Boston Condos for Sale and Apartments for Rent
Are Compass agents getting a raw deal?
Back in the day when Compass started off, it was touting the fact it had a new model for the real estate market. It bragged about its technology and how it had financial incentives for its agents. That was then, this is now. Compass financial situation is in disarray, the stock is plummeting and some condo for sale agents want out.
Compass, which vaulted from a new entrant in the industry a decade ago to the largest US real estate brokerage last year, has struggled to turn an annual profit ever, even during one of the hottest housing markets in real estate history.
Yesterday, the CEO dropped another bombshell about one of Compass’ most effective recruitment tools: The company no longer offers equity or cash incentives to new agents. The statement went on to say: Reffkin said that the firm would focus on reducing technology and incentive-related expenses...(Hmm, Compass wasn’t those two items your greatest marketing recruiting tools?)
The CEO noted that Compass continues to retain over 90 percent of its agents, and said retention figures had improved quarter-over-quarter. When asked about how ending the equity program would impact recruitment, Reffkin said that the firm had ended the equity incentive program two months ago, with “no impact on our ability to bring on agents.”
What the CEO fails to mention on the companies 90% retention rate is that they make their agents sign iron-clad employment contracts, that they strictly enforce if you try to leave the Compass organization.
I guess its revolutionary business plan is falling apart. The big looser, new Compass agents and exiting Compass realtors who bought into the Compass hype and bought stock at around $20.00 a share to see it plummet to $4.64 a share as of August 15, 2022.
Why Compass Stock Price is important to agents
The focus on share price is important because Compass pioneered the use of equity grants and stock options to attract employees and agents. It also allowed agents to swap commission dollars for stock options or restricted stock. I wonder how that’s working at for those agent.Is Compass in financial trouble?
The bad news comes less than a month after industry analyst Mike DelPrete predicted problems for Compass because of significant cash burn: a first-quarter financial results revealed $142 million in cash was burned during the first three months of 2022, leaving Compass with $476 million left in the bank which started off with $1.5B
“Let me be very clear,” Reffkin wrote in an email, “Compass will not run out of cash.”
Filed Under: Pride goeth before the fall
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