Tech-powered real estate brokerage Compass has officially entered the mortgage business. The company has announced it’s forming a new mortgage origination firm in partnership with Guaranteed Rate Inc.
Compass, which is best known for its technology tools that assist real estate agents in marketing themselves and their listings online, wants to expand its business by bringing tech tools to the mortgage application process. Mortgages are of course an important part of most real estate transactions that are ripe for disruption, Compass said.
The brokerage believes its new company, called OriginPoint, will provide faster, more seamless and transparent home buying experiences for buyers, sellers, agents and loan officers.
“With interest rates creeping up, limited housing supply, and refis slowing down, right now couldn’t be a more perfect time to hire … loan officers and sales leaders throughout the country,” said Victor Ciardelli, founder and CEO of Guaranteed Rate. Guaranteed Rate has closed more than $60 billion in loan volume since the beginning of 2021.
OriginPoint will serve clients of Compass’s real estate agents. According to the company, it will “directly unite agents with loan officers” in order to create more cohesive teams that can reduce consumer uncertainty throughout the home buying process. That, it said, will lead to greater customer access and satisfaction.
What Compass didn’t say, but what is obvious, is that the mortgage market also represents a multi-billion dollar opportunity for the company. Compass needs it too, because although it recently raised $450 million via a public offering that saw it listed on the stock market, it remains unprofitable. Its most recent financial year, 2020, saw it post a $270 million loss, though that was an improvement on its $388 million loss in 2019.
Compass said OriginPoint will be available in every market where it does business.
“Buying a home is the most emotionally and financially significant decision of most people’s lives and the role of the agent is to make the process as stress-free as possible,” said Robert Refkin, founder and CEO of Compass. “OriginPoint brings together two digital-first companies to deliver a mortgage product that provides a seamless and transparent experience for agents and their clients, which ultimately leads to a simpler real estate transaction for everyone involved.”
During the company’s first ever quarterly earnings call in May, Refkin revealed that Compass is also hoping to expand into adjacent service businesses such as title and escrow, though it is yet to reveal any concrete plans for doing so.