Nikonomics - The Economics of Small Business 137 - How to Avoid Losing Money on Commissions When Selling Your Property with Amanda Orson
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Mar 24, 2025 In this engaging discussion, Amanda Orson, founder of Galleon, shares her vision for disrupting the outmoded real estate industry with a commission-free marketplace. She explains the frustration with outdated practices and high commission rates, revealing a staggering $100 billion spent on commissions in 2022. Amanda emphasizes the importance of identity verification in transactions and introduces innovative strategies to connect sellers with vendors directly. Her lean approach to business, termed 'seed strapping,' hints at a revolutionary path for real estate.
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Innovator's Dilemma in Real Estate
- Tech companies haven't disrupted real estate due to the "innovator's dilemma."
- Incumbents like Zillow profit from commissions, and disrupting the model would hurt their revenue.
Zillow's Business Model
- Zillow makes a significant portion of its revenue, $1.2 billion, by selling leads to real estate agents.
- Listing "by owner" on Zillow is difficult; leads are resold to agents, potentially costing sellers 3%.
Marketplace Challenges
- Founders creating marketplaces face the challenge of attracting both buyers and sellers.
- Zillow opted to maintain the existing marketplace and sell leads, rather than building a new one.