This is the #1 reason I went to Compass, and I didn’t really feel like I had a choice.

When realtors get disrupted, this is the way the big brokerages can survive while the little guys die.

Hoard the listings in-house as ‘private exclusives’, like they do in the commercial real estate. The practice is legal (per the Clear Cooperation Policy) and is a choice for home sellers to make.

The big benefit for sellers is that they don’t get penalized by the days-on-market statistic, which buyers normally consider as the best way to know if the price is wrong after the first week on the market.

Compass has this option available for sellers, as do all the other brokerages, but nobody in management is pushing it around here. It’s used more like a Coming-Soon feature while homes are being prepared for open-market exposure. But there are deals being made.

If there was an organized, committed effort to use it as a survival tool, then I could see 30% of our sales happening off-market. But we’re not there yet.

Maybe next year?

Compass Settles

Nobody was overcharged, but the media will feed the hysteria for another week or two with baseless claims and lies just to attract more eyeballs! Meanwhile, buyers are hurrying up their quest to buy a home before they have to pay their agent’s commission!

Hat tip to Gerry for sending this in:

I haven’t seen any evidence that paying 3% or higher commission to the buyer’s agent would result in a higher sales price. But those homes offering 2% or less commission usually sell for less, though that is mostly due to an overall weak listing agent, not solely because of the rate.

Local Brokerages, Sales & Volume

The general market conditions have appeared relatively healthy over the last few years, but the above demonstrate why brokerages – especially those operating on thin margins – have been feeling the pain.

Volume has dropped considerably between 2021 and 2023:

Top Five Brokerages

The 2-year stats for the whole county were even worse. Sales were down 44%, and volume was off 36%. Even the 2019 county stats were better than in 2023. Sales last year were 37% lower than in 2019, and volume was 3% lower.

Portal Wars

As a battle of words and philosophies rages between major real estate portals, Compass CEO Robert Reffkin on Thursday jumped into the fray and threw support behind the newest entrant in the space,

Reffkin was asked about’s “your listing, your lead” strategy that aims to direct consumers to listing agents, and about Andy Florance, CEO of parent CoStar. “Do you agree with him?”

“Yes,” Reffkin simply replied.

Why Compass

Yesterday, 2,400 Compass agents came to the Rady Shell to hear CEO Robert Reffkin discuss the accomplishments of his clients, the agents. Here are this year’s facts to plug into our presentations:

Compass #1 in sales volume nationwide last two years.

Compass agents sell 2.5x the average agent.

Retention – 98% of Compass agents stayed last year, and 300 who left have come back.

$1.5 billion invested into the agent/client platform.

500+ people in the engineering department improving tech daily.

$1.0 billion in Compass Concierge money spent to maximize the sales price for sellers.

$1 trillion in sales volume in less than ten years.

High tech and high touch!

The support that Compass agents receive from the brokerage enables us to be more effective with helping our clients, and run our businesses with high efficiency!

Robert is one heck of a leader. This year, he has visited 40 metro areas to meet with agents in most of the 200+ Compass offices. Then on the weekends, he takes his wife and three little kids to open houses around the NYC area in support of Compass agents – including on Mother’s Day!

But in the end, it is up to the individual agents to perfect their own presentations. The best thing any leader can do to support highly competitive people is to create a contest!

There will be local, regional, and national prizes for the agents who deliver the most buyer-broker agreements and sales in 2024 – with the top ten agents being flown to NYC for dinner at Robert’s home!

Compass Reports

This is for all the people who said it would never work – which includes a shocking number of industry insiders who didn’t give Compass any chance of making it.

Compass says it brought in $51 million more than it spent in the second quarter, the first time the residential brokerage has been cash-flow positive since going public in 2021.

The company still posted a net loss – which includes stock-based compensation and other expenses – of $48 million, according to its second-quarter earnings. That loss, however, was a big improvement from the same period last year, in which it lost $101 million.

Reaching cash-flow positivity was a key target the company had declared for itself last year, and Compass said it met the goal while still growing market share and agent count, according to its earnings report. It posted an adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — of $30 million, up from $4 million a year ago.

“We have made up most of the free cash flow deficit from Q1 2023 and we believe we are in position to achieve our goal of being free cash flow positive for 2023,” said Compass CFO Kalani Reelitz.

Second-quarter operating expenses came in at $1.5 billion, down roughly $600 million from a year ago. Compass has a goal of getting to $900 million in operating expenses, which Reelitz said it will hit in the fourth quarter.

The company’s commissions payable also increased to $98 million last quarter, an increase of $41 million over the prior quarter but in line with the $96 million figure a year ago.

The firm’s revenue fell 26 percent year-over-year to $1.5 billion, with transactions falling by a fifth and fewer deals in luxury home markets such as California.

Compass finished the second quarter with $335 million in cash and cash equivalents, but in July paid back the $150 million draw it had taken on its revolver loan.

The results reflect efforts from a year-long cost cutting campaign announced in the earnings call this time last year, when Compass pledged to cut $320 million from its budget. As part of that pledge, it stopped offering new agents cash and equity incentives, one of its most effective recruiting tools.

Compass was the top residential brokerage in the country by sales volume in 2022, according to RealTrends. As losses mounted — the firm lost over $600 million last year, up from $500 million in 2021 — critics and rivals seemed to relish in the company’s struggles and questioned its viability.

This is a developing story. Check back in for updates.

Local Compass

Most of the Compass agents here are working in North San Diego County’s coastal region – there are only a handful of those mentioned above that aren’t in the Compass offices from La Jolla to Carlsbad. P.S. For those who get Jessie’s rankings of the top producers in the county and wonder why we’re never included, it’s because of the way her software collects the data. Donna is always listed as the second agent on our listings, and they calculate the rankings per agent – so our volume is split in half.

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