The Battle for Unique Inventory Is Moving On From Private Listings
The industry has spent the past year fighting over Compass's private exclusives, while in the background its unique inventory strategy shifted to coming soon listings.
Why it matters: The lawsuits, listing access standards, legislation, and lawmakers are all aimed at the one part of Compass's strategy it no longer needs.
The key to Compass’s unique inventory ambitions is coming soon listings, which have nearly tripled over the past year while private exclusives have dropped.
And 57 percent of new Compass listings launched as coming soon in July, which means the shift is accelerating.
Compass's own public statements show the same shift in focus across its last eight quarters of earnings calls.
Management said "private exclusive" zero times in prepared remarks in three of the last five quarters, and last week said "coming soon" 13 times against just 4 for private exclusives.
Another clue to the declining importance of private exclusives is the user flow of the infamous black box.
Clicking "See Private Exclusives" routes a buyer into an agent directory that dead-ends in a “find an agent” lead form or an alphabetical office roster.
Compass has the expertise to improve this experience but hasn't, which says a lot about the product’s importance and who it’s really for.
This all suggests the audience for private exclusives is agents and not consumers — a powerful recruiting and retention tool (read more: The Business Case for Exclusive Inventory).
Recruiting matters less at Compass's current size than it did two years ago, with the company now larger than the next five largest brokerages combined.
Both private exclusives and coming soon listings create unique inventory, but only coming soon was built with consumer traffic and leads in mind.
While the fight over private exclusives reached fever pitch, in the background MLSs were changing their rules to allow more coming soon listing options, with Compass expecting more than 90 percent of MLSs to permit it by the end of the year.
CRMLS and Bright, the two largest MLSs in the country, widened their coming soon rules in June and July to let sellers keep a listing off the portals while still allowing brokers to share it across the MLS.
Zillow's listing access standards punish a listing that is publicly teased but gated behind a brokerage, which describes private exclusives but not coming soon.
Private exclusives could disappear tomorrow — banned by a new law, or shut down because the juice isn't worth the squeeze — and Compass would barely notice.
It would still hold thousands of coming soon listings, which draw consumers to Compass.com, generate leads for agents, and anchor the recruiting pitch.
Redfin would still carry that inventory, and Compass and its partners could still advertise an inventory advantage over other portals.
The bottom line: Like a line of skirmishers in front of the main body, private exclusives are part of the overall strategy, but are not holding decisive ground.
Private exclusives could go to zero tomorrow and Compass would maintain its strategic inventory advantage.
Perhaps the most telling evidence isn't in the courtroom at all: Compass moved its focus to coming soon while everyone else kept arguing about private exclusives.