home. We recoup that but don't charge a listing commission. Our agents are salaried, so there's always a separate listing agent and buying agent on both sides of the table. We get 3 percent of the sales price when we rep buyers.
Q: Your customers?
A: We target an urban professional market. Most clients are 35 to 50, husbands and wives, young professionals, middle- to upper-middle class, with homes in the $400,000 range.
Q: Your competitors, and the key differentiator?
A: Traditional real-estate brokerages like Keller Williams and Coldwell Banker, and startups like Redfin and Compass. The opportunity is to attack the traditional model on price and trust. We can move faster, and 70 percent of consumers distrust real-estate agents.
Q: How big a biz is this?
A: Two salaried agents and four administrators, two who are salaried. Kevin and I aren't taking salaries. We've generated about $100,000 in revenue and saved consumers about $80,000.
Q: What's next?
A: Right now we're licensed in Pennsylvania, focused on the Philadelphia grid and Main Line. We're raising $1 million in the next 90 days, with about 25 percent already committed. A second goal is to prove out our model here and have 500 transactions in the next 12 months. And third would be to scale the operation in 10 to 15 cities over the next 18 months.