SoftBank-backed real estate brokerage Compass is acquiring title and escrow startup Modus, it announced Monday.
The amount Compass paid to acquire Modus was not disclosed and the deal will close later this month.
Modus, founded in 2018, has created a secure closing platform for home sales that holds home-purchase funds in escrow and connects home-buyers to title insurance providers. The company raised a $12.5 million Series A funding round last October, co-led by NFX and Felicis Ventures, and included funding from Liquid 2 Ventures, Mucker Capital, Hustle Fund, 500 Startups, Rambleside, and Cascadia Ventures.
The Seattle-based company has also raised seed funding from 500 Startups, and earlier this year was selected for the National Association of Realtors's strategic investment arm, Second Century Ventures' REACH accelerator program. The company's more than 60 employees will join Compass.
This is the third tech acquisition for Compass, which has raised $1.5 billion and was most recently valued at $6.4 billion in July 2019. The company has previously acquired machine-learning software company Detectica and CRM startup Contactually, who have helped to developed its agent tech stack. Modus will help Compass get closer to its goal of being an end-to-end platform from real estate deals, bringing Modus's closing software into Compass's systems.
Compass has had a rollercoaster year as the coronavirus hit the real estate world hard, with 15% layoffs in March and replacing cash wages with equity offerings. As home sales have accelerated out of the lockdown, the company hired more than three thousand agents in the last six months to meet demand.
Modus's software is focused on the title and escrow portions of the real estate closing process. Title companies search public records to make sure there are no disputes about the ownership or tax records of a home before it is sold, and will pay legal damages if it misses any of the violations. Escrow services are third-party services that hold payment for a property until it is assured that property has been transferred according to a contract.
Title and escrow fees are typically paid by the home buyer. Bringing the closing process in-house has become fertile grounds for real estate tech companies looking to increase the amount of money they make per transactions. iBuyer companies have been launching their own title services to capture more of the potential revenue from a sale.
In 2018, co-founder and executive chairman Ori Allon told TechCrunch that the firm would be moving into title and escrow services. The Modus acquisition is the firm's first foray into the space. Compass agents will now get access to Modus, but as they are independent contractors, will have the option to use their own closing services as well.
