Where Real Estate Gets Its Dirt

Warren Buffet wants out of real estate

Compass negotiating to buy Berkshire Hathaway HomeServices

“News of the negotiations between the companies was notable because it would represent a shift in strategy from Warren Buffett’s Berkshire Hathaway conglomeration. HomeServices is a subsidiary of Berkshire Hathaway Energy, a company silo that otherwise exclusively includes energy production and transmission companies. Berkshire Hathaway, Inc. also holds other ancillary real estate services and the insurance company GEICO.”

I could make the case of Stone Point Capital buying Keller Williams and Rocket buying Redfin as an optimistic view for the industry. Meaning, “big money” thinks real estate is going to pretty much operate as it has in the past. Which is good for organized real estate

I don’t know why, but this news hits different.

Industry Relations Podcast: The Duel over Dual Agency

In this episode of Industry Relations, Rob and Greg dive into the controversy surrounding dual agency, private networks, and the MLS’s role in protecting small brokers. They break down the industry’s long-standing acceptance of brokerage-level dual agency while questioning why teams are getting a pass. Plus, they debate whether Compass’s push to double-end deals is just standard brokerage strategy—or an attempt to reshape the industry. If you want unfiltered takes on where real estate is headed, this episode is for you.

Key Takeaways

• Is Brokerage Dual Agency Bad? Rob argues that the industry has historically supported it—so why the sudden outrage?

• The Compass Controversy: Greg and Rob discuss whether Compass is playing the same game as everyone else or trying to blow up the MLS for its own benefit.

• The Team Dual Agency Dilemma: Should teams be held to a different standard? Rob questions why brokerages get a pass but teams don’t.

• MLS Protection for Small Brokers: Rob suggests the MLS has always been designed to protect smaller brokerages—should that continue?

• The Future of Private Listings: If brokers create exclusive networks, will they face lawsuits—or is that just scare tactics?

Watch Us on YouTube 

Connect with Rob and Greg: 

Rob’s Website

Greg’s Website

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Why is Robert Reffkin spreading lies about MLS?

Bright MLS CEO checks Robert Reffkin on Clear Cooperation Policy

“What concerns us the most is that these false claims are trying to harm us and benefit primarily the brokerage through sellers not getting the widest exposure for their listing.

“In our view, it could put homebuying and selling in the hands of a select few agents who could choose with whom they want to share information. Ultimately, we think getting rid of the norms and protocols about how information is shared would slide the real estate industry down the mountain into a heap where buyers and agents are forced to pore through online marketplaces and thousands of brokers’ sites to weed out scams and find possible properties. I am confident no one thinks that’s a good idea.”

Brian Donnellan, CEO Bright MLS

Masterful rebuttal from Brian Donnellan calling out Refkkin’s nonsense. At CMLS the misinformation Reffkin was putting out on stage reminded me of another meme.

But why put on such a show? What with all the hand waving? We all know what’s going on. Brian Boero’s post, “Clearing the air of Clear Cooperation” laid it out.

“Some big brokers, among whom Compass is the most vocal, want to accelerate their private listing efforts. Compass has been quite clear about their desire to become a listing destination. Given years of eroding margins, and the potential for commission compression in a post-settlement world, big brokers would like to keep as many transactions in-house as possible and fully leverage their hard-won market share. A critical mass of private, exclusive listings is also a big recruiting lever.

Why not just say that? It’s an obviously rational position, and one that is not inherently evil.”

It seems that culturally, we now rely on fear as the main way to make a point. Whether it’s immigrants ‘eating our cats and dogs’ or the ‘end of democracy.’ Just stop.

And by the way, if Reffkin or any other broker thinks that private/exclusive listings are the right strategy to increase their margins, they need to think harder about this problem. The market will turn, and coming up with band-aid solutions to current problems is not the answer. The real reason you’re failing is that you’re not delivering value to your customers. Focus on that, not on spreading fear.

Opendoor weirdness

Friday Flash: The year things got weird

“No, 2019 was the year consumers, also known as people, began to do very strange things in very significant numbers.
 
Two years ago, many in the industry thought the idea of a home seller paying 7-10% in fees for the privilege of getting a low-ball offer on their home was crazy, a pathway only for the desperate. 
  
Turns out lots of people were willing to do this in 2019. “

Brian Boero, 1000watt

Over the holiday break, I kept thinking about this insightful post (as usual) from Brian Boero of 1000watt. It pairs nicely with a webinar I did with Tyler Hixson, Opendoor’s Director of Real Estate Partnerships & Strategy.
You can watch the replay of the webinar in the video below. But one of the more “weird” things that came out of the discussion is that a vast majority of consumers were willing to pay the fee from Opendoor AND the agent’s full commission. They saw value in both. They appreciated the certainty and speed that Opendoor provided but also saw value in the guidance they received from their agent.

Think about that. In an age where many business models are trying to push commissions lower, or get rid of them entirely, many consumers are willing to pay more.

The fact that iBuyer offers have gone from “lowball” to fair market value might also be a factor. Here’s a quote from a recent article in the Wall Street Journal.

“The new study from Mike DelPrete, a scholar in residence on real-estate technology at the University of Colorado at Boulder, found Opendoor and Zillow typically purchase homes for just over 1%, or around $3,800, less than the value of the home as determined by First American Financial Corp. , a real estate title insurance company.”

These two shifts are more significant than people realize. iBuyers are not an either-or proposition, but something entirely different.

Things definitely got weird in 2019, hell I would include the entire decade. What weirdness this new decade will bring is what I’m excited about.

Back to work.

Industry Relations Episode 41: 10 Defining Moments & Trends in the Last Decade of Real Estate

On January 1, 2010, organized real estate was still reeling from the recession. Dale Stinton was steering the ship at NAR. Zillow was seen as the enemy of the MLS. Real estate software was meh. Agent teams were rare. Nearly all brokerages took a split. Selling your house online seemed outrageous. And we still signed documents in pen.

On this episode of Industry Relations, Rob and Greg are looking back at the last 10 years in real estate. They discuss the passing NAR’s MLS Statement 8.0 Clear Cooperation Policy, debating the significance of the office exclusives loophole and how it might lead to government involvement. Our hosts also express their disappointment around the Newsday investigation in Long Island, Testing the Divide, challenging brokerage leadership to make a strong statement against the egregious racism it uncovered. 

Greg and Rob go on to share their top 10 defining moments and trends with the biggest impact on the industry over the last decade, describing how the rise of agent teams, 100% commission brokerages, the iBuyer model and consolidation have transformed organized real estate. Listen in for insight into how NAR’s decision to fund RPR and Upstream changed the way the MLS saw Zillow and explore how the space has evolved from 2010 through the end of 2019.

Editor’s Note: We did record an Episode 40 that was never aired. It was about Policy 8.0 but wasn’t ready before the vote. After the vote passed we decided it didn’t add to anything to the issue.

What’s Discussed: 

NAR’s passing of the MLS Statement 8.0 Clear Cooperation Policy

Rob & Greg’s take on the Newsday investigation in Long Island

How the loophole in 8.0 could lead to government involvement

The 10 defining trends/events in the last decade of real estate

  1. The end of poorly designed software
  2. The rise and domination of agent teams
  3. The transition in leadership at NAR
  4. Opendoor pioneering the iBuyer model
  5. Zillow’s acquisition of Trulia
  6. 100% commission brokerages
  7. Consolidation and the influx of capital
  8. The practice of buying agents/agent teams
  9. The mainstreaming of digital signatures
  10. NAR’s decision to fund RPR + Upstream

Connect with Rob and Greg:

Rob’s Website

Greg’s Website

Resources:

MLS Clear Cooperation Policy

Compass Pre-Litigation Letter to Bright MLS

Bright’s Response to Compass

Newsday Documentary: Testing the Divide

Rob’s Blog on the Newsday Piece

1000watt Article on Real Estate Software

The Millionaire Real Estate Agent by Gary Keller with Dave Jenks and Jay Papasan

Ben Thompson Interview with Rich Barton

Our Sponsors:

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Compass’ COO Maëlle Gavet Out

Compass’ COO Maëlle Gavet set to leave company next week

“Gavet’s departure comes one week after the company confirmed its head of communications Jason Post would be leaving to take a new job at Google. Gavet will be with Compass until Oct. 4 as part of her transition.
Reffkin announced Gavet’s departure on Tuesday in a companywide memo. “

I hate being right all the time.

Inman interviews Maëlle Gavet, chief operating officer of Compass.

Inman News:

Gavet spoke at length with Inman about the results of Compass’ technology push, her working relationship with Reffkin, the departure of multiple executives and what exactly Compass has accomplished. Her remarks have been edited for clarity.

Seems that the latest shakeup at Compass was a much bigger thing that I thought. Even some press on The Real Deal on “…tension between CEO Robert Reffkin and COO Maelle Gavet on how to run the company — on everything from decisions marketing strategy to product development.”

Yikes!

Maëlle Gavet:

“To be perfectly honest with you we both very much believe in the fact that a partnership requires some type of debate, this is very important. Robert and I are different people by background, by gender, by approach. We both spent a lot of time building this partnership.”

Translation: We hate each other.

Inman:

In the internal letter [Reffkin] sent out in January that announced this three-month push, he had said you’re ‘bottom line, responsible for the entire initiative,’ and [Malik] will take the point on product marketing. He also said [Seidman] and [Sirosh] will have delivered everything agents need to bring the core of their business onto the Compass platform. At the end of this push, two of those people are gone and you’ve had your duties shifted. Is it fair to say the push underdelivered in [Reffkin’s] eyes? Is that an uncharitable reading?

Maëlle Gavet:

I understand where you’re coming from, but that’s not exactly what happened. Let me start by talking about the results. I think the results have been good. We have hired close to 200 people in product and engineering since the beginning of the year, which is a big number. We acquired Contactually based out of Washington D.C., which was an important acquisition for us. We started displaying the listing agent on every listing whether or not its a Compass agent. We launched a new geo-agnostic search experience. We revamped entirely our iOS and Android app. We’ve done a lot of things.
It’s actually more because Robert felt that the product and engineering team was on a good track and delivering that he decided he wanted to be more involved in the product.

Really? I mean, really? Since when does the CEO of any company shift their focus on divisions that are “on a good track and delivering” instead of areas that need the most help?

The interview is very revealing. You get a real sense that Compass is in trouble. Maëlle comes across as some sort of corporate robot, which is such the antithesis of the perception of Compass, CEO Robert Reffkin.

The sad part is it’s the same self inflicted wound a lot of leaders make in this space, “over promise and under-deliver.” I also have a feeling that more changes are coming.

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