Robert Reffkin wants to make Compass a hub for real estate listings
Compass‘s plan for future success? Become a hub for real estate listings. Brokerage founder and CEO Robert Reffkin laid out his company’s plans for the future during his third-quarter 2024 earnings call with investors and analysts on Wednesday.
“Listed inventory remains the lifeblood of the housing market,” Reffkin said. “At Compass we already have levels of inventory that are second to none in many of our local markets.”
One of the company’s main objectives is to achieve an average market share of 30% in the top 30 markets. Achieving this goal, according to Reffkin, would increase the company’s competitive advantage by increasing the number of listings its agents make and the number of contacts on their CRM (Customer Relationship Management) platforms.
“By expanding our listing inventory, we believe more and more buyers will search Compass.com and use Compass agents because it will be known that Compass has more inventory than any other website or broker,” Reffkin said.
“This inventory benefit includes not only our active inventory, but also potential inventory from our Make Me Sell program, which allows Compass agent clients to enter an aspirational sales price for their home in our CRM.”
Reffkin believes the Make Me Sell program, which will be fully launched in all markets in 2025, will help consumers by creating the potential for more inventory. It should also help Compass by making it a hub for inventory and listings, attracting real estate agents and consumers who come to the company looking for properties they can’t find elsewhere.
“Ultimately, our North Star is to use our deep inventory to create better outcomes for sellers, buyers and our agents, which as a function translates into better outcomes for Compass and our shareholders,” said Reffkin.
While Reffkin’s vision for Compass seems simple, there is one small roadblock: the National Association of Real Estate Agents Clear cooperation policy (CCP). Under this policy, agents have one business day to list a home on the MLS once they begin publicly marketing the home. Not surprisingly, Reffkin has become an outspoken critic of the CCP, calling on NAR to rescind the rule.
According to Reffkin, the CCP is “infringing” on a seller’s choice of how to market their home.
“We don’t think this is right. Homeowners should not be forced to do something they don’t want to do,” Reffkin said. “The future we are creating is one where buyers will know how to search on Compass.com, as we become known as the place where homeowners list their homes early, through Compass Private Exclusives and Compass Coming Soon, which will protect them from the risk of exposure to MLS. .
“For most homeowners, their home is their most valuable asset. It deserves the most valuable marketing. It deserves protection from the risk of exposure to MLS.”
According to Reffkin, no homeowner wants the number of days their property has been on the list, price reduction history, crime reports or climate risk-related data shown with their listing.
“The powerful real estate websites are using these insights to strengthen their model of selling buyers to third-party agents,” Reffkin said. “Just as tabloids use negative headlines to attract readers, real estate websites use negative insights to attract buyers.”
Reffkin noted in his comments that professional homebuilders and developers are excluded from the CCP. He claims that repealing the CCP would “level the playing field” for existing homeowners who want to compete with builders.
Industry professionals who support the CCP argue that repealing the policy would hurt buyers, making the home search much more challenging and arduous for consumers and their agents. Reffkin addressed these criticisms during the Q&A portion of the call with analysts, noting that many critics highlight the challenges of buying a home in other countries where no MLS exists.
“In many of these other countries, it’s not as difficult as it was 10 or 15 years ago,” Reffkin said. “But look, I’d love to be able to search everything in one place. I would like to continue Netflix and see any show I want, but that’s not how the world works in a free and fair market. There is such a thing as competition, and different companies come in and create different offerings.
At this point, only time will tell whether Reffkin’s big initiative to boost Compass’ internal listing platform will pay off. A NAR advisory committee recently declined to make a decision on the CCP and referred the matter to its leadership team.
In the meantime, with CCP still in place, Compass managed to post another strong quarter of growth. In the third quarter of 2024The company’s revenue grew 11.7% year over year to $1.5 billion. The number of transactions increased 16.1% to 55,872 for a total sales volume of $57.7 million, an increase of 13.4% compared to a year ago.
In addition, Compass’ number of principal agents grew 20% from a year ago to 17,542, while its national market share grew to 4.8%, compared to 4.31% in the third quarter of 2023. The company also recorded free cash flow of $32.8 million.
Compass executives are sticking to their expectations that the company will have positive free cash flow for the full year of 2024, a first for the brokerage. But despite the growth, Compass still posted a net loss of $1.7 million for the quarter, an improvement from the $39.4 million loss recorded in the third quarter of 2023.
