Real estate agency

Why rivals fear this real estate agency

By opening third office in Brooklyn, brokerage startup Compass is shaking things up with technology, venture capital and rapid growth

Through Juliette Fairley – May 9, 2017

A Compass agent presents his new software tool, Collections (Photo courtesy of Compass)

For decades, the real estate offices that lined Brooklyn’s Court Street were mostly family-run operations. Then, inevitably, the rise in real estate values ​​drew the big firms to Manhattan. But now comes a force that could be as disruptive to the industry as Amazon, Uber, or Airbnb.

Judging by its facade, the latest brokerage house to open in Cobble Hill may look like many others. A little more polished, perhaps, with friendly touches like a water bowl in the front for thirsty dogs. But in the storefront, which is the national real estate agency’s third Brooklyn outpost Compass, beats the heart of a fierce competitor. Compass, a startup that rocked the industry from Manhattan to Beverly Hills, is now bringing its groundbreaking formula to Brooklyn’s wealthiest neighborhoods.

Why in this street, taking the place of a old used bookstore? Partly because a new, high-end generation of child-rearing years has decided that part of brooklyn has all the attractions of an ideal place to settle: convenient location, picturesque buildings, safe streets and good schools. What adds to high demand and rising prices. “Brooklyn continues to be a destination and a place where people want to raise their families,” said Mary Lowe, who manages agents in the Cobble Hill and Williamsburg offices. (Compass also has an office in Park Slope.) “There is certainly enough business that Compass has an interest in being in Cobble Hill.”

Brooklyn real estate

Mary Lowe of Compass, who operates offices in Cobble Hill and Williamsburg (Photo courtesy of Compass)

Compass will carve out a healthy share of this activity, judging by its performance elsewhere. With a powerful combination of venture capital funding, technological knowledge, and aggressive recruiting of top brokers, Compass has left rivals in an already competitive field. For its part, the management of the company describes its style as simply innovative. “Compass is building the future of real estate,” Lowe said The bridge. “We have exciting technology and we are also building the future culturally by being super collaborative. Our agents are talented, seasoned and agile. Most recently, Compass has extended to Harlem, hiring the seven agents making up Harlem Properties, a three-year company.

At just four years old, Compass snuck up on its older competitors with its rapid expansion. The company has 1,300 agents at 28 locations, including Aspen and the Hamptons. Growth is fueled by $ 225 million in funding from Goldman Sachs and financier Peter Thiel. Founders Fund. These investments place the valuation of the nascent company at over a billion dollars. The meteoric rise has aroused some skepticism. “If they’re worth $ 1 billion, I’m worth $ 10 billion,” New York real estate mogul Arthur Zeckendorf said. said to the Wall Street newspaper. the private company of Zeckendorf, Terra Holdings, owns Halstead Property and Brown Harris Stevens, among the giants that Compass challenges.

However, just like the dizzying valuation of the Tesla electric car company Often justified by the fact that it should be viewed as a tech company that puts batteries on wheels, Compass arguably is a software company that just happens to be in real estate. And it’s the one that is growing rapidly, tripling its revenue last year, to $ 180 million, the company said.

The young founders of Compass had tremendous preparation for their roles. Co-founder Robert Reffkin, the CEO, holds an MBA from Columbia and worked at Goldman Sachs as well as McKinsey, the consulting firm. (His company bio indicates that he recently completed 50 marathons, one in each state, to raise $ 1 million for nonprofits.) Co-founder Ori Allon, the executive chairman, holds ” a doctorate in computer science and founded two technology companies, one of which he sold to Google and the other to Twitter. For good measure, the company’s chief technology officer, Liming Zhao, also has a doctorate in computer science. His previous job was to “develop software for Anton supercomputer for molecular dynamics simulations.

brooklyn real estate

The Compass office in Cobble Hill. While the company has a valuation of around $ 1 billion, the office is so new that recently there was only a paper sign stuck to the window to identify itself (Photo by Crary Pullen)

So when these newcomers say they’re using technology to make a difference, they have some credibility. Among their developments to date are the Compass mobile app and Collections, a portal through which home buyers and sellers can organize an online portfolio of properties, receive price and availability updates, and communicate with their broker on a single platform. Compass compared Collections to Pinterest, the image collection site. Compass says part of the rationale for its technology orientation is its customer demographics. “Millennials are an important force in decision making for any business,” Lowe said. “They’re buying and researching property in Brooklyn and engaging with real estate agents in a more modern, tech-driven way.”

As some competitors roll their eyes at the agency’s tech swagger, they shake their fists against alleged agent poaching and other competitive methods by the company. Rival company Citi Habitats sued Compass in 2014 for allegedly hacking its proprietary list database. then compete Corcoran Compass sued for “brazenly and intentionally” looting Corcoran’s offices in search of talent. Compass filed a counterclaim accusing Corcoran of launching a smear campaign against its former agents. In 2015, the parties reached a settlement and committed to “resolve their differences”, The real deal reported.

brooklyn real estate

Compass co-founders Ori Allon and Robert Reffkin (Photo courtesy of Compass)

Even so, the backlash from rivals has not completely subsided. Compass has stirred the Beverly Hills real estate community with moves like the hiring of agent Tomer Fridman, better known as Kim Kardashian’s broker, as well as three of Fridman’s colleagues, all from a rival of Compass. Beverly Hills all-star broker Mauricio Umansky, who recently participated in the $ 100 million Playboy Mansion sale, went on a rampage last month in a interview with The real deal. “I think what Compass is doing from a poaching point of view is absolutely horrible and disgusting to the industry,” he said, accusing Compass of fostering “competitive wickedness” driven by high finance. “I think their model is not viable. My prediction is that they will be closing their doors in five years.

Perhaps this is just wishful thinking. Compass may be smart enough to withstand hindsight and efficient enough that clients don’t care about having a tough defender on their side. In Brooklyn, the competitive fireworks display may be tempered by what Compass director Lowe sees as a calming residential market. As prices continue to rise, Lowe believes the frenzy of buying hair triggers has subsided. “The Brooklyn market and the market’s customers, including buyers, sellers and investors, are more demanding than they have been in the past,” Lowe said. “The market is not that fast, and all parts of the market take a lot more time and consideration before they make a purchase.”

At the new Cobble Hill office, the Compass team has a friendly face. “We are very excited to get involved in the Cobble Hill neighborhood,” said Lowe. “Since last week, many residents of the neighborhood have already seen us. A list of events is planned, she said, including “a neighborhood entrepreneurial event where we invite local businesses for a get-together and event with friends and family.” Looks like their dogs are welcome too.

Juliette Fairley is an economic and financial journalist who wrote
for The Wall Street Journal, The New York Times, Commercial Observer,
and many other publications.

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