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The battle over private listing networks intensified last month when Compass and Windermere began duking it out on Instagram.
The conflict started with critical comments from Compass CEO Robert Reffkin about Washington state-based Northwest MLS and Windermere, with Windermere soon firing back with its own Instagram post. Reffkin has since continued posting about the issue on the social network, including this week with a quote supporting his position from a law firm. Meanwhile, Windermere Co-President OB Jacobi fired back in an opinion piece.
At issue is a disagreement over how and where real estate listings reach the public. In other words, while this is a feud between two specific companies and centers on policies in one state, it’s also part of a broader and ongoing philosophical debate in real estate. Inman has endeavored to cover both sides of this debate and, in the past, has published opinion pieces from Reffkin and invited him to the Inman Connect stage to discuss related issues.
This week, however, Inman spoke with Jacobi to get his take on the issue. Jacobi was unsparing in his comments, criticizing Reffkin and Compass by name, and arguing that private listings benefit brokerages but not consumers. In addition, he said that opening the private listing floodgates could ultimately set the real estate industry back by decades.
What follows is a version of Inman’s conversation with Jacobi that has been edited for length and clarity.
Inman: I think some people already know where you stand, but give me your take on private listings, Clear Cooperation and this debate that’s happening right now.
OB Jacobi: My dad started the company in 1972. I got my license in ’89. I haven’t seen the really bad markets, but I’ve seen some other stuff where lack of transparency creates bad actors in our space. And we’ve seen it in recent times, such as the lawsuit last year. That was a lack of transparency.
And so, for me, what’s happening today is that Compass has decided to create their private exclusive listing network. And to me, that just takes away transparency, and lack of transparency creates issues for everybody.
We’ve worked really hard over many decades to create a more transparent marketplace. And now, Compass threatens to take us back decades.
We’re in about 50 MLSs in 10 states that have varying rules. The only difference is that the Northwest MLS — which happens to be where Windermere’s headquarters are — is a broker-owned MLS and doesn’t have to follow NAR rules. And that’s a little bit of a crimp in Robert Reffkin’s plans to move his private listing network into Washington state.
[Robert Reffkin] has made the case that Northwest MLS is uniquely restrictive. How do you respond to that?
Historically, Northwest MLS has been viewed as a leader in the industry. And it’s been a leader in the industry because it’s owned by the brokerage community of more than 30,000 members. They have been able to set their own rules. And they seem to be one of the only MLSs that was not sued in the national case. And they were not sued because they made transparency changes.
So, saying they’re restrictive is actually not really the right thing to say. I’d venture to say that they’re the best MLS out there in regards to consumers in the real estate industry. And he’s finding fault with them because they’re not bending to his rules of a private marketplace.
I think I understand the argument that you’re making, but the other side of this issue is that it’s about seller choice. So, shouldn’t I be able to do whatever I want with my house? Sell it however I want to sell it?
In almost every MLS, sellers, if they want to have a private listing, that option is available to them. They can exclude their name. They can exclude their address. They can exclude showing time. They can exclude local or public dissemination of their information. They cannot exclude — or they should not be able to exclude — having the MLSs of the world, the agents of the world, see their property.
Why would you want to limit the amount of people that could see your property? What Robert’s saying is it’s seller choice. Really? Is it a seller choice? Number one, is it fully disclosed to all of the sellers that only a very limited number of people in the world can see their homes on Compass or on their private network? Does the seller make marketing choices typically? Or is it the agent and brokers that make the marketing choices? I suggest the broker makes the marketing choices. And so I think seller choice is really a fallacy.
I think Robert’s response to that would be, “Well, days on market start counting right away.” Great, Robert. Why didn’t you work with the MLSs across the country to change that, specifically? Because private listing networks only benefit the brokerage that does it.
Why does all of this matter right now? Back in, say, 2015, there was no Clear Cooperation, for example. Was discrimination widespread? Was redlining a problem 10 years ago? Why would these problems return in response to the changes that people are pushing for?
I think the industry has always faced challenges with bad actors. You look at the study that was done on Long Island about steering. The industry has always faced those kinds of things. And so when you have transparency, you get accountability. The more transparency you can have, the more accountability is created.
When you create private listing networks, who are you accountable to? If somebody says, “I want to sell my house to the neatest family in the world,” well, now you’re discriminating against single people. Is that fair? Could it be a situation of have and have not? In this instance, it’s saying, “we’re not going to play by the fair housing rules anymore.”
You’ve said previously that the push for a private listing network is a business move by Compass, that this is about money. But they’ve made a similar argument, saying the rules exist to prop up trade organizations or smaller brokerages. What’s your response?
I would say this: Is competition good? I love competition. Competition makes me better.
Let’s get to the real bottom of this question. Who is it good for? Study after study shows that it’s not really good for the seller. So, Bright MLS, NAR, Zillow, they all came out with studies that say it’s not good for the seller. So, is it good for the buyer that has to call your company and say things like, “Hey, how many days on market is that? How do I make an informed choice on what I should offer?”
What happens if private listings become the norm? What does that future look like?
We have 30 percent market share in the Pacific Northwest, so we are the company that has the most to gain out of something like this. But I want to make it really clear: This is bad for competition.
A small player in the market, I can’t see how they survive something like this. And so companies become monopolistic. In companies’ perfect world, they get rid of all the other companies and the MLSs. If they do that, do they control the pricing? Do they control the commission structure?
I think the future of real estate, if this is allowed to happen, is it’s really bad for buyers who don’t have information at their fingertips. They need to make informed decisions. I mean, appraisers probably go away. Where do they get their information from? Does Compass start their own appraisal company? Probably. Is it good for sellers? Well, we already established they don’t make more money. They have less choices.
There are other executives in the industry who have said, “Hey, we believe private listings are bad. But if that’s where this goes, we’re going to have to do it ourselves.” I’m curious where you stand on that. If private listings become common, do you guys start doing them also?
It’s a really good question. It’s one that we’ve internally talked about. The current answer is no, we’re not going to participate in that. And that’s my answer. You know what? It’s bad for consumers, period, end of story.
I think we can compete in that market. We have really strong professional development. We coach on talking about your value and the value of the system that’s in place.
I’m a firm believer in DEI in our space. I’m a firm believer that what has transpired in the past is we have acted as a bad industry for marginalized people. And so creating a system and being part of a system that allows that kind of behavior is not something we’re interested in.
I hope companies don’t let the dominoes fall and say, “We’re going to do this for the short-term gain.” Because that’s all it would be. It would be a short-term gain for your company, and you are participating in the demise of the real estate industry. I think that is an absolute, total shame if people do those kinds of things.
We think we can win and we are ready for the fight. I hope other companies are, too. [NextHome CEO] James Dwiggins, he’s out there having this fight as well. You can see people who are following the side of the consumer and that, in my opinion, always wins.
You say you guys are ready for the fight. Is this a fight in the court of public opinion? A legal fight?
It wouldn’t shock me. Robert has been a little bit of a bully when it comes to this movement, if you will. He’s trying to make everybody bend to his will. And so if it’s a fight in a court, we’re happy to have it there. If it’s a fight in the court of public opinion, we’re also happy to have it there. We know that we’re on the right side of this fight. A free marketplace is the best system.
I know you’re a part of Northwest MLS, which is not affiliated with NAR and thus not bound by Clear Cooperation specifically. But the concept of Clear Cooperation is part of this conversation, so I’m curious what you make of the changes NAR made to the rule.
Yeah, it’s terrible.
Listen, it’s pretty simple, right? If an office takes a listing and never inputs it in an MLS and just shares it amongst its agents, who’s it good for? There’s no answer other than the company and the agent. There literally is no answer.
You know, everything about the changes, I can’t stand. I believe in taking a listing, putting it in the fair marketplace that we’ve established over decades, and then having it marketed to agents and the public.
