Ryan Serhant, Associate Director Back Commission Advance Startup
RLTY Capital is supported by Chris Schmidt of Ryan Serhant and Related Companies. (LinkedIn via Schmidt, Elwell Kennedy Capital, Serhant)
A fintech startup is borrowing some local star power from famed broker Ryan Serhant from front agent commissions across New York City.
RLTY Capital will buy up to 80% of an agent’s commission on a pending transaction and pay that cashout within 24 hours, according to the company, which launched its services on Thursday. Its backers include the venture capital arm of Serhant’s eponymous company, 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 the pandemic has revived the company’s efforts.
“Once we come out of the pandemic, this will be a service that… a large chunk of agents will want and need,†said Elwell, who is also leading business growth for Elegran. He underlined the gap between the signing of the contract and the conclusion of certain commercial and residential transactions.
Commission advance companies, which buy the right to collect an agent’s commission in exchange for cash, often see greater demand for their services after periods of declining transaction volume. This was the case last year and in the years following the Great Recession. Companies typically advance between $ 10,000 and $ 15,000 and charge a fee of 5 to 15 percent.
RLTY does not place limits on the dollar amount, according to Elwell. And the fees vary based on the amount of commission an agent sells, time to close, and risk rated by RLTY’s proprietary, AI-enabled platform.
Elwell also said that 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 firms in the space. The company’s approval became “a big deal” that prevented many agents from using the service during its testing, so the startup opted to offer to deal directly with the agents or their companies.
“We wanted [RLTY] not be the classic stigma of advancement, â€Elwell said. Another part of the service reputation change was teaming up with Serhant.
“It’s not a product to need money,†Serhant said. “It’s a product to help agents grow their business. “
When asked if he plans to use the service, Serhant replied, “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.