Reali, a real-estate startup has announced it started shutting down and will be laying off most of its workforce on September 9, as reported by TechCrunch.
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BRISTOL, ENGLAND - OCTOBER 08: A view of housing on October 8, 2014 in Bristol, England. On the first anniversary of the introduction of second phase of the Help to Buy scheme, which provides a government partial guarantee on high loan-to-value mortgages, a new survey from the The Centre for Economics and Business Research (CEBR) claims that house prices in 2015 are set for their first decline since 2011.
A statement from co-founded and chairman Amit Haller said in a press release, "The challenging real estate and financial market conditions and unfavorable capital-raising environment led to the decision to wind down operations."
The company was one the companies that offer "buy before you sell" and "cash offer" programs to homeowners. It was founded in Israel in 2016 due to their personal frustrations with the service quality by agents and the high commissions they paid out. Reali's goal was to make real estate buying and selling process more transparent, professional, and honest.
They provided customers with one coordinated transaction to buy and sell properties, thus, eliminating resale contingencies and paying two mortgages at once.
Ever since its launch, Reali has over $290 million in debt and equity funding, and its last raise was a $100 million Series B in August 2021 led by Zeev Ventures in participation with Akkadian Ventures, Signia Ventures, and others. During that time, Reali has over 180 employees, according to CTECH by Calcalist.
The Employees
According to the company, their employees will continue to support active real estate transactions through the end of the year. They also added that they are in talks with other companies that have expressed interest in buying specific parts of its business, such as mortgage origination, power buying, and title and escrow.
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The Real Estate Environment Today
Reali isn't the only startup struggling today. With the interest rates and inflation, along with inventory shortages, many startups find it a challenge to push through with their efforts.
Aside from Reali, Homeward laid off 20 percent of its workforce. Also this year, better.com has laid off thousands of employees.
Inflation is a nationwide trend that has had a negative impact on real estate as well. It is considered a precursor to interest rate hikes, which has been proven to prove the largest annual percentage increase since the 1980s. Because of this, economists have predicted that rates will rise this year.
With interest rates rising, it is also expected that the mortgage rates have been pushed up. Add to that the fact that inventory restrictions are not in favor for sellers, it is no surprise that startups like Reali shut their doors.
To be able to survive, the startups have to adapt to the market. They have to compete against realtors who have been in the market for decades and have the experience to provide a service that is different from others.
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Written by: April Fowell
