Washington, D.C. – Today the Consumer Policy Center (CPC) is releasing a new report revealing the increasing dominance of Compass Real Estate, their strategies for dominance, and issues that will affect its future. The study – Compass Expansion: New Data on Market Share and Double-Ending – provides new data on Compass’s expanding market share and the role of double-ending in this expansion.
“The concern is that the Compass share is not only very large but also much larger than that of major competitors,” said Stephen Brobeck, a CPC senior fellow and author of the report. “Compass is becoming so dominant in some local markets that consumers will feel both pressure and attraction to list and purchase properties through Compass agents,” he added.
The report includes an analysis of 5,000 recent sales – 1,000 each in Boston (MA), Washington (DC), Chicago (IL), Austin (TX), and San Diego (CA). In these cities, the Compass share of unit sales ranges from 30 to 40 percent, and in terms of sales volume ($s) the percentages are even higher. Furthermore, the shares of unit sales are at least four times larger than that of its main competitors in four of the cities and 2.5 times that in the fifth.
Much of the industry attention on Compass has focused on its prioritization of private listings. In phase one of this program, the only way for consumers to gain access to these listings is through a Compass agent. This strategy appears key to its high rates of double-ending sales – both buyer and sellers working with one or two Compass agents. In Washington, D.C., the double-ending rate exceeds 40 percent.
The report identifies Compass strategies for expansion. They include acquisitions (e.g., Anywhere) and partnerships (e.g., Rocket-Redfin) as well as double-ending. Through acquisitions and partnerships, Compass is also expanding its sales of ancillary products such as mortgages and title insurance.
As Compass has expanded, it has challenged, worked around, or flouted traditional industry rules. As a result, the whole industry – including the National Association of Realtors, major competitors, and portals including Zillow – have been pressured into altering their own policies and practices. “Instead of inadequate industry rules, increasingly there are no rules effectively governing industry conduct,” noted the CPC’s Brobeck.
Compass expansion has posed challenges not only to competitors but also to consumers. In the future, sellers are likely to increasingly be attracted to Compass ubiquity and to its listings that omit information about days on market and any price changes. Buyers are likely to be attracted to this ubiquity and to feel pressure to work with Compass agents to gain access to its private listings. The report speculates that in the future, Compass will try to greatly strengthen its brand through national advertising, such as Rocket’s recent Superbowl ad or major insurance company ads on TV programs.
The report also identifies challenges that Compass will face including integrating and paying for its acquisitions, greater cooperation among competitors, public and private antitrust challenges, and consumer skepticism.
