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Compass, the U.S.-based brokerage that has become a champion for private listings, has sued real estate portal Zillow over new rules that ban privately marketed listings from the platform.
The antitrust lawsuit that was filed in United States District Court in the Southern District of New York on Monday alleges that Zillow has employed “anticompetitive tactics to protect its monopoly and revenues in violation of the antitrust laws.”
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The lawsuit was the latest escalation between two powerhouses of the industry: Zillow is the largest real estate portal, with 2.4 billion visits during the first three months of this year alone. Compass is the No. 1 brokerage in the country by sales volume.
It is the latest signal that the industry remains divided over recent updates to the rules that govern real estate in the U.S., especially when it comes to how, when and where homes are marketed for sale.
“This lawsuit is about protecting consumer choice. No one company should have the power to ban agents or listings simply because they don’t follow that company’s business model,” Compass CEO Robert Reffkin said in a statement. “That’s not competition. It’s coercion. Imagine if Amazon banned a seller for offering a product on their own website first. That’s what Zillow is doing in real estate. Consumers should have the right to choose how they sell their homes.”
The fight over private versus public listings seems to have reached a peak with the new legal action. The suit also follows months of brokerages teasing or releasing their own private listing networks (including Compass, Corcoran and Douglas Elliman). Meanwhile, Redfin has joined Zillow in banning private listings that are publicly marketed.
In March, the National Association of Realtors (NAR) weighed in on the subject by opting to keep the Clear Cooperation Policy, which stipulates that agents must list properties on the MLS within 24 hours of marketing them. However, NAR also added a “delayed marketing exempt listings” option for homesellers, allowing them to delay listings to Internet Data Exchange (IDX) feeds while still making them accessible to MLS participants. Individual MLS’s are creating their own policies for how long listings may be delayed, when opting into the new listing feature.
In the complaint, Compass goes on to characterize Zillow as “relentless” in its quest for dominance in the home portal space, even releasing this spring its new “exclusionary policy” to ban listings — what Compass calls the “Zillow ban” — that had been previously marketed privately from its platform as part of its “3-Phased Marketing Strategy.”
Thousands of listings first appear only on Compass’ internal platform, where they can be viewed by Compass agents and their clients. The second phase involves marketing a listing publicly as a “coming soon” listing that isn’t yet on the MLS. Ultimately, Compass said that 94 percent of its seller clients who use the company’s private listing strategy ultimately list their homes on the MLS.
Compass alleged that Zillow moved to prevent the private listings strategy because it can’t monetize those listings.
“The strategy poses a significant threat to Zillow’s home search monopoly and its revenues,” Compass wrote in its complaint. “For Zillow, every home buyer search conducted on Compass instead of Zillow is a lost opportunity for Zillow to lock that prospective home buyer into Zillow’s ecosystem and make money selling her information to real estate agents for a lead fee—Zillow’s central business model.”
Lead-monetization was another point of contention in Compass’ suit. When properties are first marketed elsewhere, Compass alleges, “Zillow cannot make money” from those listings.
“Zillow uses the Zillow Ban to block real estate search rivals like Compass from competing head-to-head,” Compass wrote.
Compass alleged that Zillow is large enough to amount to a monopoly, and that it may have colluded with Redfin and worked directly with eXp on administering and complying with the ban.
EXp is the nation’s largest real estate brokerage by transactions. It announced on April 10 that it would support Zillow’s policy.
Neither Redfin nor eXp was named as a defendant in the Compass lawsuit. Compass named Zillow and its subsidiary Trulia as the sole defendants in the antitrust case.
In response to the complaint, Zillow said that it planned to “vigorously” defend itself from the claims, which it called “unfounded.” The company said that “most brokerages, consumer advocates and fair housing experts” supported its policies.
“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 company said in a statement. “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.”
“Our listing access standards are designed to ensure transparency, equal opportunity, and broad visibility for everyone so sellers can maximize price and time to sell and so buyers have access to all available inventory,” the statement continued. “Limiting visibility hurts buyers and sellers, disadvantages smaller brokerages, and undermines an open market. Our focus remains on creating a level playing field that serves the best interests of everyone in the home buying and selling journey.”
Update: This story was updated after publication with additional background and details from the lawsuits.
