To all the agents in the house,
At the start of 2021, the virtual cocktail talk of real estate was Compass. The SoftBank-funded brokerage planned to open up its books and go public. Today, people interact somewhat more in real life, Chicago radio stations are already playing Christmas music, and Compass has neither imploded WeWork-style nor proven its legion of critics wrong.
In markets from Pittsburgh to Kansas City, Compass continues to be a force to be reckoned with, recruiting big names away from established brokerages. Many talented agents are joining Compass. The brokerage is disrupting markets across the country. But back in the company's New York headquarters, Compass continues to lose money.
Compass lost $100 million in the third quarter, a quarter where its closest apples-to-apples rival, Realogy - another national brokerage that focuses on the resources it gives agents - made $114 million. While Realogy made money each quarter in 2021, Compass has lost money each quarter.
In order to turn matters around, Compass is copying the playbook of Realogy and Home Services of America by adding title and mortgage services. They acquired a handful of title companies, though consumers who use those title services after availing themselves of a Compass agent "sits at the mid-single digits," according to the company's third quarter earnings call.
Compass also announced a mortgage joint venture with Guaranteed Rate. Guaranteed Rate already has identical partnerships with Realogy and @properties. Compass has said they will launch the joint venture, called OriginPoint, by the end of this year.
Though Compass increased revenue to $1.74 billion in Q3 – it should be noted that more than 80% of gross revenue is returned to real estate agents – its overall market share actually fell nationally to 5.4% in Q3, down from 6.2% in Q2.
Agents, what are you seeing from Compass? And have your thoughts on the brokerage changed after six months as a publicly traded company?
Please email me your thoughts to mblake@housingwire.com.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
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