Compass loses money, examines mortgage

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Compass has successfully become a publicly traded company, but the housing brokerage continues to lose money and has unclear plans to increase revenue.

In its first P&L announcement, the eight-year-old New York-based brokerage company posted net income on Wednesday. loss of $ 212 million in the first quarter of 2021, up from $ 133 million in the first quarter of 2020.

Lost in line with history of SoftBankThe compass that quickly defied Realogy as well as Berkshire Hathaway HomeServices of America as the largest housing brokerage in the country through the acquisition and recruitment of high performing and talented agents.

Only Realogy reported higher sales volumes in 2020, while Compass reported that agency transaction volume jumped 67% between the first quarter of 2021 and the same quarter of 2020.

Compass reported $ 1.1 billion in revenue in the first three months of 2021. That’s an impressive figure – an 80% jump over revenue in the first quarter of 2020, when they posted revenue of $ 619 million.

But then income completed when selling a home, the commission is split between Compass real estate agents – money that goes in and out of the door. After deducting “expenses” for “commissions and other ancillary expenses”, Compass generated revenue of $ 151 million in the first quarter.

It’s unclear if Compass is generating revenue in addition to the roughly 15% commission for each agent.

Compass CEO Robert Reffkin said the brokerage is “expanding our related service business” to title and escrow and “plans to provide” mortgage services. Diversification into title, escrow and mortgage is the piece is used by HomeServices to maintain profitability and is used by most brokerages.

Lloyd Walmsley, analyst german bank, asked what progress the company has made in the field of property rights, and how it plans to introduce a mortgage loan.

“Related services have grown well,” replied Kristen Ankerbrandt, CFO at Compass, adding, “We’re not going to disclose the exact amount.”

Reffkin said Compass is exploring the possibility of creating a mortgage division, buying a mortgage company, or creating a joint venture, following the example of other residential real estate brokerages. Reffkin said the Compass mortgage product could outperform other brokerage firms because “our product integrates a single sign-on experience.”

Reffkin later responded to a question about mortgage interest rates, stating that Compass is less influenced by other brokerage firms because of its luxury clientele, which is less likely to need mortgage service.

“In the segment of elite services, mortgages are used less frequently,” said Reffkin.

Compass became a public company April 1 bidding on New York Stock Exchange… Subsequently, Compass shares fell from $ 20.15 a share to $ 14.43 at close of business on Wednesday. Its market capitalization is $ 5.5 billion, which is more than Realizations $ 2.0 billion and $ 3.6 billion for eXp

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