Standing beneath the oversized stone archway on the second floor of a swanky Upper East Side event space, Compass CEO Robert Reffkin was beaming.
“Which New York agents did more transactions than anybody else in the last year?” he shouted to the brokers and employees gathered for the firm’s annual holiday party, before raising a glass of champagne.
Reffkin, dressed in an understated blue suit sans tie, kept his remarks brief. No need to extemporize, after a year in which Compass’ longtime leader has been dominating headlines with his industry-shifting acquisitions and outspoken reproaches of the National Association of Realtors.
The company has plenty to cheer after running an offensive counter to chaos elsewhere in the industry this year.
Douglas Elliman lost its longtime leader Howard Lorber amid internal pressure and a falling stock price; Anywhere Real Estate has matched the market’s meager growth and is still saddled with several billion in debt; and NAR has been buffeted about by lawsuits, government investigations and brokerage bosses like Reffkin, who has been sharply critical of the trade group.
But Reffkin has not been content resting on his laurels. Instead, he unfurled a grand vision for the future — one in which Compass becomes not just a brokerage, but a listings destination, buoyed by the firm’s ever-increasing inventory that will — if Reffkin has his way — no longer be hemmed in by NAR’s restrictive policies.
Lofty ambitions are at the company’s core and have paid off before. They’ve enabled Compass to court billions of dollars in investment in the first place, and allowed it to throw gobs of money and eye-roll-inducing commission splits to lure agents to the industry’s shiny new toy.
That party came screeching to a halt a few years ago as high interest rates and a slow housing market forced belt-tightening around the industry. Critics gleefully opined it could be Compass’ moment of reckoning.
“What they’re doing, it doesn’t make sense,” Brown Harris Stevens CEO Bess Freedman told Bloomberg in 2022. “They’re not a technology company. They’re a real estate brokerage company that just spent far more than they were making. The question now is, how is it sustainable?”
This year, Compass has come closer than ever to answering that question, generating positive cash flow while continuing its cost-cutting campaign, and getting back to adding agents through transactions and recruitment.
But that’s run-of-the-mill brokerage stuff, and Reffkin has made it clear he wants much more — now the question has become, what exactly does Compass want, and can it get it?
Back to basics
This year, Reffkin announced his goal of achieving 30 percent market share in Compass’ top 30 markets by 2030.
Sound familiar? The plan is the souped-up version of Compass’ 20/20 plan — 20 percent market share in its top 20 markets by 2020 — that it announced in 2017.
The brokerage fell short of that target, but the guiding philosophy on building market share has remained the same.
“Every broker on the whole planet has always understood fundamentally, if you want to build a real, prosperous brokerage company, control as much inventory as you can,” RealTrends founder and advisor Steve Murray said. “Having products on the shelves has always been Nirvana in this industry, period.”
Compass has revved up its market share plans this year by scooping up regionally dominant brokerages, resuming a growth tactic it deployed before the pandemic.
“Before this year, what [Compass] would have lost is a guaranteed payment of compensation, because the MLS was the vehicle that enforced that — Okay, well, that’s gone now.”
Its acquisitions of Parks Real Estate and Latter & Blum gave it pole position in Tennessee and the Gulf Coast, similar to how its deals for Pacific Union in 2018 and Stribling & Associates in 2019 turbocharged its growth in San Francisco and New York, respectively.
But Compass reeled in its biggest fish in December, when it announced a deal for top Chicago brokerage @properties, Christie’s International Real Estate and Atlanta-based Ansley Real Estate.
On an investor call following the deal, Compass executives mentioned their “inventory strategy” at least six times. The scale of that strategy has changed for Compass post-acquisitions, but the plan has remained the same.
“With more listings and more buyers, they can bolster your exclusive ‘coming soon,’ ‘off-market’ and ‘in-house’ transactions,” Andrew Flachner, founder of tech company RealScout, wrote in 2019.
For consumers or agents perusing Compass.com for “exclusive off-market and coming soon listings, how could you not work with Compass,” he said.
A new era
While Compass’ directive has remained unchanged, the tectonic plates of residential real estate on which the company sits have been shifting.
NAR, the trade organization overseeing the vast majority of real estate agents, has taken a series of body blows this year, none bigger than the landmark Sitzer/Burnett settlement that effectively abolished agent-negotiated commissions on multiple listing services.
That disruption has led many industry leaders to publicly question the value of NAR and the MLS, which lost arguably its biggest competitive advantage over listings aggregators like Zillow — who have maintained adamant support for the MLS system — or other third-party sites.
Critics have seized on the group’s rules, namely its requirement that listings appear on the MLS within one business day of being publicly marketed, or Clear Cooperation Policy.
“Before this year, what [Compass] would have lost is a guaranteed payment of compensation, because the MLS was the vehicle that enforced that — Okay, well, that’s gone now,” said Rob Hahn, a real estate strategist who writes a popular industry subscription newsletter, NotoriousROB. “If you’re Compass and you leave the MLS system completely, what do you lose, really?”
The controversial CCP rule debuted in 2019 as a response to a proliferation of off-market listings but still allows brokerages to list properties privately within their firm (an “office exclusive”).
That exception has not proven to be enough for Reffkin, who has publicly campaigned against the policy, calling it “anti-homeowner.” He’s criticized the publicizing of days spent on market and price drops as value killers for sellers.
“Reffkin has gotten pushback on the notion that the rule is anti-homeowner. Zillow executive Errol Samuelson said that “suppressing” listing information “ultimately harms sellers and clearly harms buyers.” And some have questioned whether he’s really interested in the consumer at all.
“Just come out and say, this would be really good for our shareholders,” said Jason Oppenheim, president of West Hollywood boutique agency The Oppenheim Group. “It’d be really good for our agents, as it would be for other large brokerages. And it’s in our financial interest, and the interest in the growth of our company.”
Putting the pieces in place
For Compass, a CCP repeal would juice the “flywheel” effect that company has touted for years (former employees told Business Insider they had been instructed to chant “Compass” and “flywheel” during a 2019 meeting in the company’s Manhattan headquarters).
As Compass gobbles up listings through acquisitions and recruitment, the ability to create “walled gardens” — per Anywhere CEO Ryan Schneider — around its inventory can entice consumers and agents over to the brokerage to see what they might be missing.
At the same time, Compass has been zeroing its tech updates in on ways to promote its internal ecosystem.
In October, the company launched a tool that informs seller’s agents “which of the 33,000+ Compass agents and their millions of buyers have viewed, shared, favorited or commented on their listing,” according to a press release.
“I don’t think it’ll be an apocalypse overnight, but I do think there are brokers that are getting bigger and using that power to recruit agents.”
That came on the heels of allowing sellers to display their “aspirational” price to other Compass agents with a tool called “Make-Me-Move.”
“I expect that in 2025, Compass will have a combined off-MLS and make-me-move inventory that is many times more than the publicly searchable active market,” Reffkin said on an earnings call. “Our goal is to make it clear that Compass agents and Compass.com have more inventory than third-party sites, sending a strong signal to buyers that if you aren’t working with Compass agents or aren’t searching Compass, you are not seeing all the inventory.”
One former Compass broker described how the brokerage pushed agents on the benefits of private exclusives, but questioned how beneficial they really were for consumers.
“From the argument of, we’re supposed to do what’s best for the consumer, you could argue that model — the private exclusive model — is not in the best interest of the consumer, because you’re not getting the maximum number of eyes on it,” the broker said.
A spokesperson for Compass disputed that characterization, claiming developers and professional home builders sold over 300,000 homes off the MLS and portal sites last year. The spokesperson said Compass wants to give homeowners “the same marketing playbook as real estate developers,” which don’t have to comply with CCP.
The fight heats up
The industry writ large has rallied against Reffkin’s assault on CCP — and against his push for listings control — by touting transparency and governance provided by requiring public listings be entered into the MLS.
Most of those players have their own interests at stake, with smaller brokerages facing a death-by-asphyxiation moment and aggregators like Zillow losing some of their bargaining power if they can’t ensure access to public listings.
Redfin CEO Glenn Kelman has been one of the most vocal advocates about all the ways in which a CCP repeal would harm the industry, pointing to the monopoly power that large brokerages would gain, and the pricing power over consumers and agents that comes with it.
CCP supporters point to an oft-cited Bright MLS study that found that sellers listing on the MLS obtained better prices than sellers listing off-MLS, by anywhere from 13 to 18 percent from 2019 to 2022.
But that argument may end up self-defeating, as the policy’s detractors point out that sellers can still list on the MLS, CCP or not, and might well choose to do so if they think it will ensure the best price.
“The number one thing buyers and sellers wanted to have access to and felt was the most important tool in the industry was the MLS,” Murray said. “They won’t soon unlearn that, right.”
One former Compass agent described winning a listing over a Compass agent that was pushing the company’s private exclusive ability — part of the company’s “3-phased marketing strategy” that proposes moving sellers’ listings through a funnel from private exclusives to “Coming Soon” to finally being on the MLS.
“They didn’t buy the private exclusive pitch,” the former agent said of the client. “The Compass agent was like, ‘what I can do differently than what everybody else can is I can do a private exclusive where we can actually test it on the waters privately in the market’ — but it’s not testing it. It’s only testing it with a small agent buyer pool.”
Victor Lund, CEO of real estate consulting firm WAV Group, also questioned how close Compass was to really controlling anything when it still has a single-digit national market share.
“They would need to grow significantly to have any [potential] to control pricing, inventory, or other aspects of the market,” he said in an email.
But Compass has already become the dominant force in submarkets like San Francisco, Washington, D.C., and with its recent acquisitions, Nashville and Chicago.
And Kelman doesn’t think we’re as far from a paradigm shift as it might appear.
“If you were a consumer, would you need 50 percent of the listings to be withheld from the MLS before you decided that you wanted to work with the biggest brokers in town? No, you’d probably need 5 [percent],” Kelman said.
On a recent appearance on CNBC, Reffkin touted that over 5 percent of all Manhattan listings were available only on Compass as private exclusives.
The fear from rivals is that number will only go up with a CCP repeal.
“I don’t think it’ll be an apocalypse overnight, but I do think there are brokers that are getting bigger and using that power to recruit agents,” Kelman said. “That will get much, much worse if there are more listings that are withheld from the MLS.”
This article has been updated with a statement from a spokesperson for Compass on private exclusives.