Executive Summary: It’s shocking how many home buyers and sellers face unpleasant surprises sitting down to close on their home, their American dream. I am a real estate investor with an ivy-league MBA and a strong finance background, but even someone with my savvy isn’t immune to previously undisclosed, and often unwarranted, charges. I built Houzeo as a For Sale By Owner platform to break through the inefficiencies inherent in current real estate transaction processes and deliver a streamlined, transparent, and inexpensive experience to home buyers and sellers.
Disclaimer: Read this not as a criticism of any particular stakeholder. The agents, brokers, mortgage brokers, lenders, and so on are all attempting to do the best they can with the tools available. There’s a systemic problem of transparency however that allows undisclosed charges to creep up in the Closing Disclosure/HUD, often too late in the process for consumers to take remedial action.
Surprises as a First Time Home Buyer:
My agent & her broker represented both me (buyer) and the seller in this transaction. This was 2009, a buyer’s market. The escrow company and mortgage brokerage were in-house, with the latter offered to me at no charge. The HUD still came with a total of $1,700 of charges that weren’t previously disclosed. Many didn’t make sense either.
The Big Shock:
Another HUD/lender summary came with a $7,175 mortgage broker compensation when the agreement (luckily recorded) was no mortgage broker fee at all if I used that real estate brokerage. The mortgage broker claimed the lender was directly paying them and these monies weren’t indirectly coming from my loan proceeds.
Smaller surprises are in practically every closing. An attorney might charge 30% more than another for a similar closing, a broker charges a processing fee although they got a full 3/6% commission, and so on — but you only find out about these charges in the HUD/Closing Disclosure, 3 days before closing and often too late to do anything about it.
Houzeo’s Closing Dashboard:
Some of these charges are valid, many aren’t. Regardless, the current transaction process with weak/non-existent upfront fee disclosure requirements, makes the most exciting financial transaction in a consumer’s life rather nerve-racking. Houzeochanges that with it’s Closing Dashboard, the most advanced dashboard in consumer real estate, and it lets sellers know estimated closing costs upfront — on day 1. It also gets more intelligent the more transactions it sees in a particular area.
Visit www.houzeo.com to learn what makes Houzeo the most advanced For Sale By Owner (FSBO) platform. The platform breaks the process of selling a home into 6 linear steps and digitizes each one of them.
We’ve just launched v2.0. See the video of our v1.0 launch below.