Compass’ earnings in the first quarter didn’t quite deliver on CEO Robert Reffkin’s optimistic forecast for 2024.
The company reported a net loss of $132.9 million.
The loss, down $17.5 million from the first quarter of last year but up from $83.8 million reported in the fourth quarter, includes the first traces of the brokerage’s proposed $57.5 million settlement of claims by home sellers in a series of class action lawsuits.
But Reffkin said in Wednesday’s earnings call he anticipates it will remain cash flow positive for the remainder of the year despite its settlement, which it will begin paying in the second quarter.
“I still believe 2024 will be better than 2023, and 2025 will be better than 2024 with a mid-cycle coming in 2026,” Reffkin said.
The lawsuits centered around accusations that the company conspired with other brokerages and trade groups to hike agents’ fees. It is similar to class action lawsuits filed against the National Association of Realtors, which struck a $418 million deal with sellers and agreed to change several of its policies, including eliminating the field for buyers’ commissions in the Multiple Listing Service.
The potential impact of changes to how buyers’ commissions can be paid has been top of mind for investors, Reffkin said. He said he is confident that Compass brokers are well prepared to handle these changes in a time when some fear losses to buy-side commission revenue for brokerages.
“Since the verdict, we have provided our agents with 57 national training sessions and hundreds of local training sessions,” he said. “With these efforts, I’ve seen our agents transition from initially being worried to now being confident.
My thoughts as a Boston real estate broker
For Massachusetts, the exact settlement for MLSPIN still hasn’t been totally resolved, I keeping checking once a week with MLSPIN. My point, the buyer agent side can have a huge impact on Compass bottom line, not just Compass…