Photo courtesy of Compass

Compass has stopped offering stock and cash incentives to get real estate agents to affiliate with the brokerage as the slowing real estate market hammers its finances.

CEO Robert Rifkin made the announcement during the company’s second-quarter earnings call yesterday.

“Our ability to do this is reflective of the value our platform provides agents to grow their businesses,” he said, noting that technology investments and agent acquisition were the company’s two biggest expenses.

Refkin said the company successfully halted offering stock incentives for agents two months ago without an appreciable impact on its ability to recruit. The company’s earnings presentation noted it saw a 22 percent year-over-year growth in the average number of principal agents working with the company in the second quarter, and a 26 percent jump in the number of all agents.

Most of the company’s new agents, he added, were coming to Compass for the same commission split as they had at their previous brokerage or one that was more favorable to Compass. And Compass has been able to sustain a 90 percent retention rate among its principal agents

This, he said, reinforced his belief that the company no longer needed aggressive financial incentives to lure agents and instead could rely on the technology it offers agents.

“We believe we have created a large competitive moat,” Rifkin said that has left other brokerages unwilling to invest in creating the same level of agent-facing technology.

Chief Operating Officer Greg Hart said the company’s revenue was under “severe pressure” as many of the nation’s real estate markets cool. The company’s earnings presentation said that its free cash flow was negative in the second quarter, to the tune of $30 million, and was down $111 million year-over-year.

Compass Drops Agent Recruitment Incentives

by James Sanna time to read: 1 min