Software might be eating the world, but the real estate industry remains one market segment that is still operating in an antiquated world full of phone calls, faxes and manual paperwork processing. Startup Battlefield company Houzeo wants to change that, by digitizing — and simplifying — the process of selling a home.
To do that, Houzeo breaks down selling a home into a series of linear steps, and guides sellers through the entire process. The company has automated much of what used to be done by filling out paperwork, and has moved to a digital process wherever possible.
Those steps include listing and marketing a property, pricing a home, filling out federal and state disclosures, finding an attorney or escrow company, comparing offers and closing out the transaction.
The goal is to bring transparency, simplicity and efficiency to selling one’s home. Houzeo users will know exactly where they might be at any stage of the process and what they need to complete to move on to the next stage.
Part of the magic of Houzeo is that it has aggregated data from public sources to reduce the amount of information home sellers have to input on their own. It’s also automated the federal and state disclosures and digitized them, enabling users to digitally sign them rather than manually filling out a bunch of forms.
The company is also working to enable sellers to find service providers to simplify the process. That includes photographers, stagers, inspectors, appraisers, attorneys, escrow agents and title companies that are needed to move things along.
Houzeo is looking to market its platform to sellers in the “for sale by owner” category, which makes up 25 percent of all home sales and continues to grow. The company believes it can increase the number of home owners who go the DIY route by making it simpler to do so. It’s also trying to tap into the market of single-home investors who own, renovate and sell properties at a profit.
It has a mixed revenue strategy that includes a flat fee for sellers accessing the Houzeo platform, a percentage of fees paid out to partners and paid placement (i.e. ads) for service providers that appear in vendor results.
Q: There’s such an episodic nature to the product. It’s challenging to scale where someone might use it once a decade. How do you scale when customer might show up every 10 years?
A: It’s fair to say that the typical home buyer sells every 13 years, but there are investors and second home buyers who sell every two or three years.
Q: I have a bias toward B2B, so is there an opportunity to help onboard new real estate brokers to your platform?
A: It offers a little bit of value to real estate brokers. But we believe consumers should know the disclosures and know where they are in the process rather than relying on the agent.
Q: What’s the fee you charge the consumer?
A: On the seller side, we have basic plans that are free and provide most of the services that are offered by competitors. For the remaining four steps, we charge for the ability to close. The upfront cost is $399 and the success fee is $699.
Q: What’s to stop competitors from seeing if this works and then come along and doing the same thing?
A: Their revenue comes from the agent platform. To go into the consumer market, they would be jeopardizing their cash cow.