Real estate brokerage company Compass is suing Zillow, accusing the home-search website of engaging in an anticompetitive conspiracy to hold dominance and control over online home listings.
Compass and Zillow are now in a new phase of their ongoing disputes regarding dominance over online home listings. This week, Compass sued home-search website Zillow, accusing the site of engaging in anticompetitive conspiracy practices as a means of maintaining control over online home listings.
If Compass’ lawsuit ends in success for the real estate brokerage company, it will likely change how and where real estate listings are posted online. According to a February investor presentation from Zillow, the company accounts for 80% of all home searchers who look online for available home listings.
The complaint filed by Compass was done on Monday in a New York federal court, and stated that Zillow recently announced a new rule that allows them to monopolize the online housing market. Zillow enacted a rule stating that any home listing publicly marketed to consumers must be published on their website within one day or it won’t be allowed to be published on the site at all.
The lawsuit stated that the “Zillow ban” rule is “designed” to eliminate competing sited in the home search space.
“The Zillow Ban is designed to make it hard, indeed nearly impossible, for home sellers to sell their home outside of Zillow, in an effort to force all listings to be on Zillow where Zillow makes money selling leads off the homeowners’ listings.”
A Zillow spokesperson released a statement saying that the new rule was actually created out of fairness to combat sales tactics that actually limit the visibility of home listings.
“At the heart of this issue is a simple principle: when a listing is publicly marketed, it should be accessible to all buyers—across all platforms, including Zillow,” the spokesperson said.
“Hiding listings creates a fragmented market, limits consumer choice and creates barriers to homeownership, which is bad for buyers, sellers, and the industry at large, especially in this inventory and affordability-constrained environment.”
Compass has faced pushback from other industry leaders in the real estate industry for their “3-phased marketing strategy” for sellers. This strategy begins with a private listing to “test” the sale price of a home, then the “coming soon” phase in which the listing is showcased on Compass’ website before it’s officially on the market. Finally, the listing goes live on the platforms for public viewing.
Compass CEO Robert Reffkin said that around 35% of all listings through the company are listed as “Compass Private Exclusive” or “Compass Coming Soon.”
Critics have stated that this strategy is unfair and pushed sellers to make deals with buyers that are represented within the Compass space. The company denies this sentiment and Reffkin claims that part of the reason they filed the lawsuit is because, like their strategy, it gives buyers and sellers the freedom to choose.
“This lawsuit is about protecting consumer choice.”
Compass is claiming that the “Zillow ban” complicates their marketing strategy, and even though the rule doesn’t directly prohibit private listings, homes that are listed on Compass’ website as “coming soon” need to be published on Zillow within 24 hours.
The Zillow rule also comes out of a 2019 policy created by the National Association of Realtors, which is an association that often sets the rules for real estate professionals. The policy is called Clear Cooperation and states that is a real estate agent or agency is publicly marketing a property, they must submit the listing to their local Multiple Listing Service within a day.
The Multiple Listing Service is a database used by real estate agents to share property listings.
Compass is also accusing Zillow of conspiring with other figures in the real estate industry to maintain dominance. Some of these figures include Redfin and brokerage eXp Realty. Both bodies said that they would be adopting and adhering to Zillow’s rule.
Both Redfin and eXp Realty were not named as defendants in the suit, and eXp Realty even released a statement asserting that “any implication of co-conspiracy is categorically false, according to CNN.
“It’s ironic that Compass, a company that’s never turned a profit, is choosing to burn cash and credibility on a lawsuit. And suing Zillow for giving consumers access? That’s not strategy, that’s desperation,” said CEO of eXp Realty, Leo Pareja.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
