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As the debate over the National Association of Realtors’ Clear Cooperation Policy takes a new turn, an industry watchdog has now called on the U.S. Department of Justice to investigate private listing networks.
Stephen Brobeck, a senior fellow at the Consumer Policy Center, penned a blog post on Monday lauding Zillow for refusing to display listings that aren’t added to the multiple listing service (MLS) within 24 hours of being publicly marketed. Zillow said public marketing includes yard signs, social media posts and brokerage private listing networks.
The ban, which goes into effect in May on Zillow and Trulia, does not apply to delayed marketing exempt listings as long as they’re submitted to a Multiple Listing Service (MLS) within one day and published on Zillow and other sites that receive listing feeds.
Hours after the blog post went live, Redfin joined Zillow in banning listings that have been publicly marketed before “being shared with all real estate websites via the MLS.” Redfin CEO Glenn Kelman also called on MLS leaders to adopt a “coming-soon” designation that would conceal Days on Market and historical price points data to alleviate homesellers’ concerns about placing their homes on the MLS.
Steve Brobeck
“We encourage all brokers to support Zillow’s efforts to maintain the transparency of real estate markets and prevent their balkanization,” he said. “The efforts of some big brokers are likely to not only disadvantage buyers and sellers but also reduce competition. The U.S. Department of Justice should take a close look at potential antitrust violations by those brokers who use deceptive practices to try to dominate markets.”
Brobeck, alongside CPC fellow Wendy Gilch, argued that private listing networks are anti-competitive and disadvantage most homesellers, homebuyers and small brokerages without connections to larger brokerages with these networks. Brobeck and Glich said private listing networks prevent homesellers from getting the maximum offer for their home and minimize homebuyers’ choices as they’re unable to access all available listings in the market.
The lack of transparency, the duo said, will enable brokers with private listing networks to boost commissions by “double-ending” a greater share of sales, have an unfair recruiting advantage in attracting the best agents, and have more influence over the market, industry associations, and state regulators. Brobeck and Glich said Compass is the perfect example of what they fear the market will look like if the DOJ doesn’t step in.
Compass co-founder and CEO Robert Reffkin has been one of the CCP’s biggest opponents, arguing that the policy prevents listing agents from meeting their fiduciary duty to clients who don’t want their homes on the MLS. Reffkin lobbied to have the rule fully repealed; however, he was pleased with NAR’s decision to add the delayed marketing exemption alongside a longstanding office exclusive exemption.
Reffkin said the new exemption, which allows MLSs to determine how long listings can be seen by other MLS participants without being publicly listed, was “a small step in the right direction” to “expand consumer choice.”
In the weeks since the exemption announcement, Compass has doubled down on advertising its private listing network, which includes nearly 10,000 private exclusive and coming-soon listings. Luxury stalwarts Douglas Elliman and Corcoran rolled out private listing networks on April 8, and Redfin, despite disagreeing with the practice, said it will become more “aggressive about pocketing listings” if the industry continues its push toward off-market options.
Wendy Gilch
“It will be both predictable and telling to watch brokerage CEOs who denounce private exclusives today quietly adopt them tomorrow,” Reffkin said on LinkedIn several weeks ago. “The same leaders insisting these strategies are harmful to sellers will, within a year, be packaging and promoting their own ‘exclusive off-market solutions.’ It’s not a question of if — it’s a question of when. Consumer demand drives industry evolution…”
While Gilch and Brobeck said off-market sales are necessary in limited circumstances, the duo said they offer little value to the typical homseller. That’s why, Gilch said, homesellers should “think twice” before selling their home through a private listing network.
“Sellers will attract the most buyer interest when their home is visible across as many major real estate websites as possible — some, like Zillow, draw over a billion visits a year, far surpassing any other platform in reach,” she said. “And buyers should be skeptical of private listers who try to sign buyers to contracts by claiming to have access to off-market properties.”
While Brobeck and Gilch call on the DOJ to quash private listing networks, CoStar founder and CEO Andy Florance is hoping the DOJ will force Zillow to drop its ban.
Florance said Zillow’s ban is “anti-competitive” and “a pure power play of epic proportion.” The ban, he surmised, is a reflection of the behemoth’s fears that agents will lean into private listing networks and abandon Zillow’s platform. He urged agents to report Zillow to the DOJ’s antitrust division while reminding agents they “deserve control” over how to market clients’ listings.
“Zillow has overplayed its hand. I believe they panicked at the thought that agents might have real choice in how they market their listings. And when agents have a choice, many won’t rush to publish listings on a site that siphons off their leads,” he said in an op-ed on Monday. “Even if just a few agents hold back from listing on Zillow, buyers will quickly follow suit — and stop searching there. Zillow’s lead diversion business model is coming under threat.”
Reffkin sided with Florance on social media, saying, “Andy and Homes.com support agents. So, I support Andy and Homes.com.”
It’s unclear whether the DOJ will answer either side’s clarion call, as the department hinted that it’s less interested in CCP now that NAR has scrapped the Participation Rule.
In a Supplemental Statement of Interest filed in the class-action commission lawsuit Nosalek v. MLS PIN on March 18, the DOJ signaled that Clear Cooperation — on its own — is not anticompetitive. However, in situations where non-NAR governed MLSs, like MLS PIN, enforce CCP while still allowing cooperative compensation, the DOJ might look at CCP with more scrutiny.
“Of note, industry participants have made public statements about the Division’s purported position on Clear Cooperation policies that are misleading and out of context,” the DOJ filing said, according to a previous Inman article. “The Division has not taken a position that such policies standing alone (i.e., without mandated MLS publication of offers of compensation or exceptions benefitting primarily large brokerages) are anticompetitive.”
Ed Zorn
California Regional MLS VP and General Counsel Ed Zorn told Inman on Friday that Zillow’s policy was likely safe from DOJ scrutiny.
“Zillow is an independent company with their own board of directors, right? Their board of directors is not made up entirely of horizontal competitors like an MLS or an association board,” he said.
“So, they don’t have that automatic challenge that any action taken by an association or an MLS instantaneously is a decision of horizontal competitors, right? It’s [the] chairs on our board of directors that make decisions. I don’t see how that’s relevant to an independent company like Zillow deciding what they want to do for the benefit of their business. I don’t see any kind of anti-trust or DOJ type of issue.”
As for private listing networks, the outcome might not be as favorable. Despite the DOJ’s comments in the Nosalek lawsuit, Brobeck said he believes the addition of the delayed marketing exemption will attract the department’s ire.
“I think that DOJ will be particularly concerned about the anti-competitive implications of extensive private listings by some of the big national brokerages,” Brobeck told Inman on a phone call. “Those listings would deprive small and local firms of important information about available properties, and would lead, over time, to increasing dominance by the large firms. I think that the DOJ will be particularly concerned about that.”
“I don’t have evidence they’re looking at it, but I’m sure they are,” he added. “We sent them our news release, and they thanked us. But, you know, the DOJ doesn’t tell anybody what they’re thinking or what they’re going to do until they actually do it.”
