By contrast, legacy brokerages did not perform nearly as well. Anywhere Real Estate, Douglas Elliman, and eXp—all among the largest in the country — grew revenue less than 1%, 4%, and 7% year over year, respectively.
What accounts for this difference?
Technology is part of the story. Robert Reffkin, Founder and Chief Executive Officer of Compass explained, “As the market recovers, we believe the combination of our cost discipline and structural advantages, which include our end-to-end proprietary technology platform, national scale, network of top agents, and depth of inventory, positions Compass to capture significant upside” And what, according to Compass, does that technology look like? A more efficient and intuitive customer relationship management system (CRM); tools to create better marketing materials; streamlined client communications; and a place to manage the deal pipeline, transactions, and checklists in one place.
Consumers purchase homes, but Compass touts its technology among prospective real estate agents. Why? Because agents are the heart of the business. They drive revenue and for all intents and purposes are the entire company in the eyes of homebuying and home-selling clients.
“Real estate agent” may be a single term, but it covers a multitude of functions: presentation, negotiation, consolation, trouble-shooting, travel, project management. Agents are salespeople, media personalities, psychologists of a sort, and chauffeurs all in one, working from cars, restaurants, doorsteps, phones, and dozens of homes that are not her own. Across each of these locations and functions, they have to be fluid. Every moment of friction is potentially a lost sale. Technology is the lubricant that increases that flow. It accrues directly to the bottom line and improves agent recruitment, retention, and performance. The right tools make the best agents better and raise the bar across the board.
Among publicly traded companies, Compass has done technology development and implementation better than most of its peers. But privately held companies, specifically high-velocity startups, are typically the harbinger of what is to come.
What future state are these companies creating today? Startups in the real estate technology space are pushing the boundaries of staging with photorealistic virtual renderings of homes; in-person and remote touring; innovative financing options; better home renovation; and fraud-mitigation to protect high dollar-value transactions, just to name a few areas. And among privately held brokerages, the one executing most effectively on what Compass is proving in the public markets is SERHANT. Camber Creek evaluates hundreds of real estate startups per year; SERHANT. is one of our current investments.
SERHANT. sits at the intersection of real estate, technology, and media. Founder and CEO Ryan Serhant is a leader in leveraging social media to drive sales. In addition to one of the fastest-growing real estate brokerages in the country — the company completed almost $600 million in sales in the first three weeks of January alone — it has three additional mutually reinforcing business lines: SERHANT. Studios, which produces the content utilized by SERHANT. agents; SellIt.com, a sales training subscription program; and S.MPLE, a proprietary AI workflow automation platform. SERHANT. is its own sales technology incubator and accelerator. It develops tools that solve problems for its agents then uses media to share these innovations across the real estate sector and far beyond. S.MPLE is a back office in a box. Instead of spending hours running comps, fine-tuning presentations, and scheduling client meetings, agents can just tell S.MPLE what they need, and it does it.
Ryan Serhant says he wants SERHANT. to become the first screenless brokerage. In a world where your voice plus the right AI tools can accomplish millions of tasks, screens are not fast enough.
Compass is being rewarded for leading with technology, and rightly so. Its example creates more room for startups to accelerate this trend.
Jeffery Berman is a General Partner at Camber Creek, an investment firm driving innovation in the real estate industry.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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