AI-generated image created with assistance from ChatGPT (DALL·E).
The universe of real estate brokerage is beautiful. Every day, between 85,000 and 100,000 real estate brokerage owners turn on the lights. They are the stars in the sky of real estate. The large firms are visible like planets, establishing their own gravity and perhaps their own moons. To be sure, Compass is a bright new star that is capturing the focus of an entire industry.
We have previously seen stars born before; Century 21, Keller Williams, RE/MAX, eXp, and many more to note. The common thread among them all is the attention that they grab among competitors looking in. Each planet has changed the brokerage universe in many ways, but in most ways, brokerage remains the same.
Prepare to retain agents
What happens when Compass comes to town? The same thing that happens when any new planet comes into your orbit. You prepare to compete for agent retention. Each and every day, your agents get phone calls, emails, text messages, and in-person solicitation to join other companies. If you are a successful brokerage, you fend off these attacks and find yourself out there actively recruiting from other firms. Competition for recruiting is the mainstay of the business you operate. If you are good at it, Compass poses little threat compared to any other firm–but you must take them seriously.
Competitive analysis of Compass and others
Every broker should have a playbook for recruiting agents from every firm in the market. Each chapter of that book should also highlight the value proposition of your firm vs. theirs. Most importantly, you must pick a side and exude fierce conviction in your brand as the best place for agents to work. If you do not believe in the company you lead, then fix it or sell it. The tragedy of the real estate brokerage business is that you operate on razor thin margins. Sometimes a small number of agents walking across the street is enough to sink your battleship. The best attitude to carry is that if they take one of yours, you will take 10 of theirs. If you make a competitor hurt for taking even one of your agents, trust me, they will stop.
Compass technology is not magic
Although Compass operates like The Borg from Star Trek, gobbling up everything in their path through a wellspring of acquisitions, they also leverage the media to articulate their value proposition with technology. Every day, Compass has an article in each one of the four major real estate outlets: RE Technology, HousingWire, Inman News, or RISMedia. They have developed key talking points that they repeat over and over again. Look no further than their website to see the details of their focus and counter that narrative with your own.
3-Phased Marketing Strategy: can be easily duplicated
It’s not the commission plan
Brokers who are great at recruiting and retention will tell you time, and time again that the commission plan is not what makes an agent successful. Let’s face it, you probably have 35 commission plans if you have 50 or more agents at your firm. There is no correlation between commission plans and success.
Success comes from the brokerage culture, leadership, and the agent’s hard work. No incentive or technology can replace feeling good and working hard. In real estate, it’s usually true that even a single additional transaction pays out more to an agent than a change in commission plan.
AI-generated image created with assistance from ChatGPT (DALL·E)
Compass is not doing well in our market
Be inspired. Compass is not doing well in every market, and the same is true for other planetary brands. The playbook for success as a real estate brokerage is not universal for you or for Compass. The indelible truth about real estate is that it is local; it’s in the neighborhood. Great agents and teams win over again and again regardless of their brokerage, but change is very costly.
Here is a hot tip: Watch the production numbers of each agent or team who leaves your firm for another – albeit Compass or any other competitor.
Do those agents or teams see a drop in production value? Yes. It is almost a universal truth that agent production drops when they change firms. The cost of change is real, and most agents are uninformed. Know the numbers and show the numbers. You or your managers should be tracking the losses of agents who depart your firm.
The opposite is also true. When you onboard agents, they are up against the same friction caused by change. You must onboard each agent like you welcome a new child into the family. If you don’t want their production to drop, you need to play a role in making sure that they get the support, training, and love that is needed to create a quickstart.
Remember ZipRealty?
Never forget ZipRealty… Once a promising online brokerage that ultimately failed due to a combination of factors:
High Operating Costs – Unlike traditional brokerages, ZipRealty employed agents directly, offering salaries and benefits rather than the typical commission-based model. This structure created high overhead costs, making profitability challenging. Brokers thought that the independent contractor model was over, but that day did not come.
Low Margins – The company tried to disrupt traditional real estate by offering rebates to buyers and charging lower commissions. However, this squeezed their margins and made it difficult to sustain operations. As it turns out, there is very little price elasticity in delivering real estate services.
Agent Turnover – The salaried model attracted newer agents, but many left for traditional firms where they could earn higher commissions. This led to inconsistent service quality.
Limited Differentiation – While its technology was advanced for its time, other brokerages and platforms like Redfin quickly adapted and provided similar digital experiences albeit with an equally questionable business model. Technology does not sell real estate, people do.
Eventually, Realogy (now Anywhere Real Estate) acquired ZipRealty in 2014 for $166 million effectively ending ZipRealty as an independent brand. Here we are 10 years later, looking at the Redfin trade to Rocket for $1.75 Billion and wondering. As much as things have changed, the fundamentals of brokerage remain the same.
Be the best version of yourself
There is no doubt about the future of Compass; they are not going away anytime soon. Sharpen your sword each day. The battle wages on. Your brokerage needs to be the best at doing what you do best, but keep an eye out around you. Go to school on Compass and all of your competitors and clearly understand your unique values and weaknesses.
Get better every day, but most of all make your voice heard. Don’t trash-talk the competition. That never works. Just be the best version of yourself you can be.
WAV Group can support you in this endeavor. If you need help, reach out below.
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