California real estate startup Reali is shutting down, with plans to lay off most of its employees on Sept. 9. The firm is the latest to fall victim to rising mortgage rates and a drop in home sales.
The San Mateo, California startup cited “the challenging real estate and financial market conditions and unfavorable capital-raising environment” as reasons for shuttering its business that was founded in 2015 by Ami Avrahami and Amit Heller.
“Active real estate transactions will continue to be supported through the end of the year by a small team of employees,” the company said in a release.
The startup offers power buying services, cash offer programs and has a lending arm, Reali Loans, which provides mortgage financing in 14 states. After launching its flat-fee brokerage in 2016, the firm acquired startup mortgage lender Lenda in 2019, which it integrated into Reali Loans.
Reali is in conversations with companies that are interested in acquiring parts of its business, including mortgage origination, title and escrow and power buying, the startup said.
The firm’s plan to shut down its business comes less than two years after it expanded to San Diego after acquiring California real estate brokerage TXR Homes, with 90 agents in January. Since 2016, Reali has raised more than $290 million in funding, with its latest $100 million raise in August 2021 led by Zeev Ventures.
At the time of the funding, the company said 180 employees worked in the U.S. and 25 in Israel. In March 2020, when real estate transactions dropped at the start of the pandemic, the firm cut 50% of the workforce and dropped to less than 20 employees in Israel.
A total of 33 broker associates and 227 salespersons are affiliated with Reali’s San Mateo headquarter office, according to the California Department of Real Estate.
The company didn’t respond to questions regarding the size of the upcoming layoff in September and the total number of employees.
Following a slowdown in the housing market, a number of venture capital-fueled real estate companies are laying off staff. Flyhomes laid off 20% of its employees in July, with former employees claiming it eliminated 200 positions.
“Buy before you sell” firm Homeward also issued pink slips to about 20% of its workforce this month, despite having the “strongest month ever” in May and solid second-quarter results.