After a two-month hiatus, Compass is restarting two lending programs — with new limits to minimize risk.
The residential brokerage said it will reinstate Concierge, which fronts money to homeowners for home repairs, in second-home markets on June 15. Compass plans to restart its bridge loan program, which advances six months of bridge loan payments to owners, on July 15.
Over the past couple of years, both programs drove listings to Compass agents as the SoftBank-backed firm bulked up its market share nationwide.
In March, Compass scaled back the programs at the behest of lending partners, who were responding to economic uncertainty around Covid-19.
In the case of Concierge, Compass limited its outlay to $30,000 on homes under $3 million, and it suspended the program in certain second-home markets. It suspended bridge lending outright. Compass’ bridge loan program advances payments via Notable, an independent lender.
A spokesperson for Compass said Concierge will resume in phases. Phase I includes the Hamptons, Santa Barbara, Montecito, Carmel by the Sea, Napa, Naples and Cape Cod.
It’s also adding safeguards to Concierge to limit its exposure. Previously, rivals have criticized the program, saying it carries risk if the listing does not sell.
Going forward, agents will be suspended from using the program if they have two or more clients who used Concierge and have not listed or paid back the funds in a timely manner.
With those measures in place, Compass aims to reignite a program that helped agents win listings. In 2019, the firm said 5,000 agents used Concierge on 11,000 listings valued at $8.5 billion. That accounts for 17.5 percent of Compass’ listings.
On average, Compass said agents who used Concierge increased their number of listings by 47 percent within 90 days. That contributed to Compass more than doubling its listing volume year over year. In 2019, Compass sold $88 billion worth of real estate, up from $45.5 billion in 2018.
Since 2012, Compass has raised $1.5 billion from investors at a $6.4 billion valuation. At the end of 2019, it had 15,500 agents nationwide.
Like other firms, Compass was hit hard by the pandemic, which shut down in-person showings and other brokerage services. In late March, Compass laid off 15 percent of its staff, or roughly 375 people, after modeling a 50 percent drop in revenue over a six-month period.
Last month, CEO Robert Reffkin conveyed optimism in the market. During an appearance on CNBC, he said Compass’ year-to-date revenue is up 47 percent and the company is “seeing an accelerated shift from traditional companies to tech-enabled companies.”