The Rate/Anywhere JV, Guaranteed Rate Affinity, was formed in 2017, when what was then known as Realogy teamed up with the lender after ending its PHH Home Loans venture. The closure was part of PHH Corp.'s retrenchment of its mortgage originations business, setting it up for the subsequent sale to Ocwen in 2018.

Anywhere and PHH were both once subsidiaries of Cendant before being spun-out into separate entities.

Meanwhile, Originpoint, the JV between Rate and Compass, only dates back to 2021.

How the Compass-Anywhere deal impacts the Rate JVs

"The transaction will allow us to quickly consolidate our mortgage JVs, providing a higher attach opportunity with a wider footprint of loan officers across the country, while at the same time providing for expense synergies as we consolidate the mortgage entities," said Scott Wahlers, Compass chief financial officer, on a call with investors.

The transaction has further implications on the real estate finance side, as it "adds meaningfully to our ancillary services offering as it gives us an immediate presence in 30-plus service areas in title and escrow and mortgage operations in all of our key markets," Robert Reffkin, Compass' chairman and CEO, said. "As we've discussed on prior calls, we have a significant opportunity to increase our attach rate through the rollout in our platform of one-click title and escrow."

Last December, when Compass purchased Christie's International Real Estate and its @properties brand, a big piece of the transaction was that both sides also had JVs with Rate; the @properties JV was named Proper Rate.

Messages were left with both Compass and Rate regarding the future of the mortgage operations. Rate declined to comment.

Back in March, rumors which did not come to fruition claimed Compass was close to a deal to buy Homeservices of America, which is owned by Berkshire Hathaway.

How adding Anywhere's mortgage, title and escrow helps revenue

Reffkin claimed the Anywhere deal would add over $1 billion in revenue for Compass from ancillary product offerings like title, escrow and relocation services, plus franchise revenue,

"This diversification will make our free cash flow profile more resilient through market cycles," Reffkin said.

The deal, which will create a company valued at $10 billion, is an all-stock transaction which prices Anywhere at $13.01 per share.

Anywhere closed on Sept. 19 trading at $7.07 per share. The deal was announced before stock trading began on Monday, and Anywhere opened at $11.10 per share.

Terms of the exchange will see each share of Anywhere swapped for 1.436 shares of Compass.

An analyst's take on the deal

"The acquisition price represents an 84% premium to Friday's close," Tommy McJoynt, an analyst at Keefe, Bruyette & Woods, said in a flash note on the deal. "Anywhere's aggregated market share by transaction volume is about 12% (4% owned brokerage plus 8% franchise), and Compass' is 6% (all owned), illustrating fragmentation in the industry."

Among the various brands currently operating under the Anywhere umbrella are: Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, Coldwell Banker Commercial, Corcoran, ERA and Sotheby's International Realty.

On the call, Reffkin indicated under Compass ownership, the franchise model will be kept in place.

"We will now have the collective resources to help agents and broker owners better serve their clients, realize their entrepreneurial potential and achieve their professional dreams," Reffkin said.

Compass does have some franchise revenue already, likely from the Christie's purchase, but this amount is small compared to what comes from its company-owned brokerages, Wahlers said.

"The transaction allows us to meaningfully diversify into franchise operations," he added.

Reffkin is also known in the real estate industry for his stark opposition to the Clear Cooperation Policy. This National Association of Realtors requirement goes against Compass' three-phased home marketing strategy.