For a company that has been in San Diego for barely five years, Compass has done pretty well. We’ve been #1 since 2019, and in 2020 the volume was $2.13B with 2,372 units – big improvement since!
The agent productivity is around 3-4 annual sales per agent for all companies. But there are many licensees working on teams who are on salary so it’s not that bleak. But it is getting harder to find agents who are closing one sale per month, which makes it tougher for them to keep their chops up.
Last week, we lost a big agent to a start-up brokerage, and I hate to see people go. I’m not sure what happened in their case, but typically agents don’t try to re-negotiate with their current brokerage, instead they just leave for the greener grass without notice.
What should be considered is how likely it will be that single agency and off-market sales will grow as the market constricts further. The count today is probably under 10% of the total sales, but once it catches fire, those non-traditional sales could rise to 20% or 30% quickly.
Don’t underestimate how desperate it could get for agents, and how management will play a key role in pushing for in-house sales. It will be the same as with commercial real estate; where properties get sold in-house and public exposure to new listings is an afterthought.
This threat is the main reason why I work at Compass (of many). It’s not here yet, but it’s coming – and every agent will want to be with #1 as this evolves. We want to hire more agents on our team. If you would consider joining us, contact Donna the sales manager!
I’m just happy to see someone – anyone – step up to the microphone and discuss relevant facts about the real estate market. To also have my boss be so enthusiastic about the company and its future is an added bonus. Plus, our stock is up 50% (from $2 to $3!):
Yesterday was the Compass 2Q earnings call (transcript here) and as usual, the headlines focused on the net loss of $101.2 million – more than half of which was stock-based compensation for agents.
Compass has been very generous in their support of agents nationwide, and management is finding ways to effectively scale it back a bit. For example, they won’t be offering stocks as a recruiting tool any more. But we, the existing agents, aren’t affected by recruitment, and we’d be fine if they didn’t hire another agent! So while the stock may get battered, the agents are doing well.
I’ve mentioned that our annual contract is up in July. There was a time when we discussed Kayla joining Compass in NYC, and during that discussion our CEO offered us a 2-year contract. I brought it up again last month, and he agreed to it. We signed a two-year extension a couple of weeks ago – we are happy here!
Here are the Compass internal comments about the earnings call:
Compass has been in business locally for four years! Last year, we averaged 7.5 sales per agent.
It’s remarkable how Compass and eXp came into a rather staid and unchallenged brokerage environment and hired away nearly 2,400 productive agents so quickly.
A remarkable achievement considering that Compass has only been a nationwide company for 3-4 years.
It will matter more later too.
CoStar is going to change the search-portal landscape, and if they spend enough advertising money to get all the eyeballs, the buyer-agents will be cooked. Unlike Zillow and Redfin who encourage viewers to contact their own set of agents, CoStar will direct people back to the listing agent of each property.
You can imagine the advertising that could change everything:
“Would you rather be represented by a third-party who doesn’t know a thing about the house in question, or do you want to speak to the listing agent who knows everything about the property – including how to get you the best deal?”
CoStar got a head start when they boughthomes.com, and are rolling out their first version this summer in New York City.
Buyer-agents will be forced to join realtor teams who have the listings, or just fade away.
Who has Compass been recruiting for the last four years? That’s right, the realtor teams.
One sign isn’t going to change the world, but it’s an example of how home sales will be changing in the future. If/when homes are sold in-house (not exposed to outside brokers and buyers) like commercial properties, Compass should extend its dominance in San Diego County – especially north coastal.
I can’t control how this turns out; I can only roll with it!
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!
Did you know that 87% of new licensees quit during their first year in the business?
Your training is critical to your success! Whether you have a few years of experience or are just getting your license, we can help you build a solid real estate practice. Contact us today!
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.
Wouldn't they only agree if there was huge upside plus insurance: UBS Agrees to Buy Rival Credit Suisse https://www.nytimes.com/2023/03/19/business/ubs-credit-suisse.html?smid=tw-share
