Houwzer vs. Redfin: What Home Sellers Need to Know

Anyone who’s recently looked into how to save money when selling a home has likely encountered either Redfin or Houwzer on their search. These two companies have both opted to use technology to shake up the real estate industry, and redefine the relationship with both the home seller and the agent.

However, there are some major differences between the two organizations. Here’s what you need to know.

What is Redfin, and how does it work?

Redfin is an innovative real estate brokerage known for their 1% listing fee. Before Google maps even existed, Redfin began offering map-based online real estate searches - this proved to be an industry disruptor in real estate. Today, Redfin is known for its comprehensive, searchable data on both properties and the neighborhoods they reside in.

Although Redfin advertises itself as having a 1% fee, this rate is only available to clients who buy AND sell a home with Redfin. In a more typical transaction, the home seller will pay 1.5% to the listing brokerage (Redfin) and 2.5% to the buyer’s brokerage.

Redfin’s biggest advantage over its competitors is its extensive real estate data on local pricing, mortgage estimate, tax information, schools, and more.

What is Houwzer, and how does it work?

Houwzer aims to bring the fees in real estate back in line with what it actually costs by leveraging the internet and additional technology to make the process more efficient. Instead of charging a percentage, Houwzer makes use of economies of scale and charges a 1% for listing services - and recommends 2-3% for the buyer agent.

Houwzer’s biggest advantage over its competitors is that it offers an even better full-service experience despite huge cost savings. The discount brokerages that match Houwzer in price typically only offer a fraction of the services, while requiring homeowners to do the rest - which can add a lot of stress to the home selling process. Houwzer also has extremely high ratings by clients on online review sites (4.9/5 stars, from thousands of reviews, across multiple platforms) compared to competitors. 

How much money do you save with Redfin?

Redfin’s major value proposition to home sellers is its 1.5% listing fee. Redfin then gives 2.5% to the buyer’s agent, which is .5% less than the industry average of 3%. If you sell and buy with Redfin, the fee drops to 1% and they will refund you half percent. 

Redfin also has a minimum listing fee that differs for every area, so the actual amount they refund you can be lower (if it falls below the minimum). In Philadelphia, for example, the minimum listing fee is $3,200. You can also save money with the Redfin Refund if you buy a home with a Redfin Agent (on average, the return is $1,700 though it is prohibited in 19 markets they serve). According to Redfin, the average home seller saves $6,700 under their model. 

As an example: for a $600,000 home, $9,000 would go to the listing agent, and $15,000 would go to the buyer’s agent, for a total of $24,000 before additional closing costs.

Redfin: 

• 1.5% listing agent fee
• 2.5% buyer’s agent fee
• Average savings of $6,700
• Additional buy+sell savings: .5% on listing

How much money do you save with Houwzer?

Houwzer’s major value proposition to home sellers is its 1% listing fee. There are no upfront fees – you’ll only pay at the closing table when the home sells. If you also opt to buy with Houwzer and use their in-house mortgage and title services, Houwzer gives you back $2,500, or half the listing rate. According to Houwzer, the average homeowner ends up saving $15,000 when they go to sell. Houwzer has a minimum listing fee of $2,500.

As an example: for a $600,000 home, $6,000 would go to the listing agent, and $12,000-$18,000 would go to the buyer’s agent, for a total of $18,000-$24,000 before additional closing costs.

Houwzer:

• 1% listing fee
• 2-3% buyer’s agent fee
• Average savings of $15,000
• Additional mortgage+title savings: $2,500

What to expect from agents

How do Redfin agents get paid? 

Unlike a traditional agent, Redfin agents are considered employees, who receive a base salary with benefits. Agents can receive transaction bonuses and activity pay that help boost their paycheck. There is no commission incentive at play and, in theory, agents’ top concern is getting the best outcome for their clients. However, many reviews mention difficulty communicating with the agent and getting a timely response, which may be the result of agents taking on too many clients at one time.

How do Houwzer agents get paid? 

Houwzer agents are also considered employees who receive a full competitive salary with benefits. Similarly to Redfin, the traditional commission incentive is removed. However, Houwzer agents receive bonuses based on the total number of successful deals. According to Houwzer: “We provide a bonus per each successful transaction, as well as a tiered-bonus structure based on the total number of annual deals closed.” 

This means that Houwzer agents are incentivized to reply quickly to clients and create a smooth process - because it can lead to more deals. However, because their salary isn’t tied to selling homes at a particular price point, they can truly advise clients as to the best path forward.

Houwzer versus Redfin agents: 

Both companies have opted for a similar approach, treating agents as employees rather than contractors. Redfin, though, separates out tasks more than Houwzer does, opting to give some tasks (like running open houses, showing homes, doing price valuations, or attending closings) to contracted agents. Redfin reviews show that it’s fairly common for Redfin to pass you around to a different agent each time there is a new step or task, which can be frustrating for clients who feel like the new agents aren’t as familiar with their home or situation.

Houwzer doesn’t have contract workers or junior agents. Unlike most brokerages, Houwzer invests a considerable amount of time and money in training their agents after they receive their license, and thus have the most equipped and highly trained agents on the market. 

Conclusion: 

Investing in employees, and training them, can help develop true expertise and ensure home sellers aren’t paired with inexperienced agents. This can help ensure home sellers are getting the best advice for their unique situation.

Redfin Reviews: Consumer Affairs, Google

Consumer Affairs is a consumer advocacy organization. Unlike other review sites, Consumer Affairs requires contact information to make sure reviewers are real - they also have intelligent software that helps eliminate nefarious players (such as companies leaving false reviews for competitors). For this reason, their review section is a good source to see consumer feedback. Here are some of the Redfin reviews that can currently be found on Consumer Affairs.

“Working with Redfin agents has been less than pleasant. One Redfin agent caused us a delayed closing after wells of trying to get a termite report. Another Redfin agent required an offer deadline and has been unreachable since. Very unprofessional...” Dilara of Falls Church, VA (one star)

“We used Kathy at Redfin and sold in 5 days. She was awesome - their pictures and video blew other realtors away! Every detail was communicated daily and have never experienced such a smooth sale! Amazing experience to the very end - closed today!” Alice of Canton, GA (five stars)

“The selling agent's communication was less than desirable….His failure to communicate with us and with the contractor his client hired continuously caused delays in our move. Redfin only cares about receiving their money and has no interest in helping people. It took numerous attempts to get any answers from him if he answered at all.” Sapphira of Roseville, CA (one star) 

Because Redfin operates in numerous cities, its reviews are often spread out to individual brokerages - which can make it hard to get an accurate idea of how the company is doing overall, through something like Google reviews. Redfin Philadelphia, for example, has an overall review rating of 3 /5 stars by 6 users. These reviews include:

“Recently sold my house. Their fees are low for a reason. Their agents could not have cared less and why should they? They represent their clients very poorly.” -Ryan M. 

Houwzer Reviews: Google

Houwzer real estate reviews are not yet available on the Consumer Affairs website, likely because their current reach (five major metro areas) is smaller than Redfins (national). However, Houwzer reviews can be found on major review sites like Yelp, Google, and Facebook. Google in particular can provide useful information since accounts are tied to real identities, rather than anonymous ones. Overall, Houwzer has a 4.8/5 star rating by 301 Google users. Some of the Houwzer reviews on Google include:

"Had nothing but a smooth, positive experience with Houwzer and saved $8k+ at closing when all said and done... I honestly don’t know why everyone wouldn’t use Houwzer when selling their house." -Ken A.

"A great experience from beginning to end.  I loved the Houwzer dashboard showing me the current status of the entire selling process.  My agent was super helpful and knowledgeable, and I felt very reassured and confident that all my needs and concerns were being addressed by the Houwzer team.  This was my first experience selling a home, and I would definitely choose Houwzer again in the future." -Kevin H.

 “I saw all the positive reviews and was still skeptical waiting for 'the catch' during this whole process but that never came and the savings is real.  I saved thousands using their service instead of the traditional realtor model.  Buying and selling a home is a stressful and emotional process but the Houwzer team made it as smooth as possible.” -AJ P.

Should you sell a home with Redfin or Houwzer?

Both companies have approached real estate with the understanding that the traditional way of doing business is outdated. No matter what, consumers will save money while selling their home.

Overall, Houwzer offers a better (and still full service) experience when it comes to professional listing services for sellers and saves more money for the average client. The average client saves $6,700 with Redfin, compared to $15,000 with Houwzer.

Every real estate transaction is unique and complex, which means that sellers should prioritize having a full-service brokerage behind them as well as a highly trained agent who is an expert in selling homes locally and negotiating in their client’s interest – all of which is included in Houwzer’s 1% offering.

To find out more, visit:

• Houwzer.com/sell
• Redfin.com