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GoldenKey Raises $1.75 million

GoldenKey recently raised $1.75 million (TechCrunch). What’s the model?

Instead of a commission, you pay an agent a flat fee for the services you need and get a 3 percent rebate when you buy or sell a home with the help of one of the company’s partner agents (though some states like Oregon don’t allow for this rebate). That may not sound like a crazy idea, but in the rather conservative real estate world, that’s akin to a revolution.

Here’s a video pitch:

The no commission real estate network. I wrote about the commissions topic in depth a couple years ago, and I’m not sure anything has changed since.

Many consumers would love to pay for only what they need, but the two core related questions are:

  1. How do you reach consumers and win their trust? People use their friends (who are agents), because they already trust those people. Trust takes years and years to build (ask Redfin).
  2. Do the incentives line up for those doing the work? Ie do they make enough money to make it worth their while?

Yes, a large percentage of the 2 million licensed agents are not making much money. That said, many aren’t very good at their jobs. Why do they deserve to make more money? More importantly, how do we know they are qualified to do high quality work?

It seems the rise of teams is tapping into this same dynamic, while preserving the commission model. Having been a business owner for several years now — I can unequivocally say running your own business (of any kind) is not for everyone. I believe more agents should join teams to make better use of their talents, and add peace of mind to their lives. Yes, that limits their potential income — but it also limits risk and stress.

Don’t get me wrong, I believe there is a market for GoldenKey. I just don’t think it’s massive.

Comments welcome…

About Drew Meyers

Founder of Geek Estate Blog. Zillow Alum. Travel addict & co-founder of Horizon. Product & Marketing for 360modern. Social entrepreneurship & microfinance advocate. Fan of Red Hot Chili Peppers and Kiva.

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  • I think the idea makes a lot of sense. They will still not be a huge part of the market because sellers might feel another agent can get them more money, even though they charge them a commission. They might feel the commission only agent has more motivation, which is probably true.

    You said:

    “Yes, a large percentage of the 2 million licensed agents are not making much money. That said, many aren’t very good at their jobs.”

    I don’t think you have any data to back that up. I also have no data, but just from experience I know a lot of good agents and the only reason they do not have a lot of business is a marketing issue, not an issue being a good Realtor when it comes to working with clients and knowing our contracts.

    • I know a fair number of agents, and there are certainly a percentage of them that I don’t feel are highly qualified/skilled. There are many who are just looking to make a buck, and will do whatever is needed to close a deal.

      Those that are part time agents, will simply never be as good as someone who devotes their lives to it. There’s a clear distinction between a “hacker” and a “professional engineer”. I’d be fine with a hacker building a side project that really has no potential business/personal downsides — I would not be fine paying a hacker to build a website/app that my business relies upon on a daily basis.

  • I’m not sure I could even add to that–well said.

  • I was thinking about doing this sometimes last year, the problem that I discover is who will pay the agent if the deal fell thru ? If the consumer will pay first , will they willing to pay for a service upfront when they can pay in the back elsewhere?
    Maybe…..I don’t know. I compare it with how we always pay attorney regardless of the outcome of our case. Changing people perception (from paid later to pre-paid) needs lots of money and time. I have none of the first but plenty of the second.

    • …which is why commissions are the way they are.

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