How will $900 million worth of technology stack up on a home broker’s path to profitability?
Compass hopes to spend nearly half of the $2 billion it raised from investors to provide a platform for agents to use with its integrated mortgage, escrow and ownership business .
“The impact of these tools is starting to be felt,” brokerage chief executive Rory Gorrod said of the new product. “It will ultimately show in financial results.”
Compass recently demonstrated its technology platform with: genuine articleas CEO Robert Reffkin teased in September 2nd Quarter Financial Results Announcement As a “significant new feature set” launch.
Its highlights include allowing agents to create lists of properties for sale, called “collections,” to be emailed to potential buyers. This platform imports list data from MLS (and his Rebny’s list in New York, which doesn’t have MLS).
The “Sell Likelihood” tool predicts which contacts are serious about selling with a 9% success rate. According to Compass, this success rate is three times that of Zillow. Artificial intelligence and human intelligence check paperwork for compliance before being returned to the broker.
New additions to the platform allow brokers to manage their business by ordering media kits to pitch homes they want to rent or sell, uploading contact lists and tracking clients. If a potential buyer is looking for a home in a new location, a Compass agent will be the first to know, as long as the prospective buyer logs into her Compass website first.
Brokers can schedule regular follow-up emails to automatically send to their clients. You can also send home care reminders to your clients, stay in permanent contact with them, and purchase closing gifts, such as a bottle of champagne, through Compass’ platform.
Brokers also have the ability to add text analytics tools that anonymously provide high-level insight into what clients want to know when viewing a property.
What’s more, Compass executives believe the platform will allow brokerage firms to continue recruiting agents without offering stock or cash incentives. The company has increased its broker headcount in New York by about 5%, according to state licensing data.
Compass’s strategy is similar to the efforts of iBuyers such as Opendoor and Zillow to achieve profitability. A company spokesperson said the integration of mortgage, escrow and title businesses into the CRM will allow the company to collect all fees associated with closing homes, but a firm date for the finished product has yet to be determined. No. .
For a $1 million sale, the broker would take home a commission of $30,000. Compass’s typical commission cut percentage is 25-30%. The deal also has a mortgage, title, and escrow fee of $20,000 to $30,000, and a Compass take rate of 80-90%.
“Imagine doubling your revenue and 3.5 times your margin,” says Golod.
Other companies have had mixed success by adding services to their sales. Opendoor attach rate changed dramatically Title insurance by state as surveyed by analyst Mike DelPrete in 2020. Mortgage attach rates in Arizona and Texas were about 2%.
As a brokerage firm, what Compass has achieved is unparalleled. Its competitors, traditional brokerage firms, are likely to rely on third parties such as Sky Slope, Dotloop and Rechat, whose software Douglas Elliman will roll out to his agency in 2021. Did.
Unlike third-party software providers (such as Bloomberg Terminal) who license their technology products for a fee, Compass positions its technology as an agent recruitment and retention tool.
Company leaders think our technology is superior. The company has agent testimony to that effect, but it remains to be seen whether Compass will be able to use its technology to make real financial headway during an overall market downturn.