When Steve Murray, considered a soothsayer in residential real estate trends, learned about trouble brewing in Tennessee, he wrote a note.
The trouble was coming in the form of an upstart brokerage siphoning away employees from Parks Real Estate, the largest firm in the state, which Murray had just helped sell to residential giant Compass.
The kicker was that the culprit was the man who in 1975 had founded the firm being raided, Bob Parks.
“Bob is a long-time good friend of mine,” Murray said. “We’re not probably good friends anymore, because I wrote him a note and said, ‘I’ve never seen any worse conduct in my entire career.’”
The drama in the Volunteer State is a colorful snag in an otherwise positive trajectory Compass took this year after training its focus on snapping up local firms to grow headcount and transaction volume.
M&A is especially important for national, publicly traded companies like Compass, according to Murray, because one-at-a-time recruiting is “challenging and time-consuming” and “expectations for growth are so high.”
Its appetite for acquisitions — including a deal announced in April for Latter & Blum, a major Louisiana-based brokerage with offices across the Gulf Coast — has already yielded results.
The two firms, which Compass has so far sunk over $47 million into with cash and stock, powered its transaction growth this year. The brokerage added $460 million in revenue over the nine months of 2024 compared to the first half of 2023, and 42 percent of that — $193 million — came from its two deals this year.
Now roughly six months after bringing both firms under the Compass umbrella, the benefits and difficulties of adding local players to a national name are coming into focus.
Latter & Blum, a multi-state legacy giant with over 3,100 agents at the time of the deal, has appeared to fit seamlessly into the Compass ecosystem. The company did over $3 billion in sales last year and since joining Compass, the company’s leadership has remained in one piece.
“There is an appreciation for the fact that we’ve operated for over 100 years and we kind of know what we’re doing and this acknowledgment that real estate is very local and you want to have a local feel so there’s a lot of reassurance knowing that our team stays intact,” Latter & Blum CEO Lacey Conway said on a podcast.
Compass and Latter & Blum declined to provide specific numbers on agent retention rates.
Local loyalty pushed Parks brokers Onward
At Parks, which counted over $6 billion in sales across more than 1,500 agents in 2023, things have gone a little differently.
Former Parks CFO Jenni Barnett, who had been at her old firm for nearly 25 years, joined Bob Parks and his wife Marie in founding Onward, where Barnett now serves as CEO.
The sale to Compass was pushed by new partners in the firm in the months leading up to the acquisition, according to Bob Parks (Parks, Village Real Estate and Pilkerton Realtors merged in 2022. Former Village CEO Hunter Connelly was named the chief executive of the combined entity, and has remained in that position since the Compass acquisition).
“Nothing against anybody, other than our focus has been local, and we just wanted to stay that way,” Bob Parks said on why he launched Onward, which opened its doors June 1, less than a month after Compass acquired his old firm.
A stable of brokers followed.
Onward added 300 agents who did close to $2 billion in volume in 2023 in its first 90 days in business; roughly 240 of those agents — 80 percent — came from Parks, according to Bob Parks.
“Through many consolidations in our market, brokerages have gotten to quite a large size, and we were able to fill a need that agents were looking for,” Barnett said.
The agents leaving for Onward have included some top producers.
Susan Gregory, ranked the top individual agent in Tennessee by RealTrends with over $100 million in sales volume in 2023, left Parks for Onward this summer.
Gregory followed Jack Miller, who ranked 16th on RealTrends as an individual in the state, and Lisa Culp Taylor, whose LCT Team topped the medium-sized team rankings in the state with over $270 million in sales volume.
“If agents wanted to be with Compass, they would have been with Compass,” Gregory said.
Reffkin came to the Parks office after the deal was announced and when Gregory, Miller and Culp Taylor approached him to introduce themselves, Gregory said Reffkin didn’t seem to know who he was speaking with and was like “a deer in the headlights.”
“I knew right then we were just a number, we didn’t mean anything,” Gregory said.
Acquisitions still ahead
While Compass made a name for itself by luring top agents with juicy incentives, the firm has also not shied away from larger swings.
Prior to the pandemic, Compass made several moves to gain footholds in high-end markets, gobbling up San Francisco-based Pacific Union International and New York’s Stribling & Associates in consecutive years, along with a handful of other deals in coastal cities.
The firm’s focus has since shifted inland. In addition to the deals in Tennessee and Louisiana, Compass added brokerages in Central Texas and Arizona in 2023.
On a recent earnings call, Reffkin said Compass will continue to execute acquisitions and has a strong pipeline of targets.
The firm is looking at opportunities in both markets where it had existing operations or “net new geographies,” Mark McLaughlin, Compass’ chief real estate officer, said on a podcast this summer.
While the defections from Parks haven’t appeared to hinder Compass’ impressive growth numbers this year, the pushback from certain brokers is noteworthy as the national brand tries to make inroads in new geographies through acquisitions.
Wendy Monday, another Parks agent who departed for Onward, actually had left Parks for Compass in 2019, only to return to the local brokerage a year later.
“I think that this actually will probably happen more as there’s more consolidation,” Monday said. “This is just what independent contractors are — they find their own path.”