Boston Real Estate for Sale

Updated: Boston Real Estate Blog 2023

Byline – John Ford Boston Condo Broker

Can Compass Rebound?

Boston Condos for Sale and Apartments for Rent


Can Compass Rebound?

A year after a “bloodbath” of layoffs began in the residential real estate market, Compass is adapting to the realities of tighter bottom line.

One of the country’s largest brokerages, Compass, moved to trim expenses as interest rates rose and sales fell. Compass slashed its expenses by almost a quarter last year.

One year later shows mixed success for Compass compared with rivals in keeping revenues up through a period of austerity.

The bottom line, Compass was cash-flow positive last quarter, but it still isn’t profitable.

Low-fee real estate brokerages on the rise

Low-fee brokerages such as eXp and Real have added agents at a much faster rate and eXp has closed the revenue gap between itself and Compass.

The good news, Compass is still growing their headcount despite trimming expenses,  they have cut fat from their budgets. Fewer back-office employees can mean less support for agents, who may leave as a result. So far, this hasn’t happened.

Compass has a lot at stake. The brokerage giant announced a $320 million cost reduction program near the end of last summer. Critics questioned whether the firm would be able to make money and retain agents in a down market. A year later, it posted its first cash-flow positive quarter and has managed to add agents, albeit at a lower rate than in the past.

As stated, Compass laid off about 40 percent of its staff, or 1,700 employees and is offshoring many back-office jobs. The big question, can it break even this year if market trends hold. We won’t know until Compas releases its annual report early next year.

Some experts claim Compass would need to trim its operating expenses to $850 million to break even. Compass CEO Robert Reffkin said during the company’s second quarter earnings call he expects the number to be $900 million this year and through 2025.

Compass’ agent count grew in the second quarter after falling in the first and likely grew last quarter as a result of the acquisition of a 630-agent Texas brokerage. Compass bought a 300-agent Arizona brokerage in the second quarter.

Source: The Real Deal

Updated: Boston Real Estate Blog 2023

Byline – John Ford Boston Condo Broker


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