Compass expands to Delaware amid homebuyer boom
GREENVILLE — As Delaware’s hot homebuyer market continues to rise, technology-based real estate broker Compass Inc. has become a player with scores of local real estate agents on its roster.
New York-based Compass opened a temporary Delaware office on Kennett Pike in Greenville, just north of Wilmington, while finding a permanent space. The tech-focused real estate firm has also brought on more than 60 agents based in the First State.
Combined, the Delaware agents represent more than $260 million in 2020 sales volume. At least a dozen support employees work out of the Greenville office, and Compass is looking at opening a second office, possibly in Lewes or Rehoboth Beach. John Bilek, broker of record and regional managing director for Compass Pennsylvania, will assist overseeing Compass Delaware.
“Delaware is an incredible place, and it has always been a part of Compass’ plans to expand in the greater Philadelphia region,” Jeff Bedard, Compass regional president for Pennsylvania, Delaware and southern and central New Jersey, told the Delaware Business Times. “The greater Wilmington area is an important business center and right along the corridor of the Northeast. We love Sussex County for its focus on the second-home markets and the beaches, and we will be taking expertise we already cultivated with supporting agents in our Jersey Shore offices to support our agents in the Delaware beaches.”
“We are very excited to be part of Compass and take advantage of the technology and excellent services that they provide to agents and customers,” The Mottola Group principal agent Stephen Mottola said in a prepared statement. “We remain committed to specialized and focused one-on-one client service while providing the best innovations that this new relationship provides.”
Founded in 2012, Compass operates offices in 46 markets and offers marketing tools and programs to serve 19,000 real estate agents across the country. The company booked $3.7 billion in revenue in 2020, a reported 56% year-over-year increase. While firms were forced to switch to online-focused showings and client interactions amid the pandemic’s restrictions, Compass was able to quickly handle that change. It has about 2,000 employees, of which 650 or more work on product and engineering.
“I’m most proud of that we were able to retool the way of working with both our agents and how they work with clients to a virtual environment,” Bedard said. “We were able to augment the existing tools to make that transition to virtual very seamless for their clients.”
Compass offers one of the more generous commission splits in the industry, reportedly hiring agents starting at 85% splits compared to the average 60% to 70% split seen in the market, according to Barron’s. Other incentives include programs featuring key data points and real-time real estate data to assist agents in marketing listings, and even fronting capital to cover home improvements to prepare a sale, which is later repaid out of the seller’s profits.
Compass spent $3 billion on commissions in 2020 and $408 million on sales and marketing, according to the company’s filing with the U.S. Securities and Exchange Commission. Compass began trading on the New York Stock Exchange earlier this month at $18 a share, raising $450 million in its initial public offering. As of the market’s close Monday, its share price had fallen to $17.78.
Compass’s landfall in Delaware comes at a time when people across the Northeast corridor are quickly buying homes. April home sales in Delaware are up 13% compared to the prior year, according to Bright MLS, but home showings are up 216%, pointing to a sharp increase in buyer demand.
Delaware agents previously told the Delaware Business Times that most of the demand has been driven by buyers from New York and New Jersey looking for more room at less cost as well as a friendlier tax structure. But Bedard said he’s seen trends of people returning to cities, as well as people still looking to head out to the suburbs.
“I think there’s an opportunity, particularly with young buyers, to move back into the cities and enjoy all the amenities that come with living in Wilmington or Philadelphia,” he said. “But we are seeing an increased amount of people search on our web platforms for large backyards, home offices and pools.”