Compass, which has been touting the growing popularity of its private exclusives, recently brought its inventory push in-house, offering agents and their clients a marketing incentive to begin their listings off the MLS.
The brokerage offered a $100 social media campaign for every listing an agent has that begins as a Compass private exclusive and moves to a Compass “coming soon,” according to an email to agents from Compass CEO Robert Reffkin obtained by The Real Deal.
The campaign will help agents in “winning more listings, getting more buyer leads, boosting visibility of your listing page on Google, helping sell your listing faster, and securing more signed Buyer Representation Agreements,” Reffkin wrote in the email.
The incentive program, which began on Feb. 1 and runs through the end of May, comes amid debate in the industry over the value of private listings. Independent brokerages, listing services and aggregators have dug their heels in about the value of listing homes publicly, while Reffkin has been trumpeting the need for consumer choice in how they list their home.
The National Association of Realtors’ Clear Cooperation Policy restricts how Compass can market listings off-MLS, something Reffkin has repeatedly criticized. More recently, he has been pushing the popularity of private exclusive listings and “coming soon” listings as evidence that consumers want the ability to freely list off the MLS.
But the internal incentives to keep listings from going directly on the MLS calls into question how enthusiastic consumers are to list their homes as private exclusives and opens the brokerage to criticism that keeping listings off the MLS helps, more than anybody, itself and its shareholders.
The inventory play
Compass’ strategy around building its off-MLS listings has come as part of a larger push to build its inventory and compete not just with brokerages, but listing services and aggregators.
The company has recently been promoting its “3-Phased Marketing Strategy,” which entails moving sellers’ listings through a funnel from private exclusives to only being available on compass.com as a “coming soon,” to finally being on the MLS.
“Our goal is to make it clear that Compass agents and Compass.com have more inventory than third-party sites, sending a strong signal to buyers that if you aren’t working with Compass agents or aren’t searching Compass, you are not seeing all the inventory,” Reffkin said on earnings calls last year.
The other benefit for Compass — aside from potentially attracting clients and agents who don’t want to miss out on homes that are listed off the MLS — is that the company is more likely to co-broke a deal when only Compass agents can see private exclusive listings.
“You always want to give a listing maximum exposure and have all eyes on it,” Brown Harris Stevens CEO Bess Freedman said. “It’s not for some greater good, like he’s trying to help the world. He’s trying to get as much money as he can.”
In a blog post last month, Zillow CEO Jeremy Wacksman wrote that the use of private listings is “designed to benefit a participating brokerage’s own bottom line as an attempt to ‘double dip’ on commissions from both sides of the transaction within their brokerage.”
“At Compass, we co-broke with everyone,” Reffkin said in a press release earlier this week noting that agents from other brokerages can see “Compass Coming Soon” listings by going to Compass.com.
Good for who?
But Reffkin has also been on his soapbox about the benefits consumers get from marketing their homes off-MLS at first.
In addition to metrics on the benefits of pre-marketing, Reffkin also posted that 94 percent of Compass listings sell on the MLS. A spokesperson for Compass said this reflects “the primary value to homeowners is pre-marketing, including ever-important price discovery.”
He has also pointed to the growing number of Compass’ off-MLS listings as evidence of the consumer demand for alternative listing strategies. On this past quarter’s earnings call, he said that the 7,500 listings “only available by working with [a] Compass agent or by searching Compass.com” was “early proof” of the value consumers were seeing from keeping their listings being publicly searchable on the MLS.
But according to Jason Oppenheim, president of his eponymous West Hollywood brokerage, the agent incentives are evidence that consumer interest in these exclusives is “not organic.”
“We knew they were encouraging their agents regardless, but now there’s a blatant financial incentive to do it,” he said. “If they’re doing this for the client, then why would you need to incentivize agents?”
StreetEasy’s general manager Caroline Burton added that agents who are “incentivized to push private listing networks must understand the negative impacts to the clients they serve.”
“It’s an inherent conflict,” said Freedman. “Our obligation is to the seller. When we sign an exclusive with them, we are to put their interests first ahead of our own. That’s like the golden rule. This is putting Compass’ interests first.”
A spokesperson for Compass replied to the claim by citing internal research that showed that homes with “strategic pre-marketing” were associated with 2.9 percent higher closing prices and received offers 20 percent faster.
“We are doubling down on our commitment to better serve homeowners by offering a limited-time complimentary social media campaign designed to maximize the return on what’s likely their most valuable asset,” the spokesperson said in an email.
In addition to the individual incentives, Compass is also running an incentive for offices: the first five that have an 80 percent adoption rate of the company’s phased marketing strategy, which entails first listing homes off-MLS, will receive local marketing campaigns including billboards and social media ads.
Reffkin wrote in the email that by participating in the incentive program, “we can protect home values, elevate your role as an agent, and maximize outcomes for your clients.”
One former Compass agent who received the email said the company has always encouraged agents to use its off-MLS tools, but that the push has ramped up in the past year.
“Is Compass trying to create a competitive advantage or are they doing what’s best for the customer,” the agent said. “To incentivize agents to do it for every listing, who does that benefit?”