A fintech startup is borrowing some local starpower from celebrity broker Ryan Serhant to front agent commissions throughout New York City.
RLTY Capital will purchase up to 80 percent of a commission from an agent on a pending deal and pay that cash out within 24 hours, according to the company, which launched services Thursday. Its backers include the venture arm of Serhant’s eponymous firm, Related Companies’ senior vice president Chris Schmidt and Elegran CEO Michael Rossi.
Briggs Elwell, CEO and co-founder of RLTY, said the idea has been in development since 2019, but that the pandemic jump-started the firm’s efforts.
“Once we come out of the pandemic, this is going to be a service that … a large portion of agents will want and need,” said Elwell, who also leads corporate growth for Elegran. He pointed to the lag between contract signing and closing in some commercial and residential deals.
Commission advance companies, which purchase the right to collect an agent’s commission in exchange for cash upfront, often see greater demand for their services after periods where deal volume dwindles. That was the case last year and in the years following the Great Recession. The firms generally advance between $10,000 to $15,000 and charge a fee of between 5 to 15 percent.
RLTY does not place limits on the dollar amount, according to Elwell. And fees vary depending on how much of an agent’s commission is for sale, the timeline for closing and the risk assessed by RLTY’s proprietary AI-enabled platform.
Elwell also said agents using RLTY to advance part of their commission are not required to obtain approval from their brokerage firm, which is required by many other companies in the space. Firm approval became “a big pain point” that prevented many agents from using the service in its testing, so the startup opted to offer to deal directly with agents or their firms.
“We wanted [RLTY] to not be the classic stigma of an advancement,” Elwell said. Another part of changing the reputation of the service was teaming up with Serhant.
“It’s not a product for needing the money,” Serhant said. “It’s a product to help agents grow their businesses.”
When asked if he planned on using the service, Serhant responded, “I should.”
RLTY plans to roll out its services in other markets later this year, and is also developing a suite of financial products for developers.