A House Judiciary subcommittee is seeking answers from Compass and Midwest Real Estate Data over their private listing partnership, escalating federal scrutiny of closed listing networks amid an ongoing legal battle involving Zillow.
In separate letters sent Wednesday to Compass CEO Robert Reffkin and MRED CEO Rebecca Jensen, the Subcommittee on the Administrative State, Regulatory Reform, and Antitrust requested briefings about the companies’ business practices, their use of private listing networks and the potential effects on consumers.
The subcommittee, led by Chairman Scott Fitzgerald, a Wisconsin Republican, set an Aug. 5 deadline for Compass and MRED to arrange the requested briefings.
“The Subcommittee is examining allegations that certain real estate companies have engaged in anticompetitive practices designed to insulate themselves from competition at the expense of consumers,” Fitzgerald wrote.
The letters focus on an April agreement that made Compass the first brokerage to join MRED’s expansion of its Private Listing Network beyond the Chicago area. The arrangement allows Compass agents to share listings with MRED participants before those properties are broadly distributed through an MLS and consumer-facing portals.
Under the partnership, Compass agreed to supply its national listing inventory and subsidize membership costs for participating Compass agents.
“We are bringing MRED national,” Reffkin told agents at the time.
Lawmakers said private listing networks could fragment available inventory, weaken price competition and create “velvet ropes” around properties by limiting access to select groups of agents and buyers.
The subcommittee also questioned whether such partnerships incentivize agents to steer sellers toward private listings so that brokerages can represent both sides of a transaction or capture buyers who contact the listing agent directly.
Compass declined to comment Wednesday. An MRED spokesperson confirmed to Inman that the Chicago-area MLS had received the House Judiciary Committee’s request for a briefing.
“We look forward to responding and helping the committee understand our business practices. Whether it’s our customers or this committee, we’re always happy to help,” the spokesperson said over email.
Scrutiny builds around Compass private listings
The congressional inquiry follows months of growing scrutiny surrounding Compass’ private-listing strategy and expanding market power.
An April report from the Consumer Policy Center found elevated rates of Compass transactions in which the brokerage represented both sides of a deal, particularly in markets where it controls a large share of home sales. The congressional letters cited the report while raising concerns that private listings could increase double-ended transactions and restrict buyers’ access to independent representation.
The report was based on 5,000 recent sales in Boston, Washington, D.C., Chicago, San Diego and Austin, where Compass accounted for between 30 percent and 39.5 percent of transaction sides.
Those findings echoed Compass’ previously stated “30/30 vision” of achieving an average 30 percent market share in its top 30 cities. The company stopped publicly discussing the target after announcing its acquisition of Anywhere Real Estate.
Compass completed that deal in January, well ahead of the companies’ originally announced closing window, creating the largest residential real estate brokerage enterprise in the country. The transaction cleared federal review despite warnings from lawmakers and competition policy researchers that the combined company could hold highly concentrated market shares in several major cities.
More recently, a coalition of consumer organizations asked the Federal Trade Commission and Department of Justice to investigate the Compass-MRED partnership, arguing that the national expansion of private listing networks could restrict access to housing information and reduce competition.
The partnership is also central to Zillow’s lawsuit against MRED. Zillow alleges Compass coordinated with the MLS as part of a campaign against Zillow’s listing access standards, which block listings that are publicly marketed without being broadly submitted to an MLS.
During a two-day preliminary injunction hearing this month, Reffkin denied directing MRED to cut off Zillow’s listing feed and defended Compass’ private-listing program as a tool that gives sellers greater control over how their homes are marketed.
