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Compass on Friday filed suit against Washington-based Northwest MLS, calling the multiple listing service a “monopolist” while sweeping the Seattle area’s leading brokerages into the rapidly escalating private-listings drama.
The 39-page suit in federal court claims the MLS serving 2,500 member offices in Washington and Oregon has “no meaningful competitors,” and that, as a broker-owned multiple listing service, its Seattle-area brokerage owners with controlling stakes have an interest in limiting competition from new entrants.
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“NWMLS is a monopolist and a combination of competing real estate brokers,” Compass states in the opening lines of the suit, filed in the Western District of Washington. “Nearly 100% of the residential real estate transactions by Seattle area real estate brokers are listed on NWMLS, and NWMLS has no meaningful competitors,” meaning no rival MLSs.
Northwest MLS is the sole named defendant in the suit, but Windermere Real Estate Services is referred in the complaint as the “largest real estate brokerage in Washington State,” and six Windermere-affiliated professionals sit on Northwest MLS’s 15-seat Board of Directors, its website shows.
Besides Windermere, members of Northwest MLS’s Board hail from affiliates of Century 21, RE/MAX and Keller Williams, among other companies.
“Its decisions are made by agreement among competitors as well,” the suit alleges. “Its Board of Directors is comprised of competitors, with most of the directors being affiliated with the longstanding traditional real estate companies in the Seattle area and six (including the current Chairperson and Vice Chairperson) affiliated with the largest real estate brokerage in Washington state (Windermere Real Estate Services Company).”
Windermere Real Estate Co-President OB Jacobi said in a statement on Friday he was “confused” by Compass’s decision to mention Windermere Real Estate Services Company in the suit, explaining that as a franchisor, not a brokerage, it is not a member of NWMLS.
Jacobi also insisted Windermere Real Estate Services Company itself “does not hold six board seats,” but thanked the “individuals” from Windermere franchise offices and other brokerage firms “who generously volunteer” for the NWMLS board.
“We vehemently disagree with Compass’s stance that the actions of the NWMLS are ‘anti-client,'” Jacobi said in the statement. “On the contrary, we continue to reiterate our position that what would truly be anti-client is a lack of transparency brought on by a blanket policy that encourages private listings, creating what amounts to a secretive network that only benefits the privileged few, and the Wall Street-driven brokerage looking to double-side sales for the benefit of their stock price.”
“That type of environment benefits neither buyer nor seller and especially hurts those from marginalized communities,” he added. “No one should be allowed to bully our industry into undoing decades of progress towards a more fair and equitable housing environment for everyone.”
A spokesperson for Northwest MLS did not immediately respond to Inman’s requests for comment on Friday night.
The New York Times first reported news of the lawsuit on Friday.
In the complaint, Compass claims that before listing homes in an MLS, nearly half of the sellers it represented nationwide in the first quarter (48 percent) opted to “premarket” their homes as Private Exclusive or Coming Soon listings.
But Compass adds that its “innovative offerings” can be unpopular with competitors because they, “disrupt traditional real estate brokers from being able to continue business-as-usual.” In the Seattle area, NWMLS, Windermere, and other traditional real estate brokerages who own and control the MLS, “first agreed to adopt and enforce NWMLS rules that prevent office exclusive listings from being used by homeowners, unlike every other state,” the suit contends.
When Compass found a workaround, “NWMLS and its co-conspirators eliminated another of its own long-standing rules, which only Compass was using to allow Compass homeowners to use office exclusives,” attorneys for the company alleged.
NWMLS maintains that Compass’s office exclusives are “fundamentally unfair and perpetuate inequities that have long plagued the housing system,” and “will lead to the dismantling of the real estate marketplace for the exclusive benefit of those brokerage firms that choose to exploit them.”
That’s not been the case in other states that allow office exclusives, Compass attorneys argued.
“By adopting, enforcing, and changing rules to prohibit consumers in the Seattle area from the freedom to choose to sell their home by office exclusives—a choice all other homeonwers in the United States have — NWMLS has restrained competition, reduced consumers’ choices, and tortiously interfered with Compass, its real estate brokers, and Seattle area consumers.”
The lawsuit is only the latest in an ever expanding drama over private listings and who has control over them in the northwest territory of the United States, but namely Washington state, where the MLS covers a majority of its counties.
The conflict began in late March when Compass CEO Robert Reffkin criticized NWMLS, describing it on Instagram as uniquely restrictive. Reffkin’s comments stemmed from Compass’ efforts to expand the listings it markets privately before posting them to an MLS.
The feud erupted on the same day as the National Association of Realtors announced it would uphold its Clear Cooperation Policy requiring Realtors to put their listings into NAR-affiliated MLSs within a day of public marketing — while also introducing a new delayed listing category. Clear Cooperation had been fiercely debated, and some had looked forward to a decision from NAR to settle the matter on private listings once and for all.
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A few days after the initial spat, a homeowner group, Washington Homeowner Rights, threatened to sue NWMLS for its requirements, which they said forced sellers to “compromise [their] privacy or security just to get [their] home sold.” The group also lamented the tracking of days on market, which they said led to significant price drops.
Compass supported the group’s mission, saying that NWMLS rules were created to benefit the MLS, not consumer rights.
“We’re proud to support Washington homeowners who are asking the right question: Why are they the only ones in America without a choice in how they sell their homes?”
All of this led to NWMLS temporarily suspending Compass’ IDX on April 16. The feed was restored on April 17.
NWMLS leadership initially refused to comment on the IDX suspension; however, Compass Regional Vice President Cris Nelson said the brokerage didn’t understand why NWMLS shuttered its feed despite following the MLS’s rules regarding private listings.
“Despite following NWMLS’s published rules, Compass’s IDX feed was suspended without warning — impacting our clients and agents alike,” Compass Regional Vice President Cris Nelson told Inman. “NWMLS is a broker-owned MLS and is the only MLS in the country that prohibits agents from marketing a property on the internet — privately or publicly — unless it’s listed in the MLS.”
“…We launched a compliant Private Exclusive marketing strategy using ‘non-exclusive’ and ‘unenforceable’ listing agreements — both of which, since the founding of NWMLS in 1984, have not been eligible for submission into the MLS,” Nelson added. “This is a stark example of monopolistic control, with NWMLS having 100 percent market share of real estate agents, that limits homeowner choice, stifles competition, and sets a dangerous precedent for broker accountability and market fairness.”
A couple of days after the suspension drama, NWMLS finally offered its side of the story, clarifying that the suspension was done on purpose after failed negotiations between Compass and NWMLS leaders over the brokerage’s private listings.
“The suspension was the result of Compass’ failure to input numerous of its own listings and share those listings with other member real estate firms and their clients in accordance with Northwest MLS’s rules,” the statement indicated. “Northwest MLS offered Compass a data license for its own listings, but Compass did not respond to that offer. Compass’s brokers access to all other Northwest MLS systems remained uninterrupted.”
“Northwest MLS worked with Compass on April 15th and 16th to facilitate Compass’s compliance with Northwest MLS’s rules,” the statement continued. “With Compass’s commitment that it would comply with Northwest MLS’s rules going forward, Northwest MLS reinstated the data license to Compass on April 17th.”
However, Compass reiterated its previous statements noting it “had already been following the rules” and claimed NWMLS had changed its policy regarding non-exclusive listing agreements in the days after Reffkin’s Instagram post critcizing NWMLS.
This is a developing story and will be updated frequently.
