Compass CEO Robert Reffkin (Credit: Compass and iStock)
UPDATED, July 19, 3:50 p.m.: By 2028, Compass CEO Robert Reffkin wants agent commissions to account for only 20 to 30 percent of their earnings.
The rest can come from title and mortgage, escrow and move-in services — and even furniture sales.
To get there, the venture-backed brokerage will spend “billions” of dollars to create a platform for agents so that buyers will go to Compass for more than just homes. “You, today, are at the center of the referral economy,” Reffkin said Thursday at Inman Connect in San Francisco, addressing agents in the audience.
Buying a home is a pathway to many other purchases and questions, he said. “You’re answering them today, you’re just not getting paid for it.”
Reffkin said his vision reinforces the standard 6 percent commission rate, plus creates a new revenue stream for agents.
But it won’t come cheap. The CEO said that “there are no shortcuts” to building a single real estate platform.
“I do expect us to raise more money over time. Who it comes from, I’m not sure,” Reffkin said, addressing rumors that Softbank — which provided Compass with $450 million in December — could double down.
Since launching in 2012, Compass has raised $800 million. Softbank’s investment brought Compass to a $2.2 billion valuation and has helped the firm accelerate a multi-year growth plan into one year: Over the past few months, it has been acquiring brokerages in new markets and on Wednesday said it would begin licensing its technology in non-core markets. It aims to have 20 percent market share in 20 U.S. cities by 2020.
Earlier this month, Compass bought San Francisco-based Paragon, which sold $2.3 billion in real estate last year.
Reffkin did not disclose how much Compass spent on recent acquisitions, but said the firm’s paid between 4 and 6.5 times EBITDA, in line with the industry norm.
Correction: The headline and story were updated to clarify Reffkin’s comment regarding the size of agent commissions.
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