As a result of the recent market shifts and shelter-in-place mandates in response to the COVID-19 pandemic, Compass—a SoftBank-backed real estate brokerage—is showing signs of struggle.
Earlier this week, SoftBank announced a $41 billion assets sell-off, which would take place throughout 2020 to decrease its debts and buyback shares, as well as increase its cash reserves.
Compass CEO and Founder Robert Reffkin told Forbes that his “focus isn’t on SoftBank. It’s on the over 15,000 agents we have, our customers, our 2,500 employees. All my focus at this time is on them.”
According to TechCrunch, Compass has experienced a 60 percent decline in real estate showings, forecasting a six-month drop in revenue of 50 percent. Additionally, Compass is seeing 80 percent reduction in its concierge business, a drop related to the virus spread. The company began scaling back its Concierge and Bridge Loan services, temporarily suspending advances and limiting the programs, following recommendations from its lending partners.
This week, Compass laid off 15 percent of its employees.
“As we continue to hope for the best, we need to prepare for the worst,” Reffkin wrote in an email to his staff on Monday, according to Forbes. “So we are joining thousands of other companies across the country in making the heartbreaking decision to let some members of our team go.”
Last week, Reffkin submitted a letter to House representatives, asking Congress to support agents, including the 15,000 under the Compass umbrella.
“As you craft your recovery proposals, I ask that you not forget about the particular plight of real estate agents and other independent contractors,” states the letter. “Though often misunderstood and undervalued, real estate agents are entrepreneurs and small business owners who personify the American dream and represent the backbone of the U.S. economy.”
Other real estate companies, particularly iBuyers, are facing similar pressures. Zillow recently suspended its Zillow Offers program after multiple states—such as California, Illinois, Louisiana, Ohio, New York and Nevada—imposed mandatory restrictions for all non-essential business, which includes some real estate-related practices. Redfin, Opendoor and Offerpad have also paused their home purchases at this time.
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