In less than 4 years, Compass has become the dominant residential-resale brokerage in San Diego County, and it’s not close. Even if you added the two CBs together, their market share is less than half of ours.
It’s been the aggressive recruiting of top agents that built the sales force, and the vast majority of those agents came from the other brokerages on this list. It tends to be a zero-sum game too – as we get bigger and better, the others are going to struggle to keep up.
Want to be a part of the Compass juggernaut? The Klinge Realty Group is hiring!
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Compass has opened the regional headquarters at the multi-use One Paseo in Carmel Valley.
“The move for Compass to One Paseo was an easy decision,” said Shana Pereira, San Diego general manager of Compass.
“What One Paseo represents in holding onto the community feel of Carmel Valley, but bringing a futuristic and modern vibe, is synonymous to what Compass stands for — being a full-service real estate brokerage and fostering our real estate agents’ businesses, while embracing the modern advancement of technology with the goal of making their lives easier,” Pereira said. “We hope that the move of basing our regional HQ (headquarters) at One Paseo shows our commitment to San Diego and the people that live here.”
She said Compass expects to have more than 100 agents in the One Paseo offices.
Here’s my brief tour of One Paseo:
We had the all-Compass virtual meeting yesterday where is was noted that the brokerage has made record income for five months in a row, and was profitable in 3Q20. Another 300 support people have been hired in the last three months, with another 200-300 expected to be hired by the end of the year. No mention of the IPO yet, but it has to be in the works.
The local recruiting effort by Compass has been very effective, and it’s really starting to show up in the numbers. With 1,200+ productive agents in San Diego County now (I was #160 in July 2018), we are taking away market share and becoming the dominant brokerage – especially in the coastal markets.
How will it all play out?
There could be a tectonic shift in the business if this lawsuit prevails. The result will be that the commission rate paid by the seller to the buyer-agents will be revealed publicly (can’t find them now), and it could end up that buyers will have to pay their buyer-agent’s fee, instead of the seller:
Our reader Another Investor has been supportive of the blog throughout the years. Her comment from the second link above still makes me wonder about the future:
We’ve already seen how the natural real estate cycles have been crushed, and now here we are in the middle of a world-wide pandemic, rampant unemployment, and racial/political unrest AND PRICES STILL KEEP GOING UP. There is nothing natural, normal, or historical about it – we are living in a different world. Today’s real estate market is tailored for the elite, and their insiders.
The days of individual realtors helping families with achieving the American Dream are just about over, and as AI said, ‘the Klinge era of service to clients is coming to an end’. All I can do is to try and help as many people as I can before I get pushed out.
An interesting conversation yesterday with the guy who made one of the biggest deals in the history of residential brokerages when he sold his company with 1,700+ agents to Compass in 2018. His team developed the graph above on March 31st, and it looks like they are guessing that the selling season will just be delayed a couple of months. He will update it next week with more-current projections.
In this discussion, he talks about how today compares with 2009 when he purchased PUI from GMAC when it had 400 agents, and a $900,000 per month overhead. He thinks the market will bounce back quickly, and that it’s time to go on the offensive (IOW: many brokerages aren’t going to make it through this):
When we joined Compass in the summer of 2018, it was clear that the evolution of residential resales was trending towards off-market sales. I said then, “we have to make sure that we’re on the right team”.
The National Association of Realtors tried to affect the outcome with their Clear Cooperation policy by making off-market sales acceptable as long as they are done in-house with no public marketing. Like all policy-making done by ivory-tower types who don’t relate to the reality on the street, they have legitimized a new opportunity for gaming the system.
I think the intention of NAR was to allow for the occasional private sale by celebrities. What they must not have considered was that all brokerages would design their own in-house system to provide privacy for anyone who wants it.
Then the coronavirus starts sweeping the country – won’t every seller want their privacy today? Are you going to let dozens of strangers into your house? You and your family could die! You need to sell your home privately.
The NAR policy makes sellers and listing agents pick a path – either the property gets listed on the MLS within 24 hours after public marketing begins, or you sell it off-market. If the private sale doesn’t work, sellers can opt for the more-public MLS sale later, so trying the safer route will be an easy choice for many.
Who do you list with?
What brokerage has the best chance of selling your home for top dollar now?
Compass has the in-house system, over 800 of the top agents in San Diego County, and we are ranked #1 in market share in Carlsbad and Encinitas. We are ideally suited to serve the private-sale market, and now we’re advertising it publicly.
Eventually, the MLS (and Zillow) will become the online marketplace of last resort like Loopnet, and buyers will be forced to work with an agent in every brokerage if they want to see all the inventory.
Compass intends to comply with NAR’s Clear Cooperation Policy MLS 8.0. In addition, the corporate staff will work the MLS to see if we can create a Coming Soon section, like many other areas are doing.
The 8.0 policy legitimizes the Coming Soon marketing, and allows for the Office Exclusives, which is already set up on our internal website. This is why we went to Compass, because it was clear that the game was changing, and the biggest brokerages with the best listing agents would be the most successful – while the little guys get squished.
After less than two years in business, here’s how Compass is doing in Encinitas. Year-to-date sales:
"Jim the Realtor is legit - I interviewed three brokers; he said list price should be $100,000 higher than the other two brokers; listed it with him and had all cash (no financing) offer in two days, five day contingency period, closing in two weeks - and it closed at his recommended list price. I could not recommend anyone more than I recommend Jim the Realtor. more "
by gary t moyer
"When we moved to San Diego in 2005 we rented a big house on Mt. Soledad (La Jolla) with 180 degree ocean views for the same payment as a mortgage on a dump in Chula Vista. Clearly something was wrong. Yet, the media was full of the usual happy-talk nonsense, so I was glad to find Jim's blog. I've followed his honest assessments and data since. more "
"Where do we begin..2020 has been a year for everyone. When COVID hit and shut down both my husband and my businesses, we were left with a mortgage and very little income coming in. We were stressed, scared and felt stuck. We made the hard decision to sell our home and move out of state. We contacted the Klinges' and spent a good hour going over what we hoped we could accomplish. Jim and Donna came over with comps in hand and suggestions on improvements to get our house ready for the market. It was overwhelming to think about, but Donna was there and one step ahead in every scenario. more "
"Jim and Donna Klinge made the sale of our condo extraordinarily easy. They know the market and gave us sound advice backed by details and very considerable experience, reflected both in the initial pricing and subsequent negotiations. They work together as a team and are always available to talk. more "
"I cannot believe there are no reviews of Donna yet, ugh!! She is the secret sauce of the Jim Klinge/Donna Klinge combo! I will touch on Jim here, but Donna is why I'm so totally loyal to these two (no offense to Jim :)).
I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in more "
"Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community... more "
by Ann Romanello
"Jim educated us, helped us find the perfect house, and then negotiated us a great deal. I would hate to be sitting across the negotiating table from ... more "
"Jim is thorough and will be brutally honest about the homes he shows you. He provides great service and follows through until the very end and even ... more "
"I highly recommend Jim as a buyer’s agent. Working with Jim, we closed this week on a San Diego condo. Jim prepared a list of comparable sales to ... more "