- What is Compass, and how does Compass work?
- How does Compass make money?
- Commission Fees
- Title Insurance and Escrow Services
- Compass’ Subsidiaries, Acquisitions, and Exits
- Compass’ profit and revenue
- What is the Compass business and revenue model?
- Compass’ funding and market cap
How does Compass make money? Here is a full, in-depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the Compass business model, their year-over-year revenue, and how Compass works.
What is Compass, and how does Compass work?
Compass is an online real estate marketplace that connects home buyers, renters, and sellers.
Founded in 2012 by Ori Allon and Robert Reffkin, Compass began trading on the New York Stock Exchange on April 1, 2021, under the symbol “COMP”. Since then, Compass now has over 23,000 agents who have sold more than 145,000 homes worth $152 billion in gross transactional volume in 2020.
How Compass works is: Homeowners can list their properties for free on the platform as well as use Compass’ sales tools like Compass Concierge and more. Once the property is sold, the homeowners will then pay for the services when the home transaction is complete along with any other fees including Compass’ brokerage fee.
Some of Compass’ competitors include Zillow, Redfin, Opendoor, Trulia, and other online real estate marketplaces.
How does Compass make money?
According to Compass’ Investor Relations page, the company bought and sold 145,000 homes worth $152 billion in gross transactional volume in 2020. So how does Compass make money off of all those purchased and sold homes?
Below is a breakdown of how much money Compass makes and its revenue model. Including all revenue streams and how much they charge for their services.
Here are the 2 ways of how Compass makes money (in 2021):
Compass has a revenue model that makes money in two (2) ways – commission fees and through providing title insurance and escrow services.
#1. Commission Fees
Compass makes the majority of its money from commissions paid by clients at the time that a home is transacted.
As mentioned above, Compass bought and sold 145,000 homes worth $152 billion in gross transactional volume (“GTV”) in 2020. Of which, they collected a commission on all of it from there more than 23,000 agents.
How it works is: When a property on the Compass marketplace sells and the transaction is complete, Compass takes a brokerage fee. From that, Compass and the real estate agent then split that commission. The commission split is as follows below.
Compass Commission Splits:
- 10 to 30 percent of the commission split
#2. Title Insurance and Escrow Services
In addition to commission fees, Compass also makes a small portion of its revenue from offering other services like title insurance and escrow services which began being offered in 2018 and 2020.
Compass’ Subsidiaries, Acquisitions, and Exits
To date, Compass, Inc. has made a total of 13 acquisitions.
Compass’ profit and revenue
In 2020, Compass reported $3.7 billion in revenue.
Note: Because Compass, Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Compass’ publicly released financial reports, including annual reports, through Compass’ investor section on their website.
What is the Compass business and revenue model?
Compass makes money through a few revenue models that they combine within their company, they are:
- Commission based business model
- Fee-for-service (FFS) business model
- Mergers & acquisitions (M&A) business model
Compass’ funding and market cap
According to Compass’ Crunchbase profile, Compass has raised $1.5 billion over 10 rounds and has a market cap of $6.3 billion as of September 2021.