Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Compass S-1

sec.gov

Post reply on HN
Print view View original

51–60 of 97 posts

Re: Compass S-1

#51

Post by emilsedgh »

nyc_pizzadev wrote: post #28

I have been house hunting lately and my agent works for Compass. The website experience kind of sucks. Horrible mobile experience, lots of UX glitches, it’s just annoying to use. In fact, half the time we are using StreetEasy to look at listings (they are a local competitor). Other than that, your buying experience is completely based on the quality of your agent and how well he can navigate your market. Not sure how…

They got VC money by pretending to be a tech company.

Then they set up very good branding.

Then they used the VC money to acquire best agents.

So their edge is not tech, but branding + good offers to agents.

Re: Compass S-1

#52

Post by exclusiv »

webdood90 wrote: post #30
rossdavidh wrote: post #23

Earlier quoted context omitted.

If you're making a purchase/sale of several hundred thousand dollars, having someone with you who has done this many times before is easily worth 5% or so. Is every agent good? Well certainly not. But it's a high-stakes transaction that most people have never done before, or have done only once before, so having a veteran of many such transactions walk you through it is easily worth a few percent of the total cost.

> easily worth 5% Easily worth a couple grand, maybe. A percentage like that? No chance in hell.

Can you negotiate 5%+ more salary if you know what you're doing? Yes. Yes you can. That's easy.

Half goes to buy side though normally. Although some firms try to "double pop" it and represent both sides. That should definitely be illegal everywhere.

There are a lot of terrible agents though that aren't worth it. It's a low barrier to entry with a very high upside. Not many career opportunities like it.

Buy side can be a ton of work though for the same payday as sell side. Agents and owners offer commission to the agents to make it worth their while.

If there weren't any buy side commissions, you'd get less interest, because no buyers agent would ever refer you to a house they can't make money on. Unless they had a conscious AND they hadn't already spent a bunch of time on you.

But at some point if you want a house that had no buy side commission and you locate it (Zillow or a sold by owner site), you're going to buy it without your buyer's agent.

So it could easily head the way of the hotel industry where the buy side is virtually non-existent.

Re: Compass S-1

#53

Post by choppaface »

jankassens wrote: post #38
rossdavidh wrote: post #23

Earlier quoted context omitted.

If you're making a purchase/sale of several hundred thousand dollars, having someone with you who has done this many times before is easily worth 5% or so. Is every agent good? Well certainly not. But it's a high-stakes transaction that most people have never done before, or have done only once before, so having a veteran of many such transactions walk you through it is easily worth a few percent of the total cost.

I'd love to see the typical breakdown of where those 5% go in a hot market like San Francisco. At a median price of $1.5mil, that's $75k in commission. I never bought a home, but that seems like it should buy a lot of services.

In a market like SF, or on Million Dollar Listing, I think the argument towards the commission is that the agent will either save you that much through negotiation (or earn you more through inflation) and/or they will get you something that you couldn't get otherwise (e.g. an unlisted property or a celebrity buyer). That said, I imagine the agents' return-on-arbitrage is actually even higher at the top price points, and even harder to quantify because deal details can be obfuscated (e.g. through LLCs etc).

Re: Compass S-1

#54

Post by jackemcpherson »

Any company that claims to provide in depth analytics and AI assistance as a value add but spends less than 10% of revenue on Research and Development is a concern.

Their spend decreasing from 6.4% in 2018, to 3.9% in 2020 seems anemic for any firm trying to put out high quality software.

Re: Compass S-1

#56

Post by trevor-e »

I used a Compass agent when buying my condo but had no idea they were masquerading as a "tech" company. Their online presence was a lot better than other agencies in the area which is probably what sealed the deal for me, and FWIW the agent ended up being great.

The real estate industry is interesting since it's such an old practice and basically none of the old players (Keller Williams, Re Max, etc) capitalized on the tech boom from what I can see. Instead, companies like Zillow, Redfin, Trulia, and now Compass, all swooped in and established a presence. The MLS database is the last hurdle and it's inevitable that will solved in the next ten years IMO.

Re: Compass S-1

#57

Post by xyzelement »

There's a bit of confusion in the comments a about the company. I had researched it a bit while interviewing there so I want to clarify although what I say will not be complete.

First compass is a real estate agency. They have agents (realtors) all over the country and the way they make money is through real estate commission.

To the extent that they have a public facing real estate search site akin to zillow, I believe the point is that it connects people with compass agents to represent them (whereas I think on zillow/trulia is just connects you to randos who paid for leads)

However the primary angle is that compass builds great tools for their agents. So the idea is that the tech makes the agents better at their jobs which in turn helps them service buyers and sellers better which in turn drives business.

I can see this angle make sense.

We are currently house shopping (not via a compass agent) and the agency's it system is clearly not that great for either us or the agent (eg when they send us listings it's not that smooth). Presumably would have been way better tech wise if we went w compass.

So that's the angle I think. Their tech and product people are solid, from my conversation. Lots of ex FAANG folks.

And finally there are comments below that don't understand why a realtor can charge the commission they do - it's because they are enabling you to navigate a high stakes, non commodity transaction and their local knowledge/network/etc matters. You could certainly try to do it yourself but unless you are going to dedicate full time to it you will just never buy anything except in a truly buyer's markets which we are not in.

Re: Compass S-1

#58

Post by anonu »

fny wrote: post #36
boh wrote: post #16

Its a little silly how easily a company can categorize itself as a technology company. Many of the IPOs from the past two years suggests having a website and/or having an app doesn't just make you into a tech company (WeWork is a good example of this). Compass is no doubt eager to foster unreasonable expectations for growth that surpasses the business they're actually in (as real estate brokers) and prefer to imbued…

Is AirBnB a tech company? I'd argue their core business has nothing to do with tech, but they've managed to become the biggest broker for temporary rentals in the US. They did need a good amount of tech to scale and be successful which is why everyone thinks of them as a tech company. In my view, Compass is in the same boat. They want to become the middleman between buyers and agents in real estate. It's a platform p…

First thought: AirBnB didnt really innovate. There was VRBO before it. They somehow got traction through a slightly better platform and more marketing/word-of-mouth. They built a better mousetrap.

Second thought: AirBnB is a marketplace. You have sellers and buyers meeting in a tech-enabled environment with rail guards in place to protect the customer experience (reviews + payment middleman + etc..)

As a recent home purchaser, I totally agree the process needs a revamp. But how does that happen when you're still boasting 10s of 1000s of brokers on your platform. The middleman is still there.

Re: Compass S-1

#59

Post by [deleted] »

emilsedgh wrote: post #51
nyc_pizzadev wrote: post #28

I have been house hunting lately and my agent works for Compass. The website experience kind of sucks. Horrible mobile experience, lots of UX glitches, it’s just annoying to use. In fact, half the time we are using StreetEasy to look at listings (they are a local competitor). Other than that, your buying experience is completely based on the quality of your agent and how well he can navigate your market. Not sure how…

They got VC money by pretending to be a tech company. Then they set up very good branding. Then they used the VC money to acquire best agents. So their edge is not tech, but branding + good offers to agents.

[deleted]

Re: Compass S-1

#60

Post by doitLP »

emilsedgh wrote: post #51
nyc_pizzadev wrote: post #28

I have been house hunting lately and my agent works for Compass. The website experience kind of sucks. Horrible mobile experience, lots of UX glitches, it’s just annoying to use. In fact, half the time we are using StreetEasy to look at listings (they are a local competitor). Other than that, your buying experience is completely based on the quality of your agent and how well he can navigate your market. Not sure how…

They got VC money by pretending to be a tech company. Then they set up very good branding. Then they used the VC money to acquire best agents. So their edge is not tech, but branding + good offers to agents.

Yep, this is what they did.

They swept through all the big markets a couple years ago and got all the top-selling agents by offering amazing packages. My brother was a top agent in Austin and he got stock, excellent brokerage rates, a lucrative bonus program and a huge stipend for marketing, branding and even 40k toward hiring an assistant. It was an offer no other brokerage could match and he and basically everyone he knew went to Compass.

Post reply on HN