By Amber Freda
Houzz, an online platform for home remodeling and design services worth $4 billion, is continuing to profit off of advertising contracts with thousands of contractors who have lost their livelihoods due to the work bans sweeping the nation. Houzz locks contractors into one year contracts to advertise in a particular region.
I’m writing about this because I’m experiencing it first-hand as an NYC landscape designer who is out of work and who has advertised with Houzz for the past 5+ years. I asked Houzz to cancel my contract a couple of weeks ago. Their only response was to apply a credit towards some of the contract price. They have been unresponsive when asked to cancel the contract or postpone payments, and they went ahead and charged my card again just a few days ago, after I had contacted them stating I’m unable to work.
To advertise in Manhattan, I’m currently being billed $350 per month. Houzz offered me a one month credit, but that credit doesn’t go into effect until April 26. To advertise in Brooklyn, I’m currently being billed $325 per month. Houzz offered to reduce this amount to $250 per month starting April 13. What Houzz doesn’t seem to get is that there is zero work coming in, and my contract doesn’t expire until the end of September. How am I supposed to afford another 6 months of advertising after losing 1–2 months minimum of work this year?
Houzz does not make their advertising rates public. There seems to be a high degree of variability based on a combination of longevity, renegotiated contract prices (i.e. a contractor wants to terminate, so they offer a better deal), regional density, and number of categories advertised under.
According to www.bluecorona.com, to advertise in Houzz, a contractor might pay somewhere in the $300–600 per month range per category that they are being listed under. A remodeling contractor in Washington, DC, for example, might want to be listed in two separate categories — design/build ($500) and architect ($600). This person would be spending a total of $1,100 per month currently, a sum which can quickly add up over a month or two with no new work coming in.
The amount paid by an individual contractor varies according to the size of the geographic region they want to advertise in. This means that high density metropolitan areas like NYC and L.A., the areas most affected by work bans, are also the areas where contractors pay the most money. A contractor in these areas might be paying somewhere in the $600–2K per month range.
It’s particularly egregious for a large company like this to still be profiting off the thousands of contractors who have been the backbone of their business for years. No one knows how long these bans will go on.
Governor Cuomo predicts that the virus will not peak in NYC for another few weeks, which means contractors could potentially be out of work for at least 1–2 months.
Even after going back to work, many small home improvement businesses will likely be struggling to catch up for their revenue losses for weeks or months to come.
What makes this practice even more alarming, according to a complaint filed with the Better Business Bureau, is the fact that Houzz has an auto-renew policy in their contracts, which means that many contractors may be automatically renewed for another year of advertising before they even realize it.
Page 2 of the Houzz contract states simply “No action needed to renew for additional 12-month terms.” One has to read the fine print further down in the document to discover that there is no option for cancellation within each 12 month term, and the only recourse for the contractor is to cancel at least 30 days before the anniversary. They also do not respond to cancellation requests that are submitted outside of the 30–60 day window allowed.
According to a pro review of Houzz on Trust Pilot, “Houzz does not have an early cancellation option and auto-renews without warning. If you do not know when your renewal date is and give a 30-day notice prior to that date, you will be trapped into paying for another whole year regardless of: expressing (in writing) little to no ROI months prior to your renewal date, requesting to cancel 2 days after your account is renewed and you were only made aware due to the bill coming in, the employee who signed up for and managed dealing with Houzz is no longer with your company. They will avoid email communication so nothing is in writing.
According to another complaint filed by the Better Business Bureau, “They don’t let you cancel your membership. We let our account manager know that we wouldn’t renew the membership. He mentioned that we need to let him know when the annual term was about to finish, and now 2 months later, he just sent an email saying that they won’t cancel the membership because we need to let them know 30 days before, and that we’ll have to renew an entire year! Since then we’ve been trying to reach out Houzz, but they don’t have any phone number to call.”
Dan Ivancic, Director of Marketing at Advantage Lumber, said “I signed a contract for one year that cost $1,625 per month. I’ve managed millions of dollars in ad spend across hundreds of contracts. I didn’t expect to get taken advantage of by Houzz, but they went out of their way to do so, rather than delivering what they promised and what we paid for. They forced us into an advertising platform that was never meant for a business such as ourselves. When I pointed all these facts out, they simply dangled their contract in our face and would not let us back out of it.”
Ivancic also says Houzz price gouges its customers for items. According to Ivancic, “Their shopping platform has major flaws, and they are price gouging.” Ivancic explained his business sells deck tile connectors for $2 each, while Houzz charges $31 for the same item.
We reached out to Houzz for comments, and they have been unresponsive.
If Houzz truly cares about the contractors they represent, they should immediately suspend all charges for those who are out of work and give contractors the option to cancel their contracts with the least possible penalties involved.