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 his firm’s plans for the future bare during its third-quarter 2024 earnings call with investors and analysts on Wednesday.

“Listing inventory remains the lifeblood of the residential real estate marketplace,” Reffkin said. “At Compass, we already have a depth of inventory in many of our local markets that is unmatched.”  

One of the firm’s main goals is to realize an average of 30% market share in its top 30 markets. Achieving this goal, Reffkin said, would boost the company’s competitive advantage by growing the number of listings its agents have and the number of contacts in their customer relationship management (CRM) platforms.

“By growing our listing inventory, we believe more and more buyers will search Compass.com and use Compass agents, as it will be known that Compass has more inventory than any other website or brokerage,” Reffkin said.

“This inventory advantage includes not only our active inventory, but also potential inventory from our Make Me Sell program, which allows clients of Compass agents to provide an aspirational sales price for their home in our CRM.”

Reffkin believes the Make Me Sell program, which will fully launch 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 agents and consumers who will come to the firm searching for properties they can’t find elsewhere.

“Ultimately, our North Star is to use our depth of inventory to create better outcomes for sellers, buyers and our agents, which, as a function, translates to better outcomes for Compass and our shareholders,” Reffkin said.

While Reffkin’s vision for Compass may seem simple, there is one slight roadblock: the National Association of Realtors’ Clear Cooperation Policy (CCP). Under this policy, listing agents have one business day to list a property on the MLS once they begin to publicly market the property. Not surprisingly, Reffkin has become a vocal critic of CCP and is calling for NAR to repeal the rule.

According to Reffkin, CCP “infringes” on a seller’s choice of how they want to market their home.

“We don’t think this is right. Homeowners should not be forced to do anything they don’t want to do,” Reffkin said. “The future we are creating is one where buyers will know to search Compass.com, as we become known as the place homeowners list their homes early, through Compass Private Exclusives and Compass Coming Soon, which will protect them from the risk of MLS exposure.

“For most homeowners, their home is their most valuable asset. It deserves the most valuable marketing. It deserves to be protected from the risk of MLS exposure.”

In Reffkin’s view, no homeowner wants the number of days their property has been listed, its history of price cuts, crime reports or climate risk-related data to be shown with their listing.

“The powerful real estate websites use these insights to empower their model of selling buyers to third-party agents,” Reffkin said. “In the same way tabloids use negative headlines to attract readers, real estate websites use negative insights to attract buyers.”

Reffkin noted in his remarks that professional homebuilders and developers are excluded from the CCP. He claims that repealing CCP would “level the playing field” for existing homeowners looking to compete with builders.

Industry professionals in support of CCP argue that repealing the policy would harm buyers, making the home search process that much more challenging and laborious for consumers and their agents. Reffkin addressed this criticism during the Q&A portion of the call with analysts, noting that many critics highlight the challenges of shopping for a home in other countries that lack an MLS.

“In a lot of these other countries, it is not as hard as it used to be 10 or 15 years ago,” Reffkin said. “But look, I’d love to be able to search everything in one place. I’d love to go on Netflix and see any show I want, but that is not how the world in a free and fair market works. There is something called competition, and different companies come in and create different offerings.”

At the moment, time will tell if Reffkin’s big play to boost Compass’s internal listing platform will pay off. A NAR advisory committee has recently refused to make a decision on CCP, referring the issue to its leadership team.

In the meantime, with CCP still in place, Compass managed to record another strong quarter of growth. In Q3 2024, the firm’s revenue grew 11.7% year over year to $1.5 billion. Its transaction count jumped 16.1% to 55,872 for a total sales volume of $57.7 million, an increase of 13.4% compared to a year ago.

Additionally, Compass grew its principal agent count 20% from a year ago to 17,542, while its national market share grew to 4.8%, up from 4.31% in Q3 2023. It also posted free cash flow of $32.8 million.

Compass executives are standing by their guidance that the firm will be free cash-flow positive for full year 2024, a first for the brokerage. But despite its growth, Compass still recorded a net loss of $1.7 million for the quarter, an improvement over the $39.4 million loss recorded in Q3 2023.