Jason Oppenheim, owner, president and broker of The Oppenheim Group, is busy leading his luxury brokerage of more than 100 agents across four offices, while also starring in Netflix’s Selling Sunset and Selling the OC, which will drop their ninth and fourth seasons, respectively, this fall.
The hit reality TV shows follow the firm’s agents as they navigate the ups and downs of the luxury market, as well as the interpersonal drama that ensues.
When Inman spoke with Oppenheim this week, he seemed energized about the shows’ impending premieres, but he also had a lot to say about the current state of the market and some of the biggest industry news: Compass’ planned $1.6 billion acquisition of Anywhere.
In a wide-ranging phone conversation, Oppenheim candidly shared his thoughts on it all. What follows is that conversation edited for brevity and clarity.
Oppenheim on the market
Inman: How is the luxury market doing in LA right now from your perspective?
Jason Oppenheim | Oppenheim Group
Jason Oppenheim: It’s down, and that’s not just my perspective — those are just objective facts. Prices are probably down anywhere from 10 to 20 percent the last couple of years in the luxury market, and volume is at historic lows.
We’re seeing about a 60 percent decrease in sales since the mansion tax.
So you’re still feeling impacts from that tax?
Oh, [it’s] huge. It hasn’t recovered, and never will.
There’s almost no development, and prices are down, and volume is down significantly. We’re seeing in all of LA, I mean the entire city, about 20 to 30 sales above the $5 million threshold a month, and we were seeing north of 70, 75 sales a month before the tax.
So yeah, it’s down about 60 percent. There’s a house that just sold on Blue Jay Way this week for $9.5 million, and it sold in 2016 for $15.5 million. So that’s down 45 percent in the last nine years. And I know the house well, I mean, nothing’s changed.
That is significant. I know many Realtors in the area have been imploring the local government to try to change or get rid of the tax.
Not everyone knows yet because the draft language has just come back, but there’s a new [bill] — it’s called the Local Taxpayer Protection Act [to Save Proposition 13 — a proposition that was first passed in 1978 to limit property taxes for Californians], and they’re gathering signatures to put it on the ballot next year. That will remove the mansion tax, if we can get it on the ballot. I just posted about it on the Oppenheim Group Instagram, so all the information is there.
Anything in particular you’re looking forward to as we approach the peak of the fall market?
My girlfriend and I are leasing a place in Newport Beach, and we’re actually trying to spend a couple of days a week down here, working out of our Newport Beach office … Ironically enough, the luxury market in LA is down 60 percent, and it’s up 50 percent in Newport Beach, and it’s a significant volume increase over the last few years.
So it’s the exact opposite of what happened in LA, and there’s also no mansion tax, which is great. So we’re working out of this office and trying to spend more time down here. We love it.
Oppenheim on Compass
I also wanted to ask you about some recent big headlines, like Compass’s deal with Anywhere, which we’ve been covering a lot lately. What are your thoughts on that?
I’m not happy about it. I understand and respect why Compass did it. I think that it was a strong business move for them. But I think for the industry, such a massive consolidation is not good.
It stifles competition. I think that, arguably, the main reason that they’re doing it is to have more leverage against Clear Cooperation and to create a private database where they attempt to convince all of their sellers to allow their properties to be listed privately and only marketed to the agents covered under these brands … So they’ll all have access to this kind of secret private database. I think it’s an attempt to create an advantage above the smaller brokerages.
So I don’t think that’s good for competition. I certainly don’t think it’s good for sellers at all.
Do you feel it’s a threat to your brokerage at all?
No. I mean, I think we’re an exception, just because we have more social media followers than any other brokerage. And we’re able to get more eyeballs on listings than any other brokerage through email and social media and the website. We get millions of visitors to the website, but that’s largely because of the popularity of our shows, so that’s an exception. We got lucky in that regard.
Other small brokerages are going to be at a disadvantage. And I don’t think it’s good for overall competition.
I don’t know in what areas specifically, but across the country, I think they could be making up anywhere from 40 to 50 percent of all transaction volume, which is a pretty significant share.
I’m also thinking about NAR’s relation to all of this. Is this deal a threat to NAR’s policies?
Absolutely. They’re going to have the biggest stick in the room. And they’ll really have leverage in all types of negotiations. I think that was the No. 1 reason that they did this. Because why else would you want to take on $2.5 billion of debt?
So I think Compass will be able to achieve benefits of scale … I think they’re going to reduce offices, so they’ll cut expenses, they’ll reduce staff, and I think they’ll probably increase broker splits.
Right now, I think Compass averages about 81 percent to the agent and 19 percent to the company — if you look at their quarterlies, it’s pretty much that for the last five years. A lot of those brands they purchased have more brokerage-heavy splits, so it’s more in the 23-24 percent that the brokerages get. So my guess is that they’ll start being a bit tougher and negotiating, and they’ll have a bigger stick to do it. That’s what I think, you’ll see Compass going from about an 18-19 percent split to probably a 21-22 percent split over the next few years.
By the way, this doesn’t bother me — as they should [do that]. Brokerages have been really getting hammered because it’s been such an agent-centric model, and I’m sure the [reality] shows are responsible for some of that. But I do think it’s made it very difficult to run a brokerage.
Would the Oppenheim Group be interested in acquiring other small firms in the future?
Oh, no. If my intention was to grow, I would have grown a lot more. My intention has always been to remain small so that I can service all of the offices, and I can drive to all of the listings that I need to, and I can service all of the agents. So, if we grow, it will be extremely slow and extremely carefully. And the last thing we’d want to do is buy another brokerage, that doesn’t even make sense. And everyone at our firm is on either a 70-30 or 60-40 split, which other brokerages [have] a much more agent-centric split. So it’s a different model.
We have 105 agents. Not a single agent has a better split than 70-30. And nobody really knows that.
Openheim on ‘Selling Sunset’
So, I wanted to ask about the new season of Selling the OC, which I know is coming out in a few weeks.
For the first time, they’re actually releasing both [shows]. Netflix is releasing Selling Sunset on Oct. 29, and then two weeks later, they’re releasing Selling the OC [on Nov. 12].
We’ve never had the shows even within 90 days of each other, so this will be interesting and fun. I just got the screeners for both shows and, oh my gosh … It’s a very fun binge. So I have a feeling that they’re going to do quite well.
Selling the OC totally crushed it — it’s such a good season. And Selling Sunset goes over current events that I think are going to be really … the world is going to get a kind of in-depth personal look at what LA’s gone through, and that includes, obviously, the fires.
There were a lot of great celebrity clients this year too.
Anyone you can tease?
I’m not allowed to until it comes out … everyone knows that I’m like a huge Washington Commanders football fan, and I always try to get a Washington Commanders player on every season, so I was successful again. I don’t know how big that is for everyone else, but it’s important to me.
Correction: An earlier version of this story had a typo stating that Compass was taking on $2.5 million of Anywhere’s debt with its acquisition, but the company is taking on $2.5 billion in Anywhere’s debt.
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