Did you know that just one commercial real estate transaction can involve multiple transactions with multiple brokers, sometimes from different firms that all have different payment and back office systems? Oh, and each of those brokers likely has a different commission structure as well, which could change halfway through the deal depending on whether they surpass certain baselines.
It’s enough to make anyone’s head spin, even someone who likes calculations and Excel. According to Turner Levison, who’s familiar with the industry due to exposure to his father’s successful commercial real estate brokerage, most brokerages have basically jerry-rigged some sort of management system.
“All of the data that is important to these brokerages is stuck on spreadsheets or in papers.” After a comprehensive look into the operations of 100 firms, Levison found that the most common solution is employing one or a few data-entry back office workers whom, armed with calculators and pen-and-paper, have created their own system and could leave the firm in shambles should they leave.
This is despite the fact that more money is flowing into these brokerages than in a long time. Despite rumors of a bubble, the commercial construction industry has been steadily expanding for eight years. In 2017, the industry built almost $87 billion worth of new commercial properties.
Levison is familiar with legacy industries. He left JP Morgan a few years into his career after speaking with entrepreneur and Atlanta Ventures partner Jon Birdsong, who told him that, as a workhorse in the financial industry, he was “riding a dying horse.”
“I was on the wrong side of the equation when it comes to technology,” says Levison. “So I left.”
Levison joined Birdsong as the first employee in a new company and quickly became immersed in the startup world. But after a few years, he got the itch to acquire the “entrepreneur” title himself.
He had already identified the inefficiency in the CRE industry, thanks to his father (now his co-founder). Together, the two explored the market to see what was already out there and came upon the imperfect, but promising, Lease.com. In 2015, they acquired the company’s intellectual property and set about building CommissionTrac.
CommissionTrac’s platform allows CRE brokerages to automate all the complicated accounting processes they had formerly been performing manually. An administrator enters the data of each agent in the firm, including their current deals and commission structure. Once a deal is complete, they enter the details and the platform automatically takes care of the commission split, tracks when a payment has been made and displays status of incomplete payments.
The dashboard can be viewed as an individual broker, so you can see the payment status of all of your deals, or as a brokerage owner to view the high-level state of the firm as a whole and generate financial reports. It even integrates with QuickBooks so payments can be scheduled from the platform.
CEO Levison says they recently conducted a case study on a small brokerage using the platform, and found that it was saving the administrator 4-5 hours of time a week.
The team, now four employees, started small on the sales and marketing front in order to ensure they had the product right. Since a full release in mid-2017, they have onboarded over 20 brokerages with 160-plus agents using the platform; they’ve processed 2,200 deals.
They also proceeded with caution on the fundraising front, remaining bootstrapped until their recent acceptance into the Techstars Atlanta accelerator, which comes with a $120,000 investment. Levison says they looked at real estate tech-specific accelerator programs but, ultimately, wanted to connect with local resources and continue building the company in Atlanta.
Once the program is over next month, Levison will turn his attention toward raising a seed round for hiring on the customer service and sales front. The team will focus on improving the product with features customers are asking for, like custom reporting and building payments into the platform itself.
Levison says that, if they get this right, the potential market is enormous, as they have already build a more robust feature set than any competing, industry-specific company. The startup has already been recognized by the industry in the 2017 CREtech Real Estate Tech Awards, where they placed second in the “Best Overall Real Estate Tech Site” category; Levison won the designation of “Most Innovative Real Estate Tech Entrepreneur/CEO.”
“Microsoft Excel is actually our biggest competitor,” he says.
