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USA Real Estate Blog

The Problem with Compass: “We’re About the Agent”

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During one of the Hacker Connect sessions, Maëlle Gavet from Compass said the following:

It’s about the agent.

That, right there, is my problem with Compass. They are catering to the real estate agent. As long as that’s the case, they aren’t really changing anything. At least not for the consumer (buyers and sellers). They are simply shifting around dollars from one brokerage/franchise to another. Yes, with slicker branding and more money. But it’s still redirecting money, rather than creating real change in the industry.

You may have seen the open letter to Compass by MoxiWorks’ CEO, York Baur. I happen to agree with pretty much everything he says. In short, Compass’ tech strategy of choosing best of class vendors and stitching them together (along with developing some proprietary tech) is not new. MoxiWorks is one of several companies has been doing it for a long, long time.

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The real question I have is how Compass expects to create leverage in the market, in order to create long term defensibility and shareholder value for the inevitable IPO?

There’s generally two ways to create leverage in real estate. The first is get critical mass of supply (listings), so buyers have no choice BUT to look at your properties. This is why Windermere has leverage in Seattle. You can’t drive around, and NOT see a Windermere yard sign. The second is aggregate demand (buyers), and shift the way they find properties and select agents. This is of course where Zillow’s leverage comes from, they have a stranglehold on buyer demand due to 10 years of branding, PR, social media, good ol-fashioned relationship building, traditional media buys, acquisitions, capital, and SEO thrown into the equation.

What I’d like to know is how is Compass making the buying and selling process better?

For consumers. Not for agents. I don’t know about you, but I haven’t heard a good answer to that question by anyone I’ve spoken with. Have you?

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