Compass-Anywhere: First play in a long game to bring commission splits down

"I suspect this is not about creating a bigger brokerage per se because, at least for the foreseeable future, you would just have a bigger, less profitable brokerage with a lot of debt, he said. This is more about Compass positioning itself to better overturn Clear Cooperation and become a real estate search portal' with listings no one else has. If this is successful, they will create a direct link with the consumer and use that link to sell' that consumer back to the agent in the form of a lower percentage of the commission."

"What the agents fail to understand is that this is the first play in a long game to reduce their splits. I do not expect Compass to admit this. Everyone's been dissecting the consumer-facing implications of market-share consolidation. This view speculates that Compass will use scale of listings to roll back the generous splits that have been used by Compass and others to woo and retain star agents. After all, once you're large enough, rubbing a star Beverly Hills or Malibu agent the wrong way may not matter like it still does these days."

"Rent and staff. They're the two biggest expenses on a balance sheet, Nourmand & Associates President Michael Nourmand pointed out this past week in chatting about the Compass-Anywhere news. They're also the first things to be scrutinized when reducing expenditures. This is M&A 101, Nourmand said. What is M&A 101? The first thing you do is say, Nothing's going to change' and then you slowly make change"

Compass' acquisition of Anywhere Real Estate appears aimed at creating a proprietary marketplace with exclusive listings and a direct consumer link. The move could enable Compass to challenge Clear Cooperation and operate as a consumer-facing search portal that controls access to listings. A direct link to consumers could be used to route business back to agents at reduced commission percentages, squeezing agent splits over time. Post-merger cost scrutiny will focus on rent and staff to improve margins. Scale and consolidation could reduce individual agents' bargaining power, especially star agents in high-end markets.

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