Real estate brokerage Compass is shutting down its Modus title business as part of cost-cutting moves the New York City company made this week.
Modus was a Seattle startup that automated the title and escrow phase of closing on a home. Compass acquired the company and more than 60 employees in 2020.
Compass also announced that it was laying off about 450 people, about 10% of its workforce.
The cuts come amid a cooling U.S. housing market driven by increased mortgage rates. Redfin, another tech-fueled real estate brokerage, also announced layoffs this week.
In a regulatory filing, Compass said it will continue to offer title and escrow services.
“The Strategic Actions are part of a broader plan by the Company to take meaningful actions to improve the alignment between the Company’s organizational structure and its long-term business strategy, drive cost efficiencies enabled by the Company’s technology and other competitive advantages, and continue to drive toward profitability and positive free cash flow,” the filing noted.
Founded in 2018, Modus had raised $14 million from backers including NFX, Felicis Ventures, Liquid 2 Ventures, and others.
The company was led by CEO and co-founder Alex Day; Chairman Jai Sim; and Abbas Guvenilir. Day and Sim previously worked at lunch delivery company Peach; Guvenilir spent nearly six years at ServiceNow before teaming up with Day and Sim.
Day told GeekWire that the decision to shut down Modus “was certainly surprising and challenging for our colleagues and customers.”
“However, the outpouring we received from our real estate agent clients was deeply special and reminded everyone at Modus that we built an industry-changing company from nothing in a few short years,” he said in a statement. “While this journey is winding down for us all, everyone’s accomplishments are forever.”
A Compass spokesperson shared this statement: “We’re grateful to the Modus team for their dedication to providing the best possible service to their customers. We continue to champion entrepreneurs in our industry and wish Alex and Jai all the best in their future endeavors.”
Compass, which went public last year, opened a large Seattle tech center in 2019.
Compass laid off about 375 employees in March 2020 due to the pandemic.
Its stock was down more than 6% Thursday, trading at less than $4/share, down from $20/share when it went public in April 2021. The company posted a $494 million loss in 2021.
Editor’s note: Story updated with comments from Day and a statement from Compass.