Inside Compass’ recruiting machine

“When we want someone, we go after them from every angle possible.”

(Illustration by Lexi Pilgrim for The Real Deal)
(Illustration by Lexi Pilgrim for The Real Deal)

UPDATED, Feb. 13, 9:38 a.m.: Residential brokerages in New York woke up on Dec. 7 with 450 million new reasons to fear Compass. Softbank’s cash infusion in that amount accelerated the firm’s nationwide growth timeline, and by the end of that month, it had recruited 50 agents in New York to close out 2017 with 888 agents in its hometown — up from 479 in mid-December 2016.

“The word ‘slow’ is not part of the Compass vocabulary,” said Compass COO Maelle Gavet.

The five-year-old brokerage, now valued at $2.2 billion, has riled competitors by aggressively courting agents and managers from rival firms, and sources said it’s ramped up its efforts in recent months, particularly since the Softbank deal.

“They’re a real entity to think about,” said one brokerage head. “They have almost $800 million behind them.”

Compass targeted agents from New York’s leading residential firms, according to The Real Deal’s analysis of licenses on file with the Department of State. Corcoran Group took the biggest hit, ceding 73 agents in the five boroughs to Compass, DOS records show. Another 42 agents came from Douglas Elliman, while 34 were from Halstead Property, 32 from Town Residential and 24 from Brown Harris Stevens.

Some of the headline-grabbing hires include Brian Lewis from Halstead, Silvette Julian from Nest Seekers International and Fabienne Lecole from Corcoran.

“When we want someone, we go after them from every angle possible,” Nolan Greenberg, who leads a nine-person recruitment team at Compass, wrote in the May 2016 issue of Compass Quarterly. (Greenberg is in charge of employee recruitment, while Rob Lehman, Compass’ chief revenue officer, oversees agent recruitment.) “If you’re battling for a candidate with another firm,” Greenberg wrote, “it’s you versus them because recruiting is all about selling opportunity.”

Face the nation

In November, Reffkin said Compass wants 20 percent market share in 20 major U.S. markets by 2020. That month, the brokerage launched three offices in Chicago, where it recruited Jeff Lowe, the city’s top agent by sales volume, according to data firm Real Trends. A week into 2018, Compass opened a Dallas office.

In New York and other markets, Compass has gone after the biggest fish and bet others would follow.

“It’s a protocol unto itself,” said one former staffer, who said the business development team pores over published rankings of top agents. “They treated it like an equation almost.”

Halstead CEO Diane Ramirez wished her former agents “all the best.” But other bosses took things more personally.

“Occasionally a solid producer moves to a competitor,” said Town Residential CEO Andrew Heiberger. “When that happens, we usually learn there were bonuses and payments along with promises of extra business to make the jump.” He said the “vast majority” of agents who left Town for Compass last year weren’t producing at his firm.

“Based on those numbers,” he said, “It appears to me that they’re just trying to fill desks.”

Compass’ recruiting process, Greenberg said, doesn’t start with a “templated string of emails,” but a personal phone call — often from Reffkin, who Greenberg described as a “recruiting tour de force.”

Many agents being courted said they’d received a text message or call from the CEO. “It makes you feel special,” said one agent. Agents don’t get a hard sell right away. Early in the courtship, they’re urged to visit the company’s headquarters at 90 Fifth Avenue, where they’re treated to what several people described as a “dog and pony show” or new development-style sizzle reel.

“It’s like a showing, you get them there and then you make the deal,” said an agent who interviewed with Compass but didn’t join. “The physical environment is very alluring. It looks like the Google of real estate.”

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Tours of 90 Fifth typically include a demo and walk-through of the engineering and marketing departments. If Reffkin is around, he’ll pop by to say hello. He frequently emphasizes that agents at Compass make 25 percent more in their first year at the firm than they did at their prior brokerage.

“Quite frankly, it’s a pretty compelling argument,” said the head of a rival firm.

Ricky Hadzovic, who joined Compass last month from Nest Seekers International, said he and his business partner, Jason Grauerholz, toured the office as a favor to a friend who works in Compass’ human resources department.

“We had no intention of moving over,” Hadzovic recalled. But, he added, everything is so on point, it became a no-brainer.” After they accepted the offer, Reffkin called with his kudos.

Toni Haber, who joined Compass in 2016 after 27 years at Elliman, said “there was clearly a pain in the market that a lot of brokers had been feeling, and that’s why we’re opening [new offices] rapidly and attracting top talent.”

Brian Lewis, who joined Compass in October, said the decision to leave Halstead after 17 years was “never about what my former company wasn’t, because I literally had a magic carpet ride at Halstead.

“I had to go when it felt right,” said Lewis, who did say he was attracted to the idea of building equity in the firm, which is expected to eventually go public. Compass agents are able to convert a portion of their commission payments into Compass stock options.

“I’m putting my money where my mouth is,” Lewis said. “If we go public, great. Or if we become the big unicorn that never flew, that’s okay too.”

Don’t hate the player

Other big firms are also focused on growing the ranks. Elliman, the city’s largest residential firm, hired 340 agents for a total of 2,350 in Manhattan while the Corcoran Group hired 328 for a total of 1,456 in Manhattan, according to TRD’s February ranking of top firms in Manhattan. Even Brown Harris Stevens, which historically hasn’t recruited heavily, hired 130 agents for a total of 627.

“Agents know it’s a challenging market, so they’re looking to make sure they’re at the right place,” Steven James, CEO of Elliman’s New York brokerage, said in January. (The firm declined to comment for this article.)

But since Compass burst onto the scene in 2013, rivals said it’s changed the rules of the game with aggressive tactics, like offering bonuses and stock. Several have taken the firm to court, including Corcoran, which accused Compass in 2015 of “brazenly and intentionally” raiding its offices. (The suit was ultimately settled.)

In a lawsuit last week, Queens-based Modern Spaces accused Compass of preying on its agents rather than engaging in fair competition — a charge the firm denied. “Compass has never been found liable by court of any of the allegations set forth,” it said in a statement.

Still, critics have been convinced for years that Compass is all about using money as a magnet. One agent who interviewed with the firm but didn’t accept the offer said she was was offered 100 percent commission for the first year. Others cited the equity program, which has a $10,000 minimum but no cap. A Compass spokesperson confirmed that participation has “skyrocketed” since the Softbank fundraising.

“They’re recruiting on a basis that is, again, purchasing,” said the head of a rival company.

But Gavet dismissed that narrative. The funding, she said, means the company can “hire staff faster,” and “can really invest more in our technology and in our agents.” It can also quickly lock down office space for its growing team. In 2017 alone, the firm opened up three offices in New York — on the Upper East Side, Cobble Hill and Upper West Side — for a total of 150,000 square feet. According to Reffkin, Compass plans to double its office count this year, for a total of 12 locations in the city. In addition to new territories like Long Island City and Bedford-Stuyvesant, Compass intends to expand its existing footprint at both 10 East 53rd Street and 90 Fifth.

“It’s not about growth for growth’s sake,” Reffkin said. “It’s about building the company that agents want.”

—Additional research by Derek Smith