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Ideal Agent, a Tampa startup that uses artificial intelligence to recruit top real estate agents, has raised $20 million since its seed round and will be launching a Series B round in the next quarter.
The real estate tech platform works by connecting home sellers with top-rated agents at a low commission rate of 2% and delivers a seamless experience.
The launch of the new round comes after Ideal Agent raised $11.6 million last August with its devoted lead investor, Incenter LLC, which allowed Ideal Agent to continue raising funds.
“They have all of the services we need- mortgage, title … the money is just strategic, and they’ve been a great company,” Ideal Agent CEO Steve Johnston said.
“A real estate transaction is very disjointed. You have seven different things that have to happen – you have appraisals, home inspection, and the title and insurance – and most of the time, those people [involved] don’t know each other, they are not communicating together and sometimes they are working against each other,” Johnston said. “We call this [our] platform Connect, we are connecting all those parties in the real estate transaction.”
Despite the pandemic causing home showings to dwindle while the prices of homes escalated, the Ideal Agent team has been able to ride the wave of uncertainty and come out on top by taking advantage of the brand-building opportunity.
“When Covid hit, we had a decision to make – we could’ve either preserved cash and stop the advertising or, we kept the advertising. What happened was people went home, advertisers pulled out of the market because they couldn’t sell, our rates went down on the costs and the ratings went through the roof,” Johnston said. “We couldn’t show houses, we couldn’t list houses, but people were still calling and wanting us, and we took off during Covid. I have never looked back.”
Prior to starting Ideal Agent in 2016, Johnston founded Home Discovery, a brokerage with agents, that flourished in the early 2000s, but didn’t survive the market downturn in 2006 as activity became deathly quiet.
The CTO, CFO and other executives previously with Home Discovery became the founding members of Ideal Agent. Although Ideal Agent was born out of the initial Home Discovery venture, it is different from Home Discovery as it’s a referral network.
“We did Ideal Agent to fix the flaws of the previous model to last [through the] different business cycles,” he said. “We embrace agents and only work with the very best. Technology will not replace agents. Too many emotions are involved in the transaction, too many things can do wrong.”
However, the technology does enable the real estate agents to work more efficiently while the real estate agents remain center-focused on the transactions. The concept of having top agents essentially all over the map that agree to Ideal Agent’s commission model, which has been proven to scale, has been a game-changer, Johnston said.
He explained the agents are coached by a specific team and have a high-touch business model. The agents and their teams in the Ideal Agent network sell on average about 100 homes a year.
Johnston said another key strategic play at Ideal Agent is buying directly from media networks to build the brand.
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