Last week, Becky Frey, a 17-year veteran at Briggs Freeman Sotheby’s who once told me she learned the real estate craft from Ellen Terry herself, joined Compass.
“It was a really big, hard decision,” says Becky. “I watched Compass evolve over the year, and it was just a good match for our team. The Sotheby’s brand was a big part of my career, and I have friends everywhere with Sotheby’s.”
But it was, she says, like leaving home: “Briggs Freeman was family to me and always will be, but moving to Compass was just a business decision for the team.”
Becky’s migration now sets Compass Dallas’ total agent count at 168 licensed. Compass has taken ALL local brokerages by storm, part of the significant disruption in the DFW real estate market we expected given our growth and sizzling hot market, and as Wall Street set its sights on the real estate industry. Why? Because the U.S. real estate industry is huge: the total value of all homes in the U.S. increased in 2017 to $31.8 trillion, according to Zillow. At least $89 billion is Realtor commissions alone. And because the industry has so many separate sub-markets (mortgage loans, title companies, insurance, construction) many forsee a way to unite and leverage the entire supply chain to feed consumer’s growing demand for convenience and one-stop shopping, like the ibuying trend:
Venture capitalists are practically throwing funds at real estate-related companies of all shapes, sizes and flavors. Nothing is sacred — brokerage models, commissions, transaction management, bundled services like title and lending. You name it, someone somewhere is trying to change it, fund it, and ultimately, capitalize on it. Every aspect of the real estate business is under scrutiny. There’s just too much money involved for real estate not to be targeted by those with deep pockets — and big ambitions to stuff those pockets full of cold, hard cash.
Outsiders have been marching into the Dallas market at a steady stream for a slice of our market pie. According to RealTrends top 10 largest brokerages in the United States, ranked by closed sales volume for 2018, Compass is number 6, right under Pacific Union. But the report needs to be updated: Compass bought Pacific Union in late August. According to Inman, Compass has more than tripled its agent count and now has more than 7,000 agents. The company also expects it will hit roughly $34 billion in sales volume this year, more than doubling its 2017 sales mark of $14.8 billion. That figure could firmly place Compass, which launched around 2014 as Urban Compass in NYC, at No. 3 on the Real Trends 500 in sales volume, right behind NRT and HomeServices of America.
Right behind NRT and Berkshire Hathaway Home Services of America.
In 2014, Coldwell Banker decided to re-take the Dallas market, aggressively hiring agents (there was talk of generous sign-ons and marketing budgets) and expanding offices. In 2015, Allie Beth Allman sold to Warren Buffet’s Real Estate arm.
Last spring, Ebby Halliday, the largest independent brokerage in North Texas founded by real estate icon Ebby Halliday Acers, sold to Berkshire Hathaway Home Services.
Compass, flush with venture capital money, landed in Dallas in early January. Compass has reportedly been offering agents various sign-on bonuses, stock options, generous commission splits, and a technology-based culture. Word on the street is that Compass is offering agents a sign-on bonus of 50 percent of their last year’s income. According to the WAV Group, a consulting firm that tracks and advises the Real Estate Industry, Compass is is investing an insane amount of money in hiring agents to achieve a formidable goal: 20 percent of dollar volume in the real estate industry.
Because real estate agents are usually independent contractors, they are recruited by other brokers almost on a daily basis.
“Compass is investing in great people and great offices,” says Victor Lund of The Wav Group. “They are investing in building a brand. Actually, if you watch what has happened in other markets, Compass makes other brokers in the markets they come into better.”
There is another element that may not make top agent flight so painful for the brokerages losing agents, says Lund: the types of agents Compass recruits are usually capped out, getting large commission splits, unlike younger agents. They may bring listings in the door, but they don’t contribute as much to overall brokerage overhead.
Disruptors, says Victor, only make the incumbents better. Watch the market, he says; Dallas brokers are gearing up for battle.
2017 Residential real estate brokerages ranked by sales volume, according to the Dallas Business Journal‘s research which, for some reason, did not include Allie Beth Allman & Associates, which did $1.8 billion in sales volume in 2017 — which I added. You are welcome:
1. Ebby Halliday ($8.04 billion)
2. Keller Williams ($7.20 billion)
3. Briggs Freeman Sotheby’s ($3.15 billion)
4. Coldwell Banker ($2.30 billion)
5. Allie Beth Allman & Associates: ($1.8 billion)
6. Coldwell Banker Apex ($1.568 billion)
7. J.P & Associates ($1.67 billion)
8. Century21 Judge Fite ($1.65 billion)
9. ReMaxDFW Associates ($1.61 billion)
10. Keller Williams Realty Plano ($991.24 million)
11. Keller Williams Realty Central 75 ($583 million)
12. Re/Max Dallas Suburbs ($509.37)
13. Re/MaxTrinity ($492.47 million)
14. Rogers Healy & Associates ($405 million)
15. Better Homes & Gardens Real Estates Winans ($347.83 million)
16. Re/MaxTown & Country ($301.04 million)
17. Re/Max Four Corners ($179.31 million)
18. Ambience Realty ($80.52 million)
19. Re/Max Pinnacle group ($6.92 million)