The Compass real estate logo is a well-known symbol in the real estate industry. The company offers incentives for its agents to produce high-quality deals and compliments their commissions with stock options or restricted stock units. However, this incentive program has contributed to the loss of several top agents. In addition, the company has a complex pay structure.
Compass’s pay structure
If you’re considering applying to Compass, it’s important to understand the company’s pay structure and what you can expect. While there are several bands that Compass uses to determine pay, they typically don’t exceed $300K for the first number in each band. For example, a senior software engineer role in the Bay Area might be worth $300K-$500K while a Facebook E4 might be worth $200K-400K. However, it’s not uncommon for the company to go above that if the candidate performs particularly well or negotiates well.
Compass’s pay structure includes a commission on every home sale and associated fees from services. This commission is a percentage of the sales price, and can vary depending on the agreement with the client. It also receives commission on rental properties and new development projects. But the biggest revenue streams for Compass are from its sales commissions.
In addition to the base salary, Compass offers signing bonuses, which are usually distributed over a two-year period. However, Compass doesn’t offer a cash performance bonus. Instead, it compensates employees with higher-than-average base salaries, and performance-based stock refreshers.
Compass is a publicly traded real estate company. It has expanded its business and now operates in many major cities across the U.S., including Washington, D.C. The company recently made headlines by facilitating the fifth largest residential sale in U.S. history, and facilitated the sale of Scott Bommer’s Lily Pond Lane properties for $110 million. It is also the largest brokerage by volume in the United States.
The pay structure at Compass is a bit unique from those offered by the other FAANG firms. For example, the company pays its employees a base salary that is comparable to the average in the Bay Area. However, unlike Google and Facebook, Compass does not offer performance bonuses, which are percentages of base salary paid out in cash. However, employees do have equity awards that vest in a yearly fashion, whereas Facebook and Google pay equity grants on a quarterly basis.
Its focus on quality
Compass Realty has focused on hiring the best real estate agents in the business. In fact, it has hired over one-fifth of the top agents in the nation in 2019. The company also focuses on quality sales experience for its agents. It provides technology support to help them in their work, including insights on average sales prices and a project management tool with tasks. Agents can also access an online platform that features listings of available homes for sale and rent. And for its most valued clients, Compass offers a Private Exclusives service.
In 2012, Compass raised $8 million in a seed round and raised a total of $208 million by 2016. Its valuation is over $1 billion and it has recently launched an aggressive acquisition campaign. It expects to acquire over 1,000 agents in 20 markets by 2020. Unlike traditional brokerages, Compass focuses on quality and is a great place to work if you’re looking for an agent.
Compass’s focus on quality has helped it grow quickly. In 2018, it hired over 7,000 real estate agents. In the past year, it has acquired several major brokerage houses to hire more agents. However, the company has also faced lawsuits from former employees and competitors. In 2019, Zillow filed two lawsuits against Compass alleging that it stole trade secrets and poached agents with non-compete clauses. Although the two companies settled in June of that year, the company has faced numerous lawsuits in the past. Currently, Compass has over 13,000 agents in over 100 offices across the United States.
Compass’s Sally Forster Jones has surpassed $8 billion in career sales. She recently co-listed a $20 million Sunset Strip mansion that sold to Wondery founder Hernan Lopez. And she holds the listing for the Paramour Estate in Silver Lake, a former convent on the market for $40 million.
Its technology platform
Compass’s technology platform aims to simplify the complex multi-party workflow in the residential real estate industry. The industry is worth $570 billion worldwide. Compass’s founder, Ori Allon, has founded two successful technology companies, one of which was acquired by Google and another by Twitter. He wanted to develop a technology platform for the real estate industry that would be disruptive. He had great recruiting power and was able to acquire some of the top engineering talent from many leading technology companies.
The company promised to use technology to close the efficiency and productivity gap in real estate and turn a profit. While the Compass technology platform has many benefits, there are still some limitations. First of all, real estate remains a highly personal, time-consuming industry. In addition, the biggest factor that impacts efficiency is the market itself. The Compass technology platform does include some features that improve productivity, such as a “likely to sell” feature. This feature allows agents to identify individuals who may be willing to list a property. However, it is unclear whether these features represent a real improvement over older technologies.
Another limitation of the technology platform used by Compass is that the company focuses on agents and not consumers. Other companies rely more on consumer centric tech to attract agents. Compass’ S-1 also emphasizes that its customers are agents and not consumers. This is a concern for investors.
The company aims to leverage its proprietary software to streamline the real estate process. It also hires more developers to develop apps that will help agents better serve clients. It also uses artificial intelligence (AI) and machine learning to assist agents in making decisions. By using this technology, agents can learn more about their clients and better target clients.
Its strategy in high-end housing markets
Compass is a real estate technology company whose mission is to organize the multi-party workflow in the $570 billion residential real estate market. The company’s Founders include a pair of VC veterans with a background in real estate. Compass has recruited top agents who bring relationships and exclusive listings to the company. Leonard Steinberg was the company’s first top-tier poach, while it has also poached proptech stars from StreetEasy, which was recently restructured.
Compass was founded with an $8 million seed round in 2012 and was worth $1 billion by 2016. Its aggressive acquisition campaign began in 2018, aiming to poach more agents in high-end housing markets. By 2020, it plans to have acquired agents in 20 markets. Its strategy is to attract agents who prefer working with firms with more expensive properties and better commission splits.
Although the stock has dropped about 40% year to date, it still continues to buck industry trends by growing revenue at double-digit rates and gaining market share. The company reiterated its target of producing $1.2 billion in annual adjusted EBITDA by 2025. This growth is due to higher agent productivity and the addition of adjacent services.
Compass has launched a new report on ultra-luxury residential sales. The report includes data gathered from multiple listings services in each market and includes aggregate market data from Compass transactions. It is the first report of its kind, focusing on the ultra-luxury market.
Compass is also focusing on proprietary technology. It has an engineering team and is hiring more people to create apps. This technology helps agents make better decisions and target their clients.
Its long-term profitability
Compass Real Estate’s long-term profitability is still uncertain, and investors should be wary of the company’s slew of acquisitions. Its recent acquisition of Consumer’s Title Company of California, licensed in every California county, is a big plus, but it still relies on agents for title services. Nevertheless, a multilayered study by real estate tech expert Mike DelPrete found that Compass was significantly behind the competition.
One reason Compass’s long-term profitability is questionable is its cash burn problem. Its spending has surpassed its earnings for several years at a rate unprecedented in the real estate industry. As a result, it is the world’s most unprofitable brokerage.
However, Compass’s cash-burn problem is not new. The company was experiencing a downturn well before the housing bust hit the market. And it faced the same problem before inflation was a big issue. It had to reduce its expenditures, retain its agents, and keep its operations at a profitable level.
The company has invested in technology. It has hired a former Microsoft CTO and invested heavily in machine-learning and artificial intelligence. This has helped its agents determine the best time to sell a home. It also helps agents stage homes and determine pricing. It also acquired Contactually CRM software and integrated it into its ecosystem. It has also sued two of its major competitors, Realology and Zillow, for poaching their employees.
Compass started as a real estate brokerage with an $8 million seed round and by 2016 had raised $208 million and was valued at $1 billion. In the same year, the company started an aggressive acquisition campaign to lure agents in 20 markets. Increasing the number of agents working with Compass will increase the firm’s revenue. And, a higher transaction volume means higher commission splits for the company.