While I was sitting in the NAR Innovation conference, news came across the wire that News Corp, operators of Realtor.com and the realestate.au, acquired Austin based OPCITY for $210 Million. On the very same day, it became official that Pacific Union would be acquired by NYC based brokerage COMPASS. Like OPCITY, the trade was reportedly struck for north of $200 Million. Congratulations to Ben Rubenstein and Mark McLaughlin. WOW – Over $400 Million in deals done in a single day.

In all of these transactions, I look for a single truth that triggered the deal. The OPCITY case is interesting. As you may know, OPCITY changed the online lead generation game. They built a business around the notion that most real estate agents do not want to learn the skills to acquire and nurture online leads. A huge number of agents want consumers that are ready to transact now.

We did some interesting research a few years ago where we looked at online lead generation from every perspective. We were provided access into data sets by many of the nation’s largest brokerages. We found that the average incubation time of an online lead from acquisition to close was 300 days. Without getting too technical or aligning economic data, you can assume that the average number of 300 days, plus or minus 50 days, is probably the range in any market. It’s a long time.

OPCITY lives in that 300-day incubation period. They acquire customers online, nurture them until they are ready to buy or sell, and refer them to a brokerage – who in turn refers them to an agent.

OPCITY does not sell advertising. They do not sell leads. This is NOT a new REALTOR.com product. OPCITY has nothing to do with Realtor.com or NAR. It is a separate division in the Move, Inc. portfolio.  They are a referral company. They send referrals to brokers, mortgage professionals, and settlement service providers.

With this acquisition, REALTOR.com will be able to leverage this Move division to deliver concierge service to consumers and real estate professionals. It’s a smart move. Zillow rolled out concierge services a few years ago to address the problem of lead response rate. Everyone now knows that if you do not respond to a real estate lead inside of 5 minutes, the lead is dead. Consumers inquiring about property do not want agents to respond later today, or first thing tomorrow. In the digital economy, consumers expect immediate response. Zillow started it. Now Realtor.com has it with OPCITY.

The single truth is that call centers that deliver concierge services to online consumers are highly relevant. Note to self: Howard Hanna, one of the largest independent brokerages in America owns a call center company.


Compass/Pacific Union

In the COMPASS transaction with Pacific Union, the single truth is a bit different. COMPASS has one goal, 20% market share in the United States. I think that the target date for that goal is 2020 – just a few years away. According to Real Trends, Pacific Union edged out COMPASS by about $100 Million in volume last year. Both firms came in just over $14 Billion, and they are both growing. You can expect COMPASS to report more than $28 Billion, probably north of $30 Billion by year end. That moves them past Howard Hanna and Douglass Elliman in volume. But they have a long way to go. HomeServices of America is beyond $125 Billion and NRT is just under $200 Billion.

When you look at the other big firms around the country, there are very few independents left. Crye-Leike, Baird & Warner, Allen Tate, Real Estate One, Rodeo Realty, and Keyes are all around that $6 Billion mark in transaction volume – which kind of feels like the have a street value of $100 Million. I expect some more consolidation to happen with COMPASS, HomeServices, and Howard Hanna continuing their quest. Remember that Realogy Franchise Group provides funding vehicles for franchise development. So do others.

My single truth from the COMPASS acquisition came from the lips of Mark McLaughlin. His vision is “from the cloud to the street.” At the end of the day, the company that is going to win will be the one with the  most number of the finest real estate agents in the world, delivering exceptional experiences for consumers.