Ladies and gentlemen, welcome to tonight’s headline fight! In the red corner, weighing in at almost $2.5 billion in total equity, the heavyweight champion Realogy! Still in the midst of a doping scandal courtesy of his manager, NAR, he’s still raring to go. In the blue corner, the tech dealer turned real estate player, the new kid on the block, valued at almost $4.5 billion, Compaaaass Iiiiinc.!!
Old vs. new? Wrong vs. right? Or just another squabble to add to the pile of recent real estate kerfuffles? Tune in to find out!
Ding ding ding.
Here’s the lowdown: Realogy, one of the biggest players in the real estate game, is suing Compass Inc. for 1) poaching top agents and getting them to breach non-compete clauses, and 2) trying to hack into Realogy’s servers to gain access to exclusive listings and steal other trade secrets. Compass say they’re not doing anything unethical, that they’re dedicated to making the real estate industry a better place.
So, what is the truth?
A quick look at both companies’ histories and legal records show that neither can claim to be totally spotless. I’m not pointing fingers, just basing that argument on the public record. Someone looking into either of them could find red flags, should they so wish.
Compass Inc. is a newbie. Starting in 2012, the New York-based business specialized in software for real estate professionals before realizing there was money to be made by entering the industry itself. By 2016, they had a stable of over 100 agents and were frequently hiring top agents from other companies, enticing them with salaries often twice or three times higher. Still, these wages don’t always make loyal workers. A number of high-profile agents jumped ship soon after joining the firm, citing disillusionment with Compass’s impersonal style and dealings. Add to that the alarming number of lawsuits against the company, with Realogy’s being the tenth in five years, ranging from allegations of software theft to breach of contract and sniping rival companies’ star agents, something Compass has become downright notorious for.
Realogy, on the other hand, has been around for six years longer than Compass, and it’s acquired a number of high-profile subsidiaries during its lifetime, like Century 21, Sotheby’s, and Coldwell Banker. Such an expansive network is bound to attract a fair amount of lawsuits, large and small, but the most interesting one is Realogy’s involvement with the recent Moehrl v. NAR suit, which alleges Realogy is part of a cabal of real estate companies artificially inflating the commissions of agents. Realogy’s suit against Compass is entirely its own thing, but it’s worth noting the timing. Casting the industry’s more recent, techy companies in a bad light might be good for the reputation of the established services that make up the bulk of the NAR, and it dispels the notion of all real estate companies being friends, complicit in tricking the public. If the suit turns out in their favor, it could be good PR.
Is this a case of a predatory tech company biting off more than it can chew, or of a resentful industry giant refusing to give up its crown and adapt to a new, more cutthroat market? There’s ways to argue for both sides, but it has to be said that Compass doesn’t do itself any favors. Its practices check the boxes of Big Tech paranoia, from the Facebook-style invasion of privacy to the Amazon-style disdain for competition, and even other, similarly tech-oriented companies have a bone to pick with them – Compass is in the middle of being sued by Zillow over alleged IP theft and breach of contract.
In wrestling, the bad guys are the “heels” and the good guys are the “faces.” Compass’s reputation in the industry certainly makes them look like heels. Does this make Realogy the face? Maybe. It depends how you look at it. But one thing’s for sure: it’s going to be a hell of a match.