Compass is pulling out of a deal that would have given Massachusetts indie brokerage Leading Edge Real Estate the same technology tools and platform that Compass agents use. The deal would have been the first of its kind for Compass and was supposed to mark the beginning of a bold new effort in the NYC-based brokerage’s ambitious expansion plans.
Compass announced the “Powered by Compass” initiative last week at the Inman Connect San Francisco real estate conference, but according to an email sent to employees from Leading Edge management this week and obtained by Inman, the deal is now off, putting the future of Powered by Compass in question.
The decision was reportedly due to Compass agents expressing fear that the company was giving away its technology, according to the memo.
A Leading Edge agent who spoke on condition of anonymity said that they were aware the deal was off, and Compass confirmed the deal had fallen through in a statement emailed to Inman on Friday, with a spokesperson writing: “Compass has decided to terminate our agreement with Leading Edge, however, since the Powered by Compass announcement we have received interest from over 30 brokerages where there’s is no geographic overlap with our current offices.”
When reached by phone on Friday, Leading Edge CEO Linda O’Koniewski said, “We’re planning on taking the high road.”
Leading Edge Real Estate Group, with its more than 200 agents and nine locations, split from Re/Max in June. In an exclusive interview at Inman Connect in San Francisco, Paul Mydelski, the chairman and founder of Leading Edge Real Estate said that adding Compass’ technology made them, “complete.”
Through Powered by Compass, brokerages will get access to four key parts of Compass’ technology: its search tools, marketing center, collections and insights.
Compass launched in New York City back in 2012 under the name “Urban Compass.” It has since expanded to 18 markets and raised over $550 million in private funding, including a $450 million investment from SoftBank Vision Fund on a valuation of nearly $2 billion.
In the past few months, it has acquired four brokerages outright, including major San Francisco firm Paragon Real Estate. Compass launched its Powered by Compass program and a new smartphone connected real estate sign last week, offering some of its first significant public glimpses into its real estate technology ecosystem.