Compass just filed its S-1 to go public. What was the most interesting part of this filing? The fact that they have made such a big investment in ancillary title services, including their acquisition of tech-driven title company Modus and another D.C.-based title company, where they will likely deploy their newly acquired technology there as well.
It’s no wonder they have made such a big investment in title; This acquisition promotes creating new revenue streams and business for brokerages through ancillary services. Additions of mortgage, title, and insurance services offer clients a new product or service that complements the primary business of the brokerage. Ancillary services are growth paths for firms looking to gain a competitive advantage, diversify and differentiate their company, and generate earnings independent from commissions.
Compass bought tech-driven title company Modus for $50 million - let me repeat - $50 million! How do they get ROI off that?
Simple - Thanks to technology, attaching ancillary services to a real estate brokerage through acquisition (if you can afford it) or a joint venture partnership is not only achievable but a strong differentiation strategy to acquire a higher attach rate with your realtors. The brokerage is able to procure more value from the real estate value chain and the title agency is able to access more realtors than before.
Further, acquiring companies like Modus or partnering with Expetitle positions brokerages for the digital-first closing. The firm’s reach will extend far beyond the core real estate transaction through complementary services and enhance its reputation for producing the ultimate real estate experience around.