By Douglas Feiden
A muscular new player is shaking up the hyper-competitive real estate market on the East End, bursting on the scene barely two months ago with a take-no-prisoners approach to recruiting top talent, a reputation for introducing cutting-edge technology into home sales and a knack for ruffling a few feathers among its rivals.
The sudden arrival and rapid growth of Compass, the Manhattan-based, start-up that is already operating nationwide, has quickly affected the brokerage community in Sag Harbor. In just the past month, three top-producing village agents have defected from the office of Brown Harris Stevens at 96 Main Street to sign up.
Compass is an online, property marketplace that brands itself as a “technology-driven real estate platform.” But in very short order, the company has also trumpeted its presence by installing its first team in the brick-and-mortar landscape of the East End.
And executives say they’ve only just begun. On the drawing board for 2016 is a full-throttled expansion drive:
* BRIDGEHAMPTON. Compass launched in mid-October with 17 agents in a former Corcoran Group office at 2405 Main Street near Bobby Van’s Steakhouse. By mid-January, it expects to have 22 on board.
* EAST HAMPTON. The firm says it will plant its next flag on January 1 with 15 brokers at 53 Main Street in the old Tiffany’s showroom, now occupied by Peloton Cycle. It plans to grow to 25 by summer in the 3,000-square-foot space.
* SOUTHAMPTON. A third foothold will be opened by mid-spring next year, although a location hasn’t yet been secured. It will eventually be a hub for some 20 agents, which will bring the tally to roughly 65 if projections are met, the company said.
“We’d love to be in Sag Harbor, too,” said Ed Reale, who is spearheading expansion plans as senior managing director of the Hamptons region for Compass. “But we have to proceed in a reasonable fashion. We haven’t gotten to that stage yet and don’t have immediate plans.”
Still, if Compass isn’t ready to bow in Sag Harbor, it’s aggressively luring Sag Harbor talent to its Bridgehampton redoubt, the base from which its new agents will continue to sell the village’s properties.
Among the key recruits: Caroline Sarraf, a longtime Wainscott resident who was designated as the top producer for Brown Harris Stevens in Sag Harbor in 2013 and 2014 and was one of the firm‘s leading producers this year.
In just over two and a half years, she has closed 36 sales deals, including 20 in Sag Harbor, where her specialty is waterfront and period homes — and her fluency in local geography extends to the best bays and inlets for late-night fishing and early-morning paddle-boarding.
Ms. Sarraf’s recent transactions in the village include homes that closed for $3.5 million at 61 Widow Gavits Road; $2.1 million at 22 Bayview Avenue; $907,000 at 33 Henry Street, and $795,000 at 69 Redwood Road.
What attracted her to the Compass brand? She cites a “clean and clever” marketing approach and savvy campaigns on social media, along with a suite of tech tools provided on desktops and laptops that free up an agent’s time for relationship-building with clients. Factor in a creative culture that vests brokers with a role in the decision-making process for the entire company, Ms. Sarraf said.
“The universe loves change,” she added. “And people who take chances—and just say, ‘Failure is not an option’—are drawn to each other.”
Ms. Sarraf, who spent eight years at BHS, says she couldn’t resist the opportunity to be one of the “pioneer agents” in an exciting new enterprise imbued with the “strong desire to shake things up and take risks.”
Indeed, risk-taking and industry disruption have been a Compass hallmark. But backlash from mainstream firms challenged by the upstart has come furiously and fast.
And Mr. Reale — a real estate attorney who started at BHS in 2010 and managed its offices in Sag Harbor, Southampton and Westhampton before jumping ship in October — is himself a target.
In early November, BHS sued Compass and Mr. Reale personally in New York State Supreme Court, alleging he had violated a non-compete agreement and accusing his new employer of an “utter disregard of fair play” in building its business model by “unlawfully poaching” the employees of its competitors.
Compass said in a statement it was “disappointed” that BHS had availed itself of the legal system to “inhibit the autonomy and economic free will” of a former employee, saying it believes that “culture and opportunity should be the means of retaining its employees.”
The case is pending. And it’s not the only one:
Earlier this month, Saunders & Associates, another rival brokerage, sued Compass in federal court, alleging that former Saunders agent Meg Salem, who departed for Compass, and her team, had accessed a password-protected Saunders database, using it to obtain thousands of listings and other proprietary material.
In response, U.S. District Court Judge Leonard D. Wexler issued a restraining order requiring Compass to safeguard the data in question, preserve computers that may have been involved and cooperate with a forensic examination of the alleged hacking.
“We are now connecting the dots and trying to figure out what happened, and what we’ve learned so far is disturbing and frightening about how they’re conducting their business,” said Andrew Saunders, founder and CEO of the 175-agent brokerage.
He said the episode “should give pause to their investors.” And referring to a couple of other lawsuits recently filed against Compass,
Mr. Saunders added, “It should really catch the attention of the attorney general because it does not appear to be a one-off but a pattern of behavior.”
Compass says it didn’t contest Saunders’ request for a restraining order. It holds its team to the “very highest standards” and its policy does not permit agents to “engage in any of the activities alleged in the suit.”
This week, Compass spokeswoman Ashley Murphy said Ms. Salem and another broker on her team, Vanessa Bogan, were no longer with the firm.
“Saunders’ suggestion that there is an apparent pattern of legal action against Compass has merit only in that there is a pattern of brokerages seeking to stifle the free will and independence of agents and employees and rushing to create publicity stunts by strategically using the courts,” Ms. Murphy added.
If Compass is having growing pains, that shouldn’t be surprising. Founded in 2012 and launched as Urban Compass in 2013, it dropped its first name this February to better reflect the broader markets where it’s now operating, and it entered the East End market just eight months later.
With 450 agents and a staff of 230, Compass is now staffing 14 offices nationwide, and in addition to Manhattan, Brooklyn and the East End, it is selling real estate in Boston, Miami, Washington, D.C., and Los Angeles.
The company confirms it has raised $125 million from venture investors so far. It boasts a valuation of roughly $800 million.
Meanwhile, in addition to Ms. Sarraf, Compass has just made two other key hires from BHS in Sag Harbor, Amadeus Ehrhardt, who joined two weeks ago, and Heather Saskas, who started the week before Thanksgiving.
Mr. Ehrhardt said he was attracted by the culture—“It’s all about the agent,” he said—and the innovative technology that is being developed by dozens of data and IT engineers hailing from giants like Google, Amazon, Twitter and Facebook. Their time-saving, decision-making tech tools help him better market properties, he said.
One of Mr. Ehrhardt’s listings is a $1.4 million, three-bedroom, two-bath home at 38 Jermain Avenue.
Born and raised in Montauk, Ms. Saskas lives with her husband, two kids, and an “adorable labradoodle” named Ziggy, in North Haven, where she is treasurer of the North Haven Ladies Village Improvement Society. She also helped found the nonprofit Local EcoWorks in Sag Harbor.
Does her background in the village figure in her approach to selling houses here?
“I would say that being a lifelong East Ender plays more of a part in my real estate approach…. However, my love for North Haven and Sag Harbor does help in that it has made some of my ‘I only want East Hampton’ customers take another look at the area,” she said.