Compass CEO Reffkin: fear of brokerage commissions ‘simply not true’
If antitrust lawsuits impact agent commissions, that won’t happen Compass.
The brokerage claimed on its Q2 2024 earnings call that it is seeing virtually no change in commissions despite the $418 million settlement the bank agreed to. National Association of Real Estate Agents (NAR) following a series of lawsuits regarding buyer commission rules.
“It has been four and a half months since the announcement of the NAR settlement, and we have seen no noticeable change from before the settlement, either in the percentage of sellers offering commissions to buyer agents or in the average commission amount they pay. the buyer’s agents,” Compass CEO Robert Reffkin said on the call.
“To be clear, the fears many had about commissions dropping or buyer fees disappearing simply did not materialize.”
Compass also said it is not seeing any changes to new listings related to commission offers, either on the Compass platform or across multiple listing services (MLSs). In May and June, the company claims that 99% of new listings included offers to pay buyer’s agents, 96% of new listings offered to pay at least 2%, and more than 80% included offers of 2.5% or contained more.
Furthermore, Reffkin does not expect this to change after August 17, when the new rules imposed by the settlement take effect.
“There won’t be any national headlines on August 17 saying anything about this,” Reffkin said. “What it does is allow the buyer’s agents to actually negotiate for themselves, so the best agents are actually happy with it. Buyer agents I meet across the country are asking their buyers for more than what the listing agent historically negotiated on their behalf. I see things being flat, I may see them going modestly down, but I also see them going up. Time will tell.”
The good news on commissions was accompanied by other positive financial news for Compass, which reported positive net income for the first time as a publicly traded company. Profit for the second quarter of 2024 came in at $20.7 million, following a net loss of $133 million in the previous quarter.
The company made those gains by bucking negative industry trends, as transactions rose 11.4% year over year, while transactions for the rest of the industry fell 3.3%, as reported by NAR. This boosted operating revenues to $1.7 billion, an increase of 14% compared to the same period last year.
Compass attributed 5% of the revenue increase to acquisitions of other brokers and 9% to organic agent growth. The brokerage added 3,299 agents through organic growth and acquisitions in Q2 2024, for a 24% year-over-year gain, and market share was 5.13%, up 50 basis points from Q2 2023 .
The call did cause a setback for officers. Compass plans to adjust the way it distributes equity within the company to reduce associated costs.
Technology remains a top priority for the company as it outlined a vision for its proprietary platform. It plans to fully integrate its title and escrow businesses by the end of the third quarter. It will launch a beta version of its customer dashboard in October, with the full rollout set to end in early 2025.
Compass is launching its “Make-Me-Move” tool in August, which the company says will help convert what it calls “passive inventory,” homes owned by people who are not actively selling but are selling at the right price would sell.
