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Compass asked a court to temporarily block Zillow’s ban on publicly marketed private listings on Friday, the final business day before the ban is set to take effect.
The nation’s largest brokerage by volume is on the verge of potentially seeing thousands of its listings go dark on the nation’s largest real estate search portal unless the judge agrees to at least temporarily pause the ban while Compass makes its case in court.
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Compass filed a motion for a preliminary injunction that, if granted, would allow the company to continue privately marketing listings on its own site and still have them end up on Zillow. If the motion is denied, Compass would be forced to decide between pausing one of its key business efforts or see if its clients are comfortable with listings that aren’t shown on Zillow.
“Zillow owns the dominant home search platform in the United States. Compass…seeks to dent this dominance through an innovative selling approach and cutting-edge technological tools,” the company wrote in its filing. “Zillow has taken notice. But instead of meeting this competitive threat with a better product or increased investments, Zillow and its market rivals have conspired to strangle Compass’s market innovations.”
Nearly half of Compass’ listings (48.2 percent) started in what the company calls its 3-Phased Marketing Strategy (3PS), which involves a period when the listing is marketed privately on Compass’ own site and not on the relevant multiple listing service.
The brokerage says its 3PS strategy allows sellers to generate early interest and gain insights about pricing and the house itself without the listing accruing a history of days on market and potential price changes. Most listings that start with private marketing ultimately (94 percent) end up on the MLS and therefore on Zillow.
In addition to what the company says are benefits to its agents and clients, the strategy is an attempt to differentiate Compass from Zillow as a place for consumers to look for listings.
It filed its antitrust lawsuit against Zillow on Monday in U.S. District Court in the Southern District of New York. Judge Jeannette A. Vargas isn’t expected to rule on the request for an injunction until later this summer or early fall.
In the meantime, Compass CEO Robert Reffkin said that come Monday, consumers should look for listings anywhere other than Zillow.
Robert Reffkin at Inman Connect New York.
“Starting June 30, buyers should know that Zillow no longer displays all MLS listings,” Reffkin said in a statement shared with Inman. “Buyers should search elsewhere or contact a real estate professional who will be able to show them what Zillow does not have.”
While the lawsuit and statement both focus on Zillow, Redfin has also enacted a ban that is similar to Zillow’s.
In its request to temporarily block the Zillow ban, Compass shared new details about an April conversation between Reffkin and Redfin CEO Glenn Kelman just hours after Zillow announced its new policy.
Kelman told Reffkin “that Redfin had agreed to adopt virtually the same policy as the Zillow Ban,” Compass said. “During that call, Redfin’s CEO acknowledged that the Zillow Ban would harm Compass, but pushed Compass to negotiate with Zillow, implying that Zillow and Redfin could find a way to negate that harm if Compass did not fight the new rules. Compass refused.”
Redfin didn’t immediately respond to a request for comment or to verify the allegations about a call between Kelman and Reffkin.
Compass didn’t name Redfin as a defendant in the lawsuit. But it alleged that Redfin and eXp, the nation’s largest brokerage by transactions, conspired with Zillow when enacting or agreeing to comply with Zillow’s policy.
Zillow CEO Jeremy Wacksman speaks at Inman Connect.
Zillow didn’t directly comment on the new legal filing. It has said that it would “vigorously defend” itself from the lawsuit.
“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,” a Zillow spokesperson said in a statement.
“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 company said.
Compass attorneys are hoping to receive from Zillow any communication between Zillow, Redfin, eXp and other brokerages, along with unspecified documents about what it calls the Zillow Ban, documents outlining Zillow’s interactions with certain MLSs, and more.
It also wants data about Zillow’s users and traffic, and documents related to competition in the real estate portal market.
