Ideal Agent, a Tampa startup that uses artificial intelligence to recruit top real estate agents, has begun a capital raise that will give the company funds to grow its team, advertise and build out its technology.
The company already has raised $760,000 from six investors, according to a Sept. 10 filing with the U.S. Securities and Exchange Commission, under the corporate name Lead & Prosper LLC.
It has a total of $1.5 million committed from local business leaders and expects to reach $2 million to $3 million in the next 45 to 60 days, said Steve Johnston, founder and CEO.
Ideal Agent also is a founding member of Embarc Collective, a startup hub in downtown Tampa.
Ideal Agent connects home sellers with top-rated agents at commission rates as low as 2 percent, which is 75 percent less than the traditional 6 percent commission a home seller pays.
If that sounds familiar to Tampa-St. Pete residents who’ve been around for a while, it’s because Ideal Agent is an evolution of the idea Johnston implemented at an earlier Tampa company, Home Discovery.
Home Discovery, a brokerage with agents who took 2 percent commissions, flourished in the early 2000s but floundered in the recession of 2008. Real estate agents who charged the traditional 6 percent commission often would not show Home Discovery listings, and when real estate sales slowed in the economic downturn, the overhead became too much, Johnston said.
“I’m finishing what I started. It’s been 17 years,” Johnston said. “I’m very passionate about real estate. Quite a few of the original people who were at Home Discovery have come back to help with this one. We’re excited to have a different angle that gets better results.”
His new company, Ideal Agent, is different from Home Discovery, because it’s a referral network.
“We match with the top 1 percent agents across the country. They can be from any brokerage, Keller Williams, RE/MAX, Compass. They have agreed to do business with us because we send them a lot of business. Their sign goes in the yard. Since they are top agents, they are charging 6 percent or more to their normal clients and they are listing our clients at 2 percent. None of the other agents know that our clients are getting a discount, so we fit into their inventory, which gets our clients great results. They’ll sell homes faster, they’ll sell for more money and the best part is they get it at a lower commission. We solved all the issues that we had at Home Discovery,” Johnston said.
Ideal Agent also offers what Johnston called a fair commission to agents representing buyers, an average of 2.5 percent nationwide. That means a home seller could pay up to 4.5 percent, but that’s still 25 percent lower than the historic 6 percent commission, he said.
In addition to using artificial intelligence to recruit top agents, the company has a performance-based algorithm to select the best agent for a particular home sale, similar to the technology Uber uses to choose a driver close to a prospective rider.
“Say you want to sell a house for $300,000 in St. Pete. We know which agent will do the best job for you and who we are going to match you with, based on how they perform in our network,” Johnston said.
The residential real estate industry has undergone big shifts in the past several years that paved the way for Ideal Agent.
“There’s been Zillow and Realtor.com that sell leads,” Johnston said. “We don’t look at it as leads, as much as we are giving qualified referrals out. It’s much more standard now than in the last decade. Our model is the future. Great agents know that a listing or referral is hard to find and that we give quality ones.”
Ideal Agent has 450 agents in its invitation-only nationwide network. Agents must meet a series of minimum qualifications and pass an interview. The agents and their teams in the Ideal Agent network sell between 100 to 300 homes a year, compared to an average of 5 transactions annually for inexperienced agents, Johnston said.
Ideal Agent currently has a staff of 11, including Chad Semans, who is co-founder and vice president of sales. Semens previously was an executive at Home Discovery. Johnston expects to hire 20 to 30 employees over the next 12 months, primarily for sales and service jobs, with starting salaries in the $60,000 to $80,000 range.
The company plans to move the team to Embarc Collective when it opens early next year.
“I like their mission and I believe that we can fit in nicely over there. I like what they are doing for the community. They want to grow Tampa and make it better and we’d like to be part of that,” Johnston said. “We’re excited to get our funding and grow this and grow another Tampa success story, particularly in the real estate technology area.”