Kathleen Pender of the San Francisco Chronicle | March 9th, 2019<\/p>\n\n\n\n
The\ncurrent issue of Gentry magazine has a two-page ad with the headline \u201cBig\nBrother or Real Estate Brokerage?\u201d The copy reads: \u201cSome brokerages use your\ninformation to make money on more than just real estate and mortgage\ntransactions. We don\u2019t. Your data is yours. Our job is to safeguard it.\nPeriod.\u201d<\/p>\n\n\n\n
The ad\nis for Alain Pinel Realtors. The unidentified \u201cBig Brother\u201d is Compass, the\nventure-funded New York firm that\u2019s been gobbling up Bay Area brokerages\nincluding \u2014 as of last Monday \u2014 Alain Pinel.<\/p>\n\n\n\n
Compass bills itself<\/a> as\na technology firm, but it\u2019s never been very clear, at least to outsiders, what\nits technology does.<\/p>\n\n\n\n \u201cOne of\nour big questions\u201d about Compass was what it does with data it gets about\nbuyers and sellers from agents, said Alain Pinel President Mike Hulme. Some\nagents from Alain Pinel and other firms were using that question \u201cas a talking\npoint\u201d with potential clients. \u201cThis was a way for brokers like ourselves to\nspin it and make it a scary situation,\u201d he said.<\/p>\n\n\n\n Hulme\nsaid he had to be convinced that Compass would not misuse data about buyers and\nsellers gleaned from agents before agreeing to the buyout. When he was shown\nthe \u201cmarket plan\u201d Compass shows investors, \u201cwe couldn\u2019t find anything, truly,\nthat was concerning in regards to data.\u201d Hulme said he\u2019d retract the Big\nBrother ad, which has run in various publications since last fall, if he could.<\/p>\n\n\n\n Compass\nhas assured its agents their data is theirs alone. \u201cWe will never contact your\nclients without your permission,\u201d it said in a data pledge. \u201cThe data is not\nwhere the money is, the money is creating a technology platform that makes\nagents better at their job,\u201d said Kevin Knight, Compass\u2019 general manager for\nNorthern California.<\/p>\n\n\n\n Hulme\u2019s\nfather, Paul Hulme, founded Alain Pinel 30 years ago and built it into a\npowerhouse in Silicon Valley and the Peninsula. In the Bay Area, it ranked\nsecond to Coldwell Banker and its sister brands in sales volume in 2017,\naccording to Real Trends, a research and consulting firm.<\/p>\n\n\n\n Compass\nfirst approached Alain Pinel in August, right after it acquired Paragon Real\nEstate Group and just before it announced the acquisition of Pacific Union\nInternational. Those two firms ranked 10th and third, respectively, in 2017 Bay\nArea sales volume.<\/p>\n\n\n\n The\nHulmes rebuffed Compass in August, and bulked up by buying Hill & Co., a\nsmaller San Francisco firm that also catered to the high-end market.<\/p>\n\n\n\n Alain\nPinel, with almost 1,300 agents, was the nation\u2019s seventh-largest residential\nreal estate brokerage in terms of sales volume in 2017, though only 73rd in the\nnumber of transactions, according to Real Trends. Its average sales price was\n$1.6 million, the nation\u2019s highest.<\/p>\n\n\n\n Compass\nresponded by poaching some of Alain Pinel\u2019s top agents, including Judy Citron,\nwho was the nation\u2019s 20th largest individual<\/a> agent by sales\nvolume last year; and Mary and Brent Gullixon, who ranked as the nation\u2019s 18th highest-volume<\/a> team, according to\nReal Trends.<\/p>\n\n\n\n It\u2019s\nimportant to remember that the customers of brokerage firms are agents, not\nbuyers and sellers of homes, who are the agents\u2019 clients. Most agents are\nindependent contractors who share a portion of their commissions with their\naffiliated brokerage, usually in exchange for office space, marketing and other\nservices.<\/p>\n\n\n\n Compass\nhas been luring top agents with some combination of cash, stock, marketing\nmoney and more favorable commission splits, according to firms that have lost\nagents to Compass.<\/p>\n\n\n\n Citron\nsaid she joined Compass in early November, not for the money, but because \u201cI\nwanted to align myself with a forward-thinking company.\u201d Compass has \u201can\namazing platform\u201d that lets her see, all in one place, where all of the web\ntraffic to her listings is coming from, so she can target her marketing better.<\/p>\n\n\n\n After\nlosing some of its top producers to Compass, \u201cwe thought joining them versus\nfighting them was in our best interests,\u201d said Hulme. He wouldn\u2019t disclose the\npurchase price, but said it was \u201csignificantly less\u201d than it would have been\nbefore his company lost agents to Compass.<\/p>\n\n\n\n D.J.\nGrubb, president of Grubb Co. Realtors in the East Bay, called the deal \u201ca\nhostile takeover. They (Compass) go in and poach … the upper performers,\ncreate insecurity and then buy at a wholesale price.\u201d<\/p>\n\n\n\n Compass was co-founded by Ori Allon, who has a Ph.D. in computer science and previously worked for Twitter and Google, and Robert Reffkin, who hails from Goldman Sachs and McKinsey.<\/p>\n\n\n\n \u201cThere\nare two world views emerging for the future of real estate,\u201d Knight said. \u201cOne\nis that technology will ultimately replace agents. The other is that technology\nwill ultimately make agents better at the things they are already great at. We\nespouse the second view.\u201d<\/p>\n\n\n\n Compass\nhas raised a total of $1.2 billion in venture capital from investors, including\nSalesforce CEO Marc Benioff and Thrive Capital, founded by Joshua Kushner,\nbrother of President Trump\u2019s son-in-law Jared Kushner.<\/p>\n\n\n\n