Compass has long had a contentious relationship with the National Association of Realtors. Real estate veterans speculated Monday that NAR could thus suffer as Compass grows
Compass and Anywhere rocked the real estate industry Monday morning when they announced a $1.6 billion acquisition deal. But very quickly, many in the industry began to wonder what the news might mean for another entity altogether: The National Association of Realtors.
Could this news intensify, some wondered, a simmering rivalry between Compass and NAR? Could it change NAR’s membership? Does it impact NAR’s influence?
Compass and Anywhere wouldn’t weigh in on the question on Monday. But industry veterans who spoke to Inman in the wake of the news pointed to recent friction between NAR and Compass, and speculated that the massive trade group could ultimately be the biggest loser following real estate’s most impactful M&A deal in recent memory.
Throwing some weight around
For generations now, NAR has been the defining entity in the real estate industry. But speaking with Inman Monday morning, Russ Cofano — an industry veteran who most recently served as CEO of Collabra Technology — said that the organization was founded on the idea of a fragmented broker landscape. In other words, Cofano explained, NAR is a product of a real estate industry that includes numerous smaller brokerages and brands.
But the Compass-Anywhere merger is the latest — and largest — move toward consolidation, much as has happened in the past in other commercial sectors, such as retail. Compass itself has been a major player in that story, and previously scooped up Pacific Union, @properties and Latter & Blum, among many others.
And as Compass grows yet again, Cofano said, that makes it harder for smaller companies to compete in terms of scale and efficiency. That, in turn, changes the landscape that led to NAR in the first place.
“NAR was was formed on the backs of the mom and pops, and local associations and MLSs,” Cofano said. “What caused the mom and pops to go away? Well, they couldn’t compete.”
Cofano — who overall described Monday’s announcement as a “win-win” for the companies — also noted both Anywhere and Compass have had conflicts with NAR, and that the merged companies’ increased power could lead to less power for the trade organization.
“I think you’re gonna see Compass basically trying to throw its weight around and causing some change in terms of whether and to what extent they’re members of NAR,” Cofano said. “I think they’re going to push down a much different relationship with NAR, and NAR is going to be the big loser.”
Phillip Cantrell, founder of Benchmark Realty, similarly suggested that NAR could take a hit from the deal. He noted that Compass CEO Robert Reffkin has been critical of NAR in the past, adding that “the biggest loser I believe will be Zillow, with NAR right behind them.”
“I think you start with […] looking at the main value props for NAR — advocacy, data accumulation and dissemination, and education,” Cantrell told Inman. “The only one of those that Compass was not already doing on its own was advocacy. At this scale, suddenly they can. So what value is NAR to their agents at this point?”
Cantrell went on to note Compass’ massive post-merger scale, and said that gives the brokerage a new kind of influence.
“Every single politician is going to listen to whatever they have to say, and thus NAR withers into irrelevancy,” he added.
Courtney Poulos — the broker-owner of ACME Real Estate, who also recently critiqued Compass’ strategy — told Inman Monday that she thinks NAR will ultimately now be forced to “bend” to the mega brokerage’s desires.
“NAR is going bend over backwards to whatever Reffkin wants,” she speculated. “I think that NAR would rather keep them and bend to their will than fight against them and have them leave.”
James Dwiggins — CEO of NextHome and co-host of the Real Estate Insiders Unfiltered podcast — was even more blunt, suggesting that Compass could attempt to expand its private listing network across multiple brands.
“Yes, NAR doesn’t allow that through its policies. No, they’re not going to care what NAR has to say,” Dwiggins said during a webinar Monday afternoon.
Vanessa Bergmark, CEO of Red Oak Realty, also noted recent friction between Compass and NAR and said that with the brokerage growing, “I think it makes it more challenging.”
“I can’t imagine NAR woke up today, heard the news and clapped,” she told Inman.
A long and contentious relationship
Many observers also spent Monday noting Reffkin’s frequent criticisms of NAR. Most recently, for example, Reffkin penned an opinion piece for Inman that described NAR and other real estate incumbents as “monopolies that profit from work they don’t create.”
The comments are part of a long battle Reffkin has waged against NAR. The battle erupted into public view last year when Reffkin began criticizing NAR’s Clear Cooperation Policy, which requires agents to put their listings into their NAR-affiliated multiple listing service within a day of marketing them. Reffkin was pushing for an end to the policy while also making private listings a key part of Compass’ business strategy.
Amid that push, Reffkin criticized NAR as restricting consumer choice.
In the face of pressure, NAR eventually opted to keep Clear Cooperation in placewhile adding a new “delayed marketing” option.
For his part, however, Reffkin has continued his criticisms of the trade organization.
“As it stands today,” Reffkin wrote last week, “organized real estate — namely, Zillow, NAR and MLSs — take, control and monetize listing content created by agents.”
How Reffkin’s criticisms translate into policy in a potentially much larger company, however, remain to be seen.