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I've seen several of our old Agents already bailing out. Their stock price when they went public was around $22 a share and today is hovering around $6 a share and continues to drop. Hopefully all the Agents who joined with stock options cashed those out in the beginning.
They seem to be just another one of the new young companies that may find being a "disruptor" in the business is not profitable.
What is Compass? Never heard of a company named that before, except for a local bank.
It's one of the newer "disruptor" companies that Brad Inman loves to promote. They aren't in my market so I'm not sure what's so disruptive or innovative about them. Some of the other posters here may be able to discuss that in more detail.
As much money as there is perceived to be in real estate, company margins have become quite small but they have been shrinking for agents as well. Disruptors that try to disrupt on a lower pay scale and make it up in volume will likley have a very hard time surviving the next downturn.
It's one of the newer "disruptor" companies that Brad Inman loves to promote. They aren't in my market so I'm not sure what's so disruptive or innovative about them. Some of the other posters here may be able to discuss that in more detail.
They aren't in my market either. They seemed like just another brokerage to me so I wasn't sure what was so disruptive about them.
They are definitely in our market (Greater Boston). For the first few years they had just one or two offices, the largest one now w/500 or so agents & a lot of teams. I have seen agents get woo-ed with big checks & promises, and surprisingly not many have become disappointed or said they didn't deliver. A few went back to where they came from, but Compass continues to grow here.
Now they are adding smaller offices in select markets, targeting (and successfuly recruiting) big agents & teams to migrate to them. I've heard about seamless on-boarding & "fantastic technology" from some people I know that have made the move.
So if you see the name pop up in your market...watch it closely! They have eaten up market share here pretty steadily since appearing. Lots of talk about "where the money comes from", and I have no clue, but it's been interesting to watch.
It's one of the newer "disruptor" companies that Brad Inman loves to promote. They aren't in my market so I'm not sure what's so disruptive or innovative about them. Some of the other posters here may be able to discuss that in more detail.
I don't know why Inman keeps saying they're so disruptive. It's just a traditional brokerage operating with pretty much a very traditional brokerage model.
Quote:
Originally Posted by Brandon Hoffman
As much money as there is perceived to be in real estate, company margins have become quite small but they have been shrinking for agents as well. Disruptors that try to disrupt on a lower pay scale and make it up in volume will likley have a very hard time surviving the next downturn.
Redfin is losing money hand over fist. I just don't understand why VC's continue to pump money into companies that just flush it down the toilet. I'd be curious to know how much national market share Redfin has and what the trend has been on that. If they're gaining market share at a decent clip I can understand it, but they're still a fairly small player at least where I am.
Quote:
Originally Posted by Silverfall
They aren't in my market either. They seemed like just another brokerage to me so I wasn't sure what was so disruptive about them.
They basically are just a traditional brokerage. This is why I am always befuddled when someone labels them a "tech company" or a "disruptor." I don't see anything different about them at all.
Anyway, my understanding is that they want to grow market share in major metro areas (NY, Chicago, LA, Miami, Boston, San Francisco, etc., etc., etc.) before they fan out. They have 13 offices in the Boston area and I understand (because they bought an existing brokerage) that they have a HUGE presence in San Francisco.
The only thing I can discern that's different about Compass is that they are FLUSH with cash. They buy existing brokerages to quickly grow market share in a new area and when they can't find one to buy they set up shop and buy the agents instead using MASSIVE signing bonuses.
Like any traditional brokerage, some agents go there and like it and some don't. The larger issue is that if they pay you a signing bonus that you're stuck there for X years or you have to pay it back. Other brokerages are starting to employ the massive signing bonus trick around here to compete. I know many people who have gotten sizeable signing bonuses from Coldwell Banker and also William Raveis (a brokerage mostly in New England and Florida) but those are two brokerages I have no interest in joining.
Quote:
Originally Posted by KJMoves
They are definitely in our market (Greater Boston). For the first few years they had just one or two offices, the largest one now w/500 or so agents & a lot of teams. I have seen agents get woo-ed with big checks & promises, and surprisingly not many have become disappointed or said they didn't deliver. A few went back to where they came from, but Compass continues to grow here.
Now they are adding smaller offices in select markets, targeting (and successfuly recruiting) big agents & teams to migrate to them. I've heard about seamless on-boarding & "fantastic technology" from some people I know that have made the move.
So if you see the name pop up in your market...watch it closely! They have eaten up market share here pretty steadily since appearing. Lots of talk about "where the money comes from", and I have no clue, but it's been interesting to watch.
Anyone who doesn't know "where the money comes from" is VERY much not paying attention or has their head buried in the sand. There are about a billion articles on Compass on the internet. Most of their money came from Softbank's vision fund.
Anyway, they have certainly grown steadily here in the Boston area and as I stated above have 13 locations now across the greater Boston area and Cape Cod.
It's not a bad brokerage to work at. We often trade agents with the office in Wellesley. Sometimes they take one of ours and sometimes we take one of theirs. I interviewed there when I moved brokerages four years ago and the one thing that's clear is that they have money to spend. They offered me a huge signing bonus, to pay for two years of coaching, to buy me a new Macbook Air, etc., etc., etc. The level of customer service they offer to their agents is also very high and over the last few years they've taken a page out of the KW playbook and started saying that their job is to service the agents and that the agents are their clients. They have lots of in house staff for marketing, etc. and their offices are always really beautifully appointed. Their tech is OK. Not appreciably better than any other brokerage as far as I can tell and from what I've seen some of it was not well thought out (ex. their Facebook ad generator is only able to target people who have visited Compass.com or people already in your database). However, they are constantly working on it and from what I've seen their tech has improved somewhat since I initially interviewed there four years ago (back then they didn't even have an app for Android phones).
One of the big reasons I would not work there is that the company initially started out with a Redfin type model and their attitude was "we're just using agents until we can find a way to replace them with tech" and then they found out they couldn't do it that way and they needed agents. So, they had to reinvent themselves. Even though the CEO likes to talk about how his mom is/was an agent he clearly has no respect for us if that was his initial business model. Also, I was told that on a semi-annual or so basis I would need to negotiate my split with the office manager. Didn't love that idea and could see it souring our relationship very quickly.
Again, my feeling is this is just a traditional brokerage but one with a lot of cash at its disposal and they're willing to spend it.
Again, my feeling is this is just a traditional brokerage but one with a lot of cash at its disposal and they're willing to spend it.
What you have posted is the way they have operated in DFW over the last few years buying up many of the top agents and market with huge bonus, stock options, incentives.
With this Sellers Market and Covid it appears the huge amount of funds has dried up for luring agents. They are losing money like Redfin, Zillow, Opendoor and the other new "Disruptors". Their stock price has fallen like many of the others.
Turns out the traditional way of making money in this business maybe the best way (or only) to make money.
I don't know much about Compass; they appear to be a standard agency that's buying existing smaller mom and pop outfits. Probably cutting staff, cutting salaries/commissions and providing worse service, if the usual pattern holds.
But as someone who's been in the market to buy, I can tell you the outfits like Door, Redfin, etc., are poor performers at the job of selling houses. Door - you call up, ask if you can see the house, and they have some "qualifying and signing up" rigmarole you've got to go through. Dude, just tell me, are you going to show me the house, or not? "Well, we have to sign you up with one of our representatives" or some such nonsense.
In my area, where houses are often sold before the sign ever even goes into the yard, the ones that linger there for months unsold are almost always the ones with the weirdo signs from "disruptors". Hey sellers, trying to cheap out on your seller's agent is rarely a good choice! The houses listed with traditional agencies (Ebby, Coldwell, and so on) fly off the market. "It's on the compuuuuuter" does NOT outperform a standard agent with their contacts.
What you have posted is the way they have operated in DFW over the last few years buying up many of the top agents and market with huge bonus, stock options, incentives.
With this Sellers Market and Covid it appears the huge amount of funds has dried up for luring agents. They are losing money like Redfin, Zillow, Opendoor and the other new "Disruptors". Their stock price has fallen like many of the others.
Turns out the traditional way of making money in this business maybe the best way (or only) to make money.
Coldwell Banker is buying agents in my market but they are smart about it. There is, from what I've seen/heard in their bonus numbers, company profit made on years 3-5. Agents have to sign ND and a contract to commit to 5 years and if they leave have to repay the bonus. The bonus really seems to just be a 2 year commission advance, and like I said earlier years it's 2 years to break even for CB and they profit years 3-5. There is also a perfomance clause so the agent can't just take the money and check out. I'd be curious to see if CB actually went after anyone as they try not to talk too much about the signing bonus publicly.
Wonder if Compass structures is similarly? I've done the math. I am pretty sure I would pay more to CB over 5 years, even with the bonus, than I do to KW over the same time period. I was told, off the record, if I was interested I'd get a 6 figure offer but I passed on even meeting with them. My cap at KW is 16k per year and I think I'd probably pay more than that per year in just the 6% royalty to Realogy. To be transparent for anyone working the numbers I sold $34,500,000 in volume in 2021.
I have no idea what fee structure Compass has but I'd hope if they're buying agents they are doing it in way they recoup it over time and not just buying agents. That's bad business for everyone if they are just throwing VC money at agents without a plan to recapture, but I doubt they'd have got this far if they were that bad at business.
With this Sellers Market and Covid it appears the huge amount of funds has dried up for luring agents. They are losing money like Redfin, Zillow, Opendoor and the other new "Disruptors". Their stock price has fallen like many of the others.
I haven't spoken to the local Compass recruiter probably in a year. So it's possible they might not be offering the massive bonuses they once were. I used to be more open to "exploring possibilities" but I just don't have the time to waste exploring moves I'm not likely going to make. Therefore, I don't take meetings anymore with recruiters. Maybe someday I'll entertain the idea of moving brokerages but as of right now I'm quite happy where I am.
Quote:
Originally Posted by rabbit33
But as someone who's been in the market to buy, I can tell you the outfits like Door, Redfin, etc., are poor performers at the job of selling houses. Door - you call up, ask if you can see the house, and they have some "qualifying and signing up" rigmarole you've got to go through. Dude, just tell me, are you going to show me the house, or not? "Well, we have to sign you up with one of our representatives" or some such nonsense.
In my area, where houses are often sold before the sign ever even goes into the yard, the ones that linger there for months unsold are almost always the ones with the weirdo signs from "disruptors". Hey sellers, trying to cheap out on your seller's agent is rarely a good choice! The houses listed with traditional agencies (Ebby, Coldwell, and so on) fly off the market. "It's on the compuuuuuter" does NOT outperform a standard agent with their contacts.
At its heart, being a real estate agent isn't about selling houses. It's about dealing with people. While the role of an agent will no doubt continue to evolve and it's possible commissions may get reduced over time, I don't feel agents would ever totally go away.
Quote:
Originally Posted by Brandon Hoffman
Coldwell Banker is buying agents in my market but they are smart about it. There is, from what I've seen/heard in their bonus numbers, company profit made on years 3-5. Agents have to sign ND and a contract to commit to 5 years and if they leave have to repay the bonus. The bonus really seems to just be a 2 year commission advance, and like I said earlier years it's 2 years to break even for CB and they profit years 3-5. There is also a perfomance clause so the agent can't just take the money and check out. I'd be curious to see if CB actually went after anyone as they try not to talk too much about the signing bonus publicly.
Wonder if Compass structures is similarly? I've done the math. I am pretty sure I would pay more to CB over 5 years, even with the bonus, than I do to KW over the same time period. I was told, off the record, if I was interested I'd get a 6 figure offer but I passed on even meeting with them. My cap at KW is 16k per year and I think I'd probably pay more than that per year in just the 6% royalty to Realogy. To be transparent for anyone working the numbers I sold $34,500,000 in volume in 2021.
I don't know a ton about the Compass bonus but what I do know is that they require the agent to stay with the company a certain number of years or you have to pay them back. IIRC the commission split they offered me was a flat 90% (might have been higher but I can't recall it's been 4 years). However, that was only for two years. My guess always was that the split could potentially drop tremendously like a teaser rate in year 3 if they felt they weren't earning back their bonus and I would have no choice but to ride it out.
Quote:
Originally Posted by Brandon Hoffman
I have no idea what fee structure Compass has but I'd hope if they're buying agents they are doing it in way they recoup it over time and not just buying agents. That's bad business for everyone if they are just throwing VC money at agents without a plan to recapture, but I doubt they'd have got this far if they were that bad at business.
I have to imagine they do. Personally, I think the KW setup is great with the cap and while every KW office is different the value you get at KW offices in general is very good. My cap is $25K plus the $3K royalty fee. Does the $16K you mentioned include the $3K in royalties?
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