Another day, another hybrid brokerage funding round.
Dallas-based Door, a high-tech brokerage that pockets only $5,000 for representing buyers and sellers, has raised $2.3 million to build on the momentum of a promising first year.
It thinks it can succeed where other hybrid brokerages have failed, in part, by providing the same level of handholding as a traditional firm.
Door closed about 100 transactions in 2016 and is on pace to generate more than $1 million in revenue this year, according to CEO Alex Doubet, a Harvard grad and real estate investor.
Door currently employs eight salaried agents who earn base salaries approaching $50,000, plus a small fee on every closed transaction. They use common real estate tech tools, such as transaction management software, to increase productivity, with the average agent closing more than four transactions a month, according to Doubet.
Seller clients receive the full range of traditional services, including in-person guidance throughout a transaction, photography and a yard sign and lockbox, according to Doubet. The company also throws in a 3-D home tour.
It collects a fee of $5,000 while advising sellers to offer a 3 percent commission to buyer’s agents.
Homebuyers can sign up for listing alerts on Door’s website and see the exact rebate they would receive for purchasing any property with Door.
If a buyer client purchased a $1.5 million home, she would receive $40,000 of the $45,000 buy-side commission, with Door pocketing the remaining $5,000, he said.
The company is also building a tool that will improve communication between its listing and buyer’s agents, about which Doubet declined to provide details.
CEO Alex Doubet talks doubters
Doubet is well aware that brokerages with similar business models have struggled to gain traction. Criticism of hybrid brokerages typically takes the form of “done before,” “never works” and “gone tomorrow,” he acknowledges.
But he thinks Door can succeed where others have failed because it’s launching at an opportune time and provides the handholding expected of a traditional agent.
“Just because no one has done it doesn’t mean that no one can do it,” he said.
The U.S. and Canada “are pretty unique in really they’re only the two first-world countries where it costs 6 percent to sell your house,” whereas commissions are closer to 2 percent in some European countries, he notes.
Door recruits and trains first-time agents. It counts on retaining talent by offering a nurturing work culture and the opportunity to make close to $100,000 a year. Employees must sign a non-compete clause.
The company is generating some business through online marketing, such as Facebook and search engine advertising, and referrals have grown rapidly over the last year, Doubet said.
News of Door’s funding round comes after British hybrid brokerage Purplebricks raised more than $60 million to expand to the U.S. and Trelora, another hybrid brokerage, bagged $4.4 million with plans to branch out from Denver.
