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Compass S-1

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Re: Compass S-1

#71

Post by lawnchair_larry »

rossdavidh wrote: post #23
choppaface wrote: post #22

Earlier quoted context omitted.

True but maybe the “industry standard” agent cut is open for “disruption.” (Personally I can’t fathom what the agents do today that adds $10k-$100k of value). They’ll find some data to support that they make agents more efficient and then reduce their cut. And when the agents complain, there aren’t going to be many people crying for them, especially the ones on Bravo.

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.

No, it really isn’t. The price only exists because of the MLS cartel, which is finally starting to crack.

Re: Compass S-1

#72

Post by lawnchair_larry »

choppaface wrote: post #53
jankassens wrote: post #38

Earlier quoted context omitted.

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,…

Agents don’t negotiate on your behalf. They present all offers.

Re: Compass S-1

#73

Post by Justsignedup »

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.

we got a sales pitch from them

basically "we have a culture that the big agents can't and that attracts the best agents to us" so basically culture + back-end not horrible tech = massive success.

Re: Compass S-1

#74

Post by piokoch »

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.

What if someone jumps in with a even better offer for agents (fed also by VC money) to "disrupt" Compass? Wouldn't this sink Compass?

Re: Compass S-1

#75

Post by Dowwie »

trevor-e wrote: post #56

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 t…

Nothing is inevitable in a multi-billion dollar industry heavily protected by regulators. The industry persists for non-technical reasons.

Re: Compass S-1

#76

Post by Dowwie »

I was a solo, technical founder on a true tech venture for real estate and property. There are many reasons why the 20th Century business model for real estate services persists today. Technology innovation cannot alone solve the challenges that entrepreneurs face in this domain. If you are currently working on solving these problems or have a strong interest in dedicating yourself to them, I'd like to connect. I've been building for several years and bring real tech assets to the table (secure, high performance systems written in Rust).

Re: Compass S-1

#77

Post by santa_boy »

benhoyt wrote: post #70
dvt wrote: post #63

Earlier quoted context omitted.

There's no technology, it's WeWork 2.0 (heck, it's even funded by SoftBank).

Compass is partially funded by SoftBank, but the rest is not true -- there's a whole lot of tech behind it (source: I used to work there as a software engineer). It's mostly tools for agents, and some tools for consumers. They pull in dozens of real estate feeds, normalize and index them and make them searchable; they have a decent app for agents to keep track of listings and contacts; they have a marketing tool that…

I am working on a real estate product for agents. Wondering if you can critique / provide inputs on a SaaS model for agents. Could I email you? Thx!

Re: Compass S-1

#78

Post by bostonsre »

boh wrote: post #47
bostonsre wrote: post #39

Earlier quoted context omitted.

Why is there no case to be made? It would be interesting for someone to investigate if it hasn't been already. I'm curious if that "absolute power corrupts absolutely" saying is just a saying or if it has a basis in reality. I can't recall many benevolent dictators for life from my history classes.

This comment is in reference to the voting rights attached to common shares. This would have likely not been covered in your history classes.

> There's no case to be made that "super control" inherently leads to unethical behavior.

You are saying it like it's been proven. What are companies where is gone well? I can't think of many examples whether inside or outside of the market where absolute control has gone well.

Re: Compass S-1

#79

Post by tamade »

benhoyt wrote: post #70
dvt wrote: post #63

Earlier quoted context omitted.

There's no technology, it's WeWork 2.0 (heck, it's even funded by SoftBank).

Compass is partially funded by SoftBank, but the rest is not true -- there's a whole lot of tech behind it (source: I used to work there as a software engineer). It's mostly tools for agents, and some tools for consumers. They pull in dozens of real estate feeds, normalize and index them and make them searchable; they have a decent app for agents to keep track of listings and contacts; they have a marketing tool that…

I've been a Compass client for several yrs and have generated ~$100m of the "Gross Transaction Value" they crow about in their S-1 (bs metric to focus on, since Compass only earns commissions of 3~5% of that). Most of the tech they promised in their initial pitch either doesn't exist or is outsourced to third-parties. Even basic services such as marketing/SEO in our market is handled by 3Ps. From a client POV, nothing differentiates them from other major brokerages. At the end of the day, RE is a people biz; I've stuck with them because I like the agents we work with. If these agents were to jump ship, I'd leave as well.

Re: Compass S-1

#80

Post by kin »

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.

Actually, I can tell you that their original strategy was to have exclusive listings. Last year because Compass had so many agents, they were able to "preview" listings on their site days before MLS. Their hope was that this edge would attract users into using Compass to search for listings over RedFin/Zillow/etc. Fortunately, this practice was banned and they no longer have that card to play.
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