Gary Keller on Compass, private listings and the next legal risk
The Keller Williams executive chairman delivered blunt takes on the big industry headlines, from criticism of Homes.com to the Rocket-Redfin “nothingburger.”
Key points:
- At the Keller Williams annual Family Reunion, the company's co-founder warned that private listings could spur the next industry class action.
- He's not concerned about the Compass-Anywhere deal from a regulatory standpoint — but he does think it could dilute the Compass brand.
- Will Redfin become a bigger player post-acquisition? No, he says, but Rocket gets a valuable lead source.
Speaking to more than 10,000 agents in Atlanta for Keller Williams' annual Family Reunion, Gary Keller offered candid views on the industry's biggest stories — the blockbuster Compass-Anywhere merger, Rocket's acquisition of Redfin, the private listings debate and the shareholder battle surrounding CoStar and Homes.com.
The appearance on Monday marked the executive chairman and co-founder's first major address to this audience since Stone Point Capital's investment in Keller Williams last March and the installation of a new CEO. While Keller's role with the company has evolved, his willingness to speak plainly has not.
Over the course of the session, Keller dismissed some headlines as overblown. Others, particularly around disclosure, he framed as a serious legal risk.
Private listings: 'The next big class action'
Keller said he has reviewed competitors' disclosure documents related to private listings and found them not just lacking, but dangerous to the industry.
"They're thinly disguised marketing pitches," he said. "They're not actually a side-by-side comparison and understanding of the pros and cons."
His concern isn't philosophical. It's legal.
"If we're not using the proper disclosures when we're talking to a seller about private or going straight public — just remember, if you're not fully disclosing, you'll be the next person sued," Keller said. "It'll be the next big class action in this industry."
He explicitly tied that warning to the commissions lawsuit that reshaped industry practices and cost NAR and others millions of dollars.
"Remember, the whole Sitzer case was all around disclosure," he said. "We spent how many years asking you to do it? And then the courts decided they would tell you to do it."
Compass-Anywhere: 'I wouldn't have done it'
The blockbuster Compass-Anywhere merger has drawn scrutiny from a group of lawmakers who have reportedly asked for an investigation into what Keller described as "the fastest approved merger of giant businesses in history," with allegations that "back-room relationships … greased the wheels."
"Do we care?" Keller said. "I don't." But he does see risk from integration.
"I think the challenge Compass has is that they built a brand, and now they're going to put that name on a lot of other brands," Keller said.
"Candidly, I wouldn't have done it."
Rocket + Redfin: A mortgage play, not a brokerage war
Keller was even more dismissive of the $1.8 billion Rocket-Redfin combination — at least from a brokerage market-share standpoint. "It's kind of a nothingburger. They're not trying to increase the sales volume of Redfin."
Instead, Rocket is looking to own customer acquisition at the top of the funnel, Keller said. "They paid $1.8 billion for the privilege of having a lead source for mortgages," he said. "So whatever Redfin was, is what Redfin is."
CoStar, Homes.com investors and a 'tough dance'
Keller also weighed in on the shareholder fight surrounding CoStar and Homes.com, describing it as a high-stakes balancing act between activist investors and executive control.
"There you have two major shareholders that are really trying to take control of it," he said, while CEO Andy Florance is "doing his moves to try to keep that business where he envisions it going, while at the same time, appeasing his shareholders."
"We'll just have to see who wins and how that turns out for them," Keller added. "It's a tough dance."