Is a Compass-Keller Williams Merger In the Works?


This will be a brief one, but it’s so interesting I had to share. I just got off the phone with a very senior executive at a major national brokerage who relayed a rumor that he or she has been hearing from other senior executives throughout the industry that the flirting between Compass and Keller Williams has intensified.

Keep in mind that this is just unconfirmed rumor at this point, but I found it interesting because of a couple of things.

First, our executive mentioned that the speculation about Compass being in dire financial straits due to SoftBank’s implosion in September of last year is apparently spot on. It seems logical, but nonetheless, it was interesting to have someone else who is in a position to know confirm that.

Second, in the same conversation, I heard (once again, rumor and hearsay) that Compass was courting RE/MAX, but that apparently fizzled out because reasons. Which then ignited the current supposed romance between Compass and KW.

Third, I wrote back in January of 2019 that “Compass Wants Nobody, Nobody But Keller Williams.” My reasoning was based on a pre-September of 2019 Compass, of course, flush with Softbank’s cash and serious momentum:

Gary Keller’s announcement in 2018 that Keller Williams was no longer a real estate company but a technology company has been widely covered. KW is the largest brand by agent count, with 166,854 in the United States as of Q3, and the loyalty of KW agents to the brand is legendary.

Robert Reffkin and Ori Allon would contend that while KW would like to transform into a tech company, Compass already is oneInman just reported that Compass is hiring 100 more engineers in its Seattle tech hub, to be headed up by its new CTO, Joseph Sirosh, formerly of Microsoft. Compass’s technology is a big draw in recruiting top producing agents to them (although big checks and sweetheart deals as widely reported don’t hurt, one imagines).

Combine the two and you have a powerhouse that really could realize Gary Keller’s vision of “tech-enabled agent” beating back the dark forces of “agent-enabled tech”. Compass certainly falls into the “tech-enabled agent” bucket as well, as Reffkin makes clear time and again, every chance he has, that Compass is all about the agent.

There is some strategic fit between the two brand as well. Compass goes after the very best top producing agent teams in Top 20 markets; KW has many of the top producing agent teams in the industry thanks to its long focus on teams. But KW also has teams in every market in the country, and tens of thousands of not-so-top producers everywhere. A combined Compass-KW (operated as separate brands, of course, as Realogy does) would allow top KW teams to migrate to Compass, while making the Compass-KW technology available to every one of those 166K-plus agents, and let Compass transition some less productive people over to the KW side of the house.

Just combining the training and coaching of KW with the technology teams at Compass alone could create massive headaches for every other franchise and brokerage in North America.

The strategic fit has not changed, despite the change in Compass’s financial fortunes.

Plus, as I mentioned in that prediction sure to be wrong, Gary Keller is the most charismatic leader of his generation. Robert Reffkin is the most charismatic leader of this generation. They’re both 1,000% all about the agent and the agent’s welfare. One is Texas flinty, and the other is New York smooth, but I could see the baton being passed from the old lion to the new.

So I think it is quite likely that there is heavy flirtation going on right now between Compass and Keller Williams. Especially since KW is likely to demand a real peek behind the curtains of Compass’s technology stack; even if the deal doesn’t get consummated, that learning will be valuable to Josh Team and his.. um… team.

At the same time, right now, as I type this out, I think it unlikely that the flirtation advance to actual marriage.

I think the two companies are going to find it very difficult to fit, culturally speaking. Keller Williams is often called a cult by detractors, because of its incredibly strong culture. That culture is modeled after extremely successful evangelical Christian campus ministries. While I have heard in recent years that KW has backed off from its deeply evangelical roots, many of its longtime agents are from that tradition. While there are giant KW operations in urban downtowns, I do feel like KW is more suburban/exurban, more middle class, and more… ah… ‘Murica.

Compass, on the other hand, is mostly urban, younger, and more into luxury real estate because of its roots in New York City. It built its ranks through acquisitions, bonus payments, heavy financial incentives, and a very sophisticated, very modern, very contemporary brand. Compass’s detractors would call its agents mercenaries who were bought, rather than true believers who were recruited. Again, though Compass does have significant operations in the burbs, I do feel like it is more urban, more upper class, and more international/multicultural than KW.

A happy combination of the two would be incredibly strong, of course, as the different strengths of each cover the weakness of the other, and the cultural differences end up enhancing everybody. But with such differences in culture, that happy combination is precisely the difficult thing to achieve. When town and country come together, it’s a potent combination; but town and country do not often come together like that.

Anyhow, although this is just rumor at this point, I am trying to confirm it with my sources. If you have anything to add, or you think this is just ridiculous, please feel free to let me know. But if there’s one thing that could turn Compass’s grey skies to blue… and the world is full of strange arrangements, after all.

Okay, back to work.


[UPDATE: I just got an email from Chris O’Brien from Compass: “To be clear – we have never discussed a merger with Keller Williams.” Well, I did say I was passing on a rumor. Consider it debunked. The strategic fit between the two remains, in my opinion.]

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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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