DALLAS — Would you list your home with a fledgling real estate company if it would save you thousands of dollars in sales commissions?
Alex Doubet is betting you will.
The 28-year-old Harvard grad intends to upend the way people buy and sell their homes. And he’s apt to stir up a hornet’s nest in the process.
Six months ago, Doubet launched Door LLC, a full-service brokerage that charges a flat $5,000 commission for either side of a home sale, compared with the 6 percent typically charged by real estate agents to sell a house.
Doubet’s idea came to him after his mother sold her two-story converted duplex in suburban Dallas for $857,000 in the conventional commission way. She didn’t get so much as a thank-you note, much less a bottle of wine, from the two agents who pocketed a combined $51,400.
“It was a bigger commission than the average household income in Dallas. It was nuts,” says Doubet, who has already been involved in several successful early ventures and a couple of real estate flips. “It was a presumptuous transaction. And that ticked me off.”
Doubet’s model is quickly gaining traction, albeit from ground zero. With a recent closing, Door’s transactions now total more than $4.1 million.
And here’s why.
Door’s commission on a $400,000 house would be $10,000 if it represents both the seller and buyer vs. $24,000 in traditional commissions. The more expensive the home, the greater the savings. The tipping point is a $168,000 sales price.
“When you see all the nicely printed collateral from the brokers around town, the pictures and the big-hair poses, that’s all nice, but it doesn’t do anything to sell your house,” Doubet says. “It’s somewhat akin to saying, ‘I’m going to sell your house by running an ad during the Super Bowl.’ You want to get in front of people who are actually going to buy your house, not just spray and pray everywhere.”
Instead, Door is into social media and online marketing. It’s focusing on the 11 ZIP codes in the Dallas area.
So far, its sweet spot has been homes $500,000 and higher.
By early July, Door will have handled a dozen “sides” of transactions, bringing in $60,000 in revenue.
More important in this inventory-starved market: Doubet says he’s had twice as many new listings come on board in recent weeks as Door sold in the past five months.
That’s giving him the confidence to project 2016 revenue of $400,000.
“We’re going to ride two gigantic trends,” says Doubet. “Ninety percent of people across all ages, all demographics use the internet when they’re looking for houses. And millennials are now the biggest homebuying population.”
Brandon and Kate Marks were Door’s first millennial buyers.
The Markses, who’d been renting a one-bedroom, closed on their dream house in early March.
They’d been disappointed by a real estate agent they’d been working with.
“She was just trying to sell us any home instead of trying to help us find value,” said Brandon.
Brandon mentioned the couple’s frustration to his buddy over coffee one morning. “Alex said, ‘Dude, why don’t you use us?’ We’ll provide the exact same experience at $5,000. And you’ll save a ton of money.'”
Marks didn’t really believe Doubet but figured what the heck.
“I thought, ‘OK, Alex is offering a bare minimum-type service so that he can charge very little.’ That was definitely not the case. We were taken care of from the beginning to the bottle of wine and a handwritten note waiting for us at the end.”
The couple was able to make the deal work because the seller came down from the asking price, thanks to the reduced buyer’s commission, Marks says.
Doubet is investing heavily in technology to differentiate Door. The currently rudimentary website will have its first real bells and whistles this summer, he says, with more to come as the company grows.
The website is oddly named Thisisdoor.com, because Door.com is owned by squatters, who recently turned down $500,000 from someone else to release the URL. Doubet certainly didn’t have that kind of money to throw around.
So far, Door hasn’t faced much resistance because real estate agents who bring buyers to Door-listed homes typically get their 3 percent commission.
“We just had a house that went under contract for close to $800,000. So we’re getting $5,000 and the buyer’s agent is getting 24-ish thousand. Doesn’t make me angry, because I know in the long run we’ll win.”
But probably not without a battle.
Taxi companies didn’t pay much attention to Uber as a startup.
For now, that’s how the real estate industry is viewing flat-fee brokerages like Door.
Flat-fee commissions represent only 3 percent of the market, says Adam DeSanctis, spokesman for the National Association of Realtors. That figure has remained, well, flat for several years.
Sales commissions are always negotiable and, last year, 69 percent of home sellers did just that, DeSanctis says.
That may be, but the national commission average was 5.26 percent last year, according to Real Trends, which tracks industry statistics.
Jim Fite, president and CEO of Century 21 Judge Fite Co., says his agents earn every penny of their commissions.
“A strong, knowledgeable and experienced Realtor can save or earn their clients many thousands of dollars,” says Fite. “Real estate is not like buying a commodity like a car or groceries. Each property is unique and may require different skills than the property around the corner.”
Nobody’s getting a commission at Door. Everyone is earning sweat equity, says Doubet, who is on a straight $60,000-a-year salary.
Door, which does business as Door Texas LLC because of a name conflict, has a licensed broker and three licensed agents in addition to Doubet.
Door pays its employees more than the $50,000-plus income that the U.S. Bureau of Labor Statistics says is the going rate for an established residential agent, Doubet says.
So far Doubet, who owns 60 percent of Door, has raised $800,000 in seed capital. Just under a third of that was invested by Phillip and Don Huffines, the twin co-founders of Huffines Communities, which develops apartment complexes and mixed-use projects.
They got to know Doubet through Don’s son. After doing an intense grilling, the brothers decided to invest $125,000 apiece.
“There are a lot of good ideas floating around looking for venture capital funds,” says Phillip Huffines. “But more important than the idea is how it’s going to be implemented. Who’s the jockey riding the horse?”
Huffines said that requires someone not only with vision, but also with the tenacity to overcome all the obstacles.
“Alex is the guy who can make that happen.”
AT A GLANCE
Title: CEO, Door LLC
Education: Bachelor’s degree in history with a minor in economics, Harvard University, 2010.
Door’s commission compared with the standard 6 percent:
Door’s commission to represent one party:
Door’s commission to represent one party:
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