I just returned home this weekend from the NAR MidYear conference in Washington D.C.
Leaders of the Boards, Trade Associations, MLSs, franchises, vendors and brokerage companies convened there, as they do each year, to discuss industry topics and legislative matters. You know, to basically talk real estate on all levels and to assure a role in the future for the residential brokerage industry.
With the exception of one company. Compass.
The supposed biggest thing in residential real estate brokerage, Compass, was noticeably absent. No booth, no presence and Reffkin was even absent from the NAR Board of Directors meeting held there on Saturday. While the residential real estate industry voted on its future, Compass was missing in action. Some of the attendees were so surprised at this lack of an appearance by Compass, that they sent me this photo. See below.
But I was not. And this is why.
Compass is present where they need to be in order to accomplish their intended objective. Compass is 100% focused on hyping their impending IPO on Wall Street while all those other NAR Directors in that room were focused solely on preserving and maintaining their businesses on Main Street.
This immediately got me thinking.
If we are in this business to one day exit with a suitable reward for all of our hard work, the question is, are we too focused on brokerage on Main Street to ever see that become a reality?
Here we have Compass led by a former Wall Street executive, essentially borrowing massive capital to roll up the equity produced by top agents and leading brokerage companies, with a keen eye on the generation of future “non-commission transactional revenue”, buying wide-spread industry PR, sitting on nearly every industry media panel, marching quickly toward an IPO or maybe even an acquisition.
While the brokers that were in the room focused on maintaining the 'Realtor at the center of the transaction' and assuring that the brokerage industry has a long-term role in serving the consumer, and that the consumer - Reffkin is focusing not on the long-term value of all this, but the short-term value of what he can sell to shareholders and what he can generate from investors. So why is he betting on the short term?
It is because I think he already knows, with his 7 short years into this business, that the long-term definition of residential brokerage is not anything even close to what we are fighting to preserve today. He basically sees a lot of opportunity for a short-term gain and far too much pain in the long term. Thus his never ending and intense support for top producers and firms with top producers.
He knows the value of increased volume, but it is not related to commission revenue. He knows that it is to harvest more opportunities to capture business from consumers other than through generating commission revenue. His machine is geared to take more of your transactions generated by your agents and to move them to his company so that he is able to do more with the transaction than just list and sell a consumer a property.
It has long been said that in terms of commission revenue, volume covers up a multitude of sin but now Compass knows that the same volume is highly valued by Wall Street for other reasons.
If you are in any doubt of this just think about how Facebook, Google, Netflix, Spotify, LinkedIN and so many other have been reward for “consumer volume" and not revenue. The reality of that fact on Wall Street is shocking.
Will there be a market for today's real estate model? That I am not certain. Will there be a role for a new model and for you and your company? That my friend, is entirely up to you.
Have a great day!