“In the citaaay of L.A./
In the citaaay of good ol’ Watts/
In the citaaay, the city of Compton/
We keep it rockin! We keep it rockin!”
The words are 2Pac’s and Roger Troutman’s, but they could well have been Robert Reffkin’s. The CEO of Compass, a California native, has brought his $800 million residential brokerage to his home state. Compass’ Los Angeles office is its seventh new one since July, and the firm is committed to being in 15 cities across the U.S. by mid-2016.
Compass will start its L.A. operation with 19 agents, including Scott Segall, Douglas Elliman’s top agent in California last year; Jeeb O’Reilly, also of Elliman; and The Agency’s Ari Afshar. The firm, which raised about $125 million from investors, is headquartered in Manhattan and operates in Park Slope, Williamsburg, Miami, Boston, Bridgehampton, East Hampton and Washington D.C.
In New York City, where top agents were offered generous bonuses or equity, Compass attracted top-producing brokers from competitors Corcoran Group and Elliman. (The practice resulted in Corcoran suing Compass for “brazenly” raiding its talent pool, but that suit has since been settled.)
Equity and bonuses buttered some bread in Gotham, but Compass says its core recruitment strategy is demonstrating to top brokers that its tools will make them better-informed and give them more time to focus on selling.
“Compass’ unique technology platform enables our ability to rapidly scale in a way no other real estate brokerage has been able to accomplish,” said Ori Allon, Compass’ founder and executive chairman.
Sources in the real estate tech space say Compass’ software platform, which it claims helps brokers price properties better, is highly scalable – a key reason the company has been attractive to investors and is valued at $800 million. Its tools – from agent-facing apps to real-time market data – also enable the firm to “turn on” new offices in new cities at any time.
Following a fresh injection of $50 million from investors in September, Compass has deeper pockets than ever to realize its national ambitions.
In California, Compass inked a deal for 7,220 square feet at 9560 Wilshire Boulevard in Beverly Hills, a space that can accommodate about 60 agents. Leanne Rogan, a former vice president of marketing at Elliman, will serve as Compass’ senior managing director of strategic marketing for California. Christina Allen, a former LinkedIn executive who joined Compass last month, will lead the product creation team in L.A. Other new hires include Paul Figueiredo and Diana Braun, formerly of Teles Properties, Stefani Stolper of The Agency and Andrew Rhoda of Elliman.
Scott Segall
Including its new agents in L.A., the firm now has nearly 370 agents nationwide.
Its competitors in L.A. include national firms and high-end boutique firms such as The Agency and Hilton & Hyland, as well as familiar foes from New York such as Elliman, Corcoran and Brown Harris Stevens.
Elliman, New York’s largest residential brokerage, opened an L.A. office in 2013, and expanded to Beverly Hills earlier this year. At that time, Elliman also recruited broker Josh Altman, who appears on Bravo’s “Million Dollar Listing Los Angeles.”
National giants so far seem unconcerned about the recent explosion of startup brokerages.
“We don’t see anybody who represents any significant threat in one way or another,” Realogy CEO Richard Smith said during an earnings call Thursday, when he was asked about the competitive landscape. Realogy, which says it is involved in 25 percent of residential transactions nationwide, is the parent company of Corcoran, Sotheby’s International Realty and Citi Habitats, among others. “We’ve got rational competition and irrational competition and some will make it and some will not,” Smith said.