It looks like the Compass vs. Zillow lawsuit could change the world.
A long-time broker/attorney filed his response here, and he thinks Compass has a strong case – and Robert Reffkin added his thoughts in the comment section:
https://notoriousrob.substack.com/p/guest-compasss-antitrust-gamble-could
The author thinks it’s likely that Zillow settles the case, and ends their ban of listings that don’t comply with their rules. But more importantly, he thinks it will open up the home search to others:
If Zillow settles, it means there will be more private marketing of homes. It’s acceptable to keep listings in-house, and we’re going to be forced to deal with it. The public will be on the outside looking in, and because the market conditions are already tough, agents might resort to actions we haven’t imagined yet.
P.S. I checked – Compass Private Exclusives make up 0.8% of the total NSDCC sales this year (7 out of 884). We have just scratched the surface of the private marketing of homes!
The war over “hidden” home listings is getting ugly.
At the core of the dispute is who gets to see houses for sale in America, and where buyers will have to go to find those listings. The bitter feud features two of the real estate industry’s true behemoths. In one corner is Compass, the nation’s largest real estate brokerage by sales volume, which argues that sellers should have more control over who gets access to their listings. In the other is Zillow, the ubiquitous home of the Zestimate and an essential repository for both buyers and sellers, which counters that to make the market fair, most home listings should be available as widely as possible.
On Monday, Compass sued Zillow in federal court, claiming the company’s threats to ban certain listings violated antitrust laws. So here we are, with real estate’s power players duking it out on social media, in email blasts, and now in the judicial system. Compass and Zillow may be the faces of this fight, but pretty much everyone in the industry has a financial stake in the outcome.
While the battle has mostly caught the eye of real estate wonks who live and breathe this stuff, everyday consumers can’t afford to ignore it any longer. And though Zillow says it’s trying to snuff out hidden home listings, its policy could actually end up pushing more properties into the shadows. Buyers and sellers are stuck in the middle — the changes could mean they risk inadvertently passing over their dream home if listings get tougher to find, or they may wind up tied to an agent who can show them only a fraction of the market. In the most extreme cases, sellers may find that their home has been blacklisted from the top destination for America’s house hunters.
Compass’s lawsuit against Zillow, filed a week before enforcement of that ban was set to begin, accuses the real estate behemoth of using its “monopoly power” to force people to advertise their homes on its website. Reffkin has framed it as a matter of “choice versus control”: In his telling, the so-called Zillow Ban isn’t a moralistic stand — it’s a power grab. Sellers, he says, should be able to advertise their homes wherever and however they want, and they have valid reasons for doing so off Zillow. Compass’ lawsuit is hardly a surprise. Reffkin has been picking a fight over home listings for almost a year at this point, and he’s shown no signs of backing down since Zillow announced the coming ban back in April. At a companywide retreat in early June, Reffkin continued his crusade from atop the stage at a convention center in Denver.
Looking out at the crowd of Compass agents, Reffkin outlined the debate in clear terms: “This is simply right versus wrong.”
Listing a home on Zillow may sound like a no-brainer. Just show your house to as many people as possible, then wait for the offers to roll in. Reffkin, however, argues that a one-size-fits-all approach isn’t best for sellers. The MLSes, and by extension, Zillow, show how long a house has been on the market and how many times the seller has cut the price. Zillow also displays a heap of information that sellers may not want tied to their listing: a Zestimate with questionable accuracy, a climate-risk assessment that highlights the chances of flooding, a running tab of all the times a deal fell through. That kind of info, Reffkin says, gives buyers leverage and hurts the seller (others in the industry tell me that price drops can signal a seller is ready to make a deal, and that this info could actually draw more attention to a property).
Compass agents instead advise sellers to adopt a “3-phased marketing strategy” that allows them to test the waters within the safe confines of the brokerage, then display it on the Compass website, and finally share it widely on the MLS and everywhere else (94% of Compass private exclusives last year eventually made it on the MLS, Zillow, and everywhere else). By the time a listing is plastered online, Compass says, the seller has already had the chance to tinker with the price and gauge its reception.
That sort of model technically violated the NAR’s clear cooperation policy, though enforcement was spotty at best. Local MLSes were left to act as the cops, but they either weren’t always on top of it or simply chose to ignore violations. The answer, Reffkin argued for months, was for the NAR to simply get rid of it altogether.
In April, after months of debate and speculation, the organization…punted. It released an attempt at a compromise that satisfied nobody, keeping the policy mostly intact and once again leaving local MLSes to sort out some of the finer details. With NAR dodging the issue and home-search portals still facing an existential threat from the growing number of hidden listings, Zillow stepped in as the judge, jury, and enforcer.
In a surprise announcement in early April, the company said it would start banning homes that didn’t adhere to the basic tenet of clear cooperation: sharing a listing in the MLS within one business day of marketing it to the public.
The search giant has since clarified a few things. Agents get two warnings before getting hit with a ban on their third non-compliant listing. Once a house is banned, it’s on the blacklist as long as the seller stays with that brokerage — the client of a Compass agent, for example, would have to ditch Compass entirely if they wanted to get back in Zillow’s good graces. And even agents who have gotten hit with a ban in the past can have future listings appear on Zillow, as long as they follow the prescribed path.
Here’s what the ban doesn’t do: Get rid of all hidden listings.
The semi-public homes advertised only on a single site may be blocked, but Zillow’s policy, like the NAR’s clear cooperation rule, allows agents to use that more secretive option of sharing a home with other agents in their brokerage — without putting the listing in the MLS or Zillow. The walls around the gardens may change somewhat, but they are still intact.
And while Compass is probably the loudest company doing this, it’s far from the only one. Howard Hanna has “Find It First.” Douglas Elliman has “Black Label” private listings. Corcoran has “Corcoran Reserve.” The 10 largest brokerage brands handled roughly 60% of US home sales last year, according to data from T3 Sixty, a consulting firm for residential real estate brokerages. As I’ve written before, if even a few big companies lean heavily into hidden listings, they could trigger a domino effect across the industry.
The situation is even thornier for homes marketed on Compass’ website but not entered into the MLS. Zillow is unequivocal here, but it’s hard to argue that a house listed on Compass’ website is really hidden — it may not be in the MLS data feeds or Zillow, but anyone can see it by visiting Compass dot-com. By discouraging agents from sharing homes for anyone to see, Zillow may actually end up forcing agents to lean more heavily on the secret “office exclusives.”
“The unintended effect of that is actually pushing these listings deeper and deeper into the shadows, making them harder for people to find,” says Mike DelPrete, a tech strategist and scholar-in-residence at the University of Colorado Boulder.
A Zillow spokesperson tells me they believe the policy will have the opposite effect. And while it’ll take some time to see how things play out, I do think it’s safe to say that buyers want to be able to see all the listings in one place. Sure, you could hop around the websites of all the big brokerages and maybe piece together the market that way. But wouldn’t it be nicer to cruise to one website and scroll through everything that’s available?
Glenn and eXp already have a vibrant off-market pitch too. I’ll bet that when the home-selling business becomes ‘dominated by a handful of capital-intensive players controlling listing access’, Glenn will be one of them.
EXp founder Glenn Sanford fired back at Compass on Wednesday, two days after being mentioned in a lawsuit Compass filed against Zillow, as the battle between brokerages continues to roil.
Sanford blasted recent consolidation moves, and the push for private listings that has become a flashpoint in the industry.
“This isn’t about any single company’s business model,” Sanford wrote on LinkedIn. “It’s about whether real estate maintains a competitive landscape where innovation can emerge from anywhere, or becomes dominated by a handful of capital-intensive players controlling listing access.”