Things could get tricky for the nation’s largest residential real estate brokerage. But Robert Reffkin’s message this week was clear: “Compass will not run out of cash.”
The CEO, whose firm’s agent count exploded in recent years as it gobbled up market share in some of the nation’s most competitive cities, was unusually dramatic in a company-wide email that followed Monday’s ominous earnings report.
The report revealed mounting losses and slashed revenue forecasts. An unsteady economy and rising mortgage rates are putting the housing market through the wringer, and brokerages and mortgage lenders have already made layoffs, though it isn’t yet clear how bad things will get.
In the video above, The Real Deal’s Hiten Samtani breaks down what’s happening with Compass, which lost money even when the housing market was booming last year, and explains why the shaky summer is having such an effect on the brokerage. Most importantly: What could Compass’ financial troubles mean for its agents?
“Never in my time at Compass have we seen such a big downturn in such a short period of time,” Reffkin said on the firm’s earnings call.
That could mean significant shifts for both new and longer-tenured brokers. And while Compass isn’t the only firm that’s likely to struggle in a down market, it marks a change of tune as the company shifts from constant growth to flat revenues and flat transactions.
Watch the video for more.