The downturn hitting the housing market is going to drive some agents and discounters out of the real estate industry, but the best agents and brokerages will actually gain marketshare, according to Compass CEO Robert Reffkin.
“A lot of brokerage firms that are going to have a very difficult time through this,” Reffkin said on The Deal with Danny Brown, a podcast hosted by Compass agent Danny Brown.
“We can sustain a downturn for six months, eight months, nine months,” Reffkin said about his own firm. “We have that capital to be able to do so.”
Brokerage firms are going to have a difficult time gaining access to capital, Reffkin explained. His own company has been aggressive in recent years with acquisitions and in perhaps a moment of pitching Compass to other brokerages, he suggested smaller brokerages should think about partnering with larger brokerage firms to give them a “source of strength.”
Reffkin also said that a lot of brokerages are going to need to make hard decisions on the expense side. Compass itself, cut its staff by approximately 15 percent last month.
But despite cutting staff, Compass has continued to add new agents. In fact, Reffkin said the company is seeing agents come to Compass faster with their ability to train and onboard agents virtually.
“The best companies always gain market share in a downturn,” Reffkin said.
Speaking generally to the real estate market Reffkin predicts we’re seeing more of a deferral of transactions, rather than an elimination of transactions.
“Buyers still need to buy, sellers still need to sell,” Reffkin said. “From that perspective, it will be more a deferred spring market. I think this summer is going to be a spring market. There’s going to be a lot of transactions.”
Reffkin said he believes that consumers will rush to transact in the summer, because there’s a fear that this is going to come back in the fall.
Reffkin also offered advice to everyone in the industry: balance being grounded in reality, but at the same being optimistic and positive. On one hand, the country is seeing the fastest recession that’s ever happened in the country, Reffkin said. But on the other hand, the curve is starting to flatten in some hot spots and the housing market will return.
“No one’s going to realize their dreams by thinking about how bad things are,” Reffkin said.
The crisis is also underscoring how important real estate agents are to the transaction, according to Reffkin, who put two offers on home himself in the past week. Agents are the ones that know the neighborhood and know the buildings and can walk consumers through a digital transaction.
“You can transact now,” Reffkin said. “Advice matters more than ever before.”