20% Market Share? Fresh Off A $100M Raise

Real estate firm Compass just finalized a $100 million funding round that values the company at $1.8 billion — and it plans on using its new cash to take one-fifth of the residential market in Greater Washington.

Compass Chief Revenue Officer Rob Lehman said in an interview that it's aiming for 20 percent market share as it takes on a newly energized Long & Foster and luxury competitors Washington Fine Properties and TTR Sotheby’s International, along with local real estate companies Century 21 New Millennium and Coldwell Banker.

“This was the first market that we ever expanded to outside of New York. As a result it’s the most mature expansion market that we have across the U.S.,” Lehman said. “We are extremely bullish and positive on our growth prospects there.”

The quest for 20 percent market share is a tall order, but Compass has grown rapidly since entering the market through an acquisition in 2014, reporting $702 million in sales volume in the metro area in 2015 and growing to $1.55 billion in 2016, according to Washington Business Journal research.

Real estate firm Compass looks to snag even greater market share in the region, according to chief revenue officer Rob Lehman.

In D.C. proper, Compass had a narrow lead on total market share at the end of the second quarter of 2017, with 12.5 percent based on $1.36 billion in total sales volume and listings by dollar amount, according to BrokerMetrics. Long & Foster had $1.34 billion and 12.2 percent market share. It's unclear how much more Compass will have to bring in to reach 20 percent across the region.

Compass had an average sale price of $735,628, compared with $674,018 for Long & Foster, $977,547 for TTR Sotheby’s and $1.3 million for Washington Fine Properties, showing that Compass still has a ways to go before it cracks the luxury market.

Lehman said the company plans to deepen its presence in D.C. proper, including Georgetown, Logan Circle and Capitol Hill while also establishing new offices in Arlington, McLean, Alexandria and Bethesda. He estimated Compass would have 10 offices in the region by the end of 2018.

One of the keys to that growth is recruiting top-performing real estate professionals drawn by a mix of the culture and technology, Lehman said.

With its technology — a series of apps and digital products — the company is trying to connect all aspects of the real estate business under one brand, whether it's connecting people with neighborhoods and houses that best suit them or the back-office tools agents need to manage their business. It is in essence a more expansive sort of customer relationship management system.

Lehman said Compass’ culture emphasizes integrity over topline sales as the company aims for likeable professionals interested in working to build a new type of real estate company, one where every agent is his or her own CEO. The comments are in contrast with what is often considered a cutthroat and high-stakes (and high-reward) competition among high-end agents.

“We are not really aggressively pursuing these people. The pool of these top performers is small and they are reaching out to us or our own agents are making introductions,” Lehman said.

But the company has had some issues keeping top-selling talent, with several high-profile departures in the last year. Jesse Sanders, the general manager for Compass' D.C. operations, left the firm in August for undisclosed reasons. Compass said it terminated its relationship with real estate exec Matt McCormick over cultural differences, but McCormick quickly moved to rival firm TTR Sotheby’s with plans to get back into property sales.

McCormick’s former team members, the Morrell-Roth team, also left Compass to return to Washington Fine Properties. Compass also saw the departure of real estate professional Alex Venditti in 2016, with Compass saying he was not a fit for the culture, while Venditti said the technology was not ready for the D.C. area.

Lehman also dismissed criticism that Compass is not so much a real estate company as it is a technology company that eventually aims to sell its brokerage and agent technology as a standalone product. He said the big goal is succeeding in the real estate business with its technology, not to eventually become a technology company selling to brokerages.

“The real estate market is the big prize,” Lehman said. “It’s not like we're a a Trojan horse.”


Compass is a licensed real estate broker (01991628) in the State of California and abides by Equal Housing Opportunity laws. All material presented herein is intended for informational purposes only. Information is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdraw without notice. No statement is made as to accuracy of any description. All measurements and square footages are approximate. Exact dimensions can be obtained by retaining the services of an architect or engineer. This is not intended to solicit property already listed.