The New Compass Plan Seems…2-Sided

  • It is Never Ethical To Hide Information From Homebuyers
  • All Real Estate Brokerages Would Love To Have Both Sides Of A Sale
  • Compass Is Pushing For A Private Network To Control Listings And Recruitment

I need to get something off my chest as I watch the “NAR Clear Cooperation” litigation wars play out. Compass is banking on Clear Cooperation being dismantled to set up a private listing network. I believe they need this in order to survive. But I’m forcefully in favor of transparency – that critical information is not withheld from homeowners and homebuyers. As a reminder, Compass is a “disrupter by capital” and, as such, doesn’t need to have innovative ideas of its own to survive. If any of my professional colleagues were given $2 billion without a commitment to make a profit, they, too, could start a national real estate brokerage company. But why should I care? I’m not a real estate broker. But, I am a consumer and a believer in open market data so consumers can make the most informed choices. So, let’s explore this further.

I have many real estate broker friends who opted to move to Compass – signing bonuses, higher fee splits, and more marketing support are all part of the enticements. They are all made possible because of financial engineering – the founders are Wall Street veterans and are extremely smart. Once agents move there, most will have to remain because the real estate brokerage economy, subject to actual market forces, cannot afford to take the agents back. When someone moves from Compass to another firm, it is not because of the money.

Real estate agents are independent contractors looking out for their interests, including more money and more support. However, I object to the fact that it’s not a level playing field, which is the crux of what a “disrupter by capital” means. Compass doesn’t have to be an innovator, so their press releases often sound like “pretzelogic.”

Choosing Sides: The Math Of Real Estate Sales

The real estate brokerage industry sees a home sale as having two sides – the sell side and the buy side. Each side has a commission. And now, with the Sitzer-Burnett settlement that made the case lawyers rich, the default setting of the two sides is no longer equal – the sell side was clearly the winner, and the buy side is uncertain. Emphasis on getting listings in a housing market with below-average listing inventory in many markets is even more important for a brokerage firm’s long-term future. And it is critical to understand that controlling the listings funnel controls the recruitment of new agents.

The Behavior Of Compass Usually Doesn’t Make Sense Until You Ask “Why?”

I’ve been quite skeptical of Compass (nee´ Urban Compass) since their inception because of all the odd things they continued to say that reflect their non-real estate lineage or reflected a previous housing market era that went bad.

Why is Compass pushing private exclusives? They want to control the flow of listings so they can control the recruitment of real estate agents after controlling the flow of information. When you get down to it, all their current marketing efforts seem to be about hiding information from buyers. Yet, as a follower of their messaging for years, I believe that Compass needs to get paid on both sides of the deal to survive in the long term. They need to increase the market share of receiving commissions on both sides (buy side and sell side) of a transaction, yet they suggest they don’t care about that (despite the fact the entire industry strives to receive both sides on a home sale).

A disingenuous quote from Compass on the “getting paid by both sides” issue from a company that has tried to market itself as “tech” came from their president of growth and communications:

“It’s not something we track; it’s not something we encourage. Candidly, it’s something that we’re not focused on at all, because that’s not our business,” Golod explained. “As a brokerage, you’re asking: ‘Am I creating an environment where the best agents want to come here and stay here because I’m creating value for them?’ At the end of the day that’s what we’re focused on.”

What does that even mean? A private listing network is a vehicle to get paid by both sides, control the listings, and have an edge in recruiting new agents.

Compass “3-Phased Marketing Strategy” Seems To Be About Hiding Information From Buyers

From the Compass website (I’ve downloaded it in case they take the page down).

Here is the key quote on the Compass web page:

For years, the traditional way of selling your home has been part of a system that has put sellers at a disadvantage. The most well-known real estate websites have built their business models at the expense of homeowners by showing negative insights on their listings, such as days on market, price drops, and home value estimates.

I don’t think they understand what they are actually saying. The page goes on to infer that developers and home builders have been successful at misleading homebuyers for years!

At Compass, we’re leveling the playing field by giving individual homeowners the same playbook and best practices real estate developers and professional homebuilders have benefited from for years.

Compass’s lack of understanding of how the housing market works in this language is surprising. In many housing markets, homebuilders/developers prefer not to share their listings in the MLS in order to control the narrative, but it never really works. New development sales rise and fall, as do resales, and so do prices. Not sharing data is a vestige from the old gate-keeper mentality that the real estate industry once had – but that was decades and a lot of litigation ago.

Homeowners aren’t dumb, and homebuyers are not there to be taken advantage of. Think about a buyer coming to a Compass agent to find them a home when corporate Compass is pushing the idea of hiding critical market information about the listing they are being shown to prevent the homebuyer from establishing value. This seems unethical.

More Homeowner And Homebuyer Litigation?

My goodness.

A Zillow/Harris poll showed how consumers want the most exposure for their homes when selling, and they don’t really understand how MLSs work and don’t understand what a private network is even more, which is what Compass seems to be pinning its future on. Per Real Estate News, the Zillow poll:

Private listing networks were an even bigger unknown. When asked if they knew what that term meant, fewer than 1 in 5 respondents expressed certainty. The older age groups were least familiar, with just 14% of those over 65 indicating they knew what a private listing network was.

Hey Sellers: Can you imagine what you’d do after finding out that your home was exposed to far fewer potential buyers than you understood?

Hey Buyers: Can you imagine what you would do after finding out that the listing you fell in love with and bought had the key data deliberately hidden that influenced how much you offered?

Compass seems to be raising the odds of a lot of future litigation after their agents use their 3-Phased Marketing Strategy.

Final Thoughts

Real Estate News has been all over the topic of private networks. Here is the latest: Compass will launch a client portal amid the push for private listings. I find the lack of transparency of this plan for home buyers and home sellers concerning. Doesn’t this raise the odds of litigation by consumers once they understand what is happening? Is transparency out the window? Well, it might be for the next four years, as consumers take a back seat since the head of the CFPB just got fired.

Despite all of this, I believe that Compass (and Zillow) have probably won the real estate brokerage wars. There is little being said on ANY topic these days by industry leaders like Anywhere, RE/MAX, HomeServices of America, eXp Realty, and Keller Williams—just silence.

I’m wild guessing here that Compass is probably hoping for an acquisition by Zillow for a big exit, leaving the eventual slash and burn to Zillow.

While we’re on the topic, Nirvana at FireAid 2025 is a worthy cause.

Monday Mailboxes, Etc. – Sharing reader feedback on Housing Notes.

January 27, 2025: DC Housing Is Not For U.S., By George

  • It will be interesting to see what happens.  So far feds are whining and crying about RTO and seem to be less concerned about losing their jobs.  

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