The conflict between Compass and multiple listing services is escalating rapidly, with the brokerage threatening lawsuits against MLSs and one of the nation’s largest MLSs preparing counterclaims and a legal defense fund.
California Regional Multiple Listing Service on Wednesday rejected Compass’ demand that it stop fining or punishing agents for publicly marketing office-exclusive listings, setting up another potential legal showdown between the brokerage and an MLS.
The dispute is the latest front in Compass’ widening fight with MLS organizations. Last week, Compass International Holdings separately pressed MLSs over their relationships with recruiting platforms such as Courted, BrokerMetrics and Brokerkit, arguing that its operational data should not be used to help competitors recruit its agents, Inman learned.
Here are some of the key arguments emerging from the flurry of letters traded between Compass and CRMLS as the fight escalates.
‘We will spend millions of dollars to sue CRMLS’
In a Sept. 8 demand letter sent to CRMLS, attorneys for Compass gave the MLS until Oct. 6 to confirm that it would stop fining or otherwise “punishing” real estate professionals for publicly marketing office-exclusive listings.
Compass said that if CRMLS agreed, the brokerage would waive and release the MLS from the antitrust claims described in the letter. If not, the company threatened federal litigation.
Near the end of the five-page letter, Compass made clear how aggressively it was prepared to pursue the issue.
“Let there be no confusion about our objectives: Compass is advocating for more public marketing of listings, expanded consumer choice, and increased market competition, and we will spend millions of dollars to sue CRMLS and other MLSs to accomplish those goals.”
‘We are prepared to sue any MLS’
Compass CEO Robert Reffkin amplified that threat Wednesday at the CMLS conference in Fort Lauderdale, according to HousingWire, which was reporting from the event.
“We are prepared to sue any MLS that fines or punishes agents for publicly marketing office exclusives. This will be an antitrust lawsuit where, when we win, the MLS will pay our legal fees and three times damages.”
Reffkin said Compass intends to begin filing lawsuits in mid-October against MLSs that do not change their policies, HousingWire noted. He also said Compass would not settle those lawsuits and argued that MLS boards composed of competing brokerage interests should not be deciding how firms can market homes.
‘Homeowners should be able to publicly market any listing’
Compass frames the dispute as a question of whether sellers can decline MLS distribution while still publicly advertising their homes. In a statement provided to Inman Wednesday, a Compass International Holdings spokesperson said MLSs covering roughly 350,000 agents already allow such marketing.
“Homeowners should be able to publicly market any listing — including office exclusive listings — without their agent facing thousands of dollars in fines. Currently, MLSs supporting more than 350,000 real estate agents across 12 states allow sellers to publicly market any listing, and we believe all MLSs should follow their lead, giving homeowners more flexibility in how they market their homes and bringing more inventory to buyers.”
Compass’ demand letter names eight MLSs it says permit public marketing of office exclusives: Bay Area Real Estate Information Services, Bright MLS, Garden State MLS, MetroList Services, MLS Property Information Network, Miami Realtors MLS, RealTracs and West Penn Multi-List. Collectively, Compass says, those organizations cover 12 states and Washington, D.C., and represent roughly 350,000 real estate professionals.
‘Seller choice already exists within CRMLS’
CRMLS sees the dispute very differently. In an op-ed released Wednesday, CRMLS CEO Art Carter argued that “cooperation goes both ways” and that the MLS model breaks down when one participant benefits from shared information while treating its own contribution as optional.
“Compass has framed this debate around seller choice. But seller choice already exists within CRMLS. Our rules provide sellers and their brokers with options for how a property is marketed, including circumstances in which a property may be publicly marketed without being submitted to CRMLS for cooperation.
“What Compass is seeking is something different: the ability to benefit from the cooperative sharing of information while publicly marketing for-sale properties to benefit themselves, while hiding these same homes from the other participants of the cooperative.”
CRMLS’ response to Compass says that a seller and broker using a non-exclusive agreement can publicly market a property without submitting it for cooperation. But when an agent enters into an exclusive agreement after benefiting from MLS data, CRMLS says the agent must contribute the listing back to the cooperative.
CRMLS accuses Compass of seeking ‘vest pocket listings’
CRMLS Vice President and General Counsel Ed Zorn was considerably more pointed in a formal MLS response.
Zorn argued that Compass’ proposal would let brokers benefit from shared MLS data while withholding their own listings from other participants, a practice CRMLS characterizes as “free riding” that could weaken the cooperative model over time.
“In short, it appears that your letter demands that CRMLS implement rules to support and facilitate ‘Vest Pocket Listings’ which the FTC specifically describes as ‘causing substantial injury to consumers.’ CRMLS will not enter into any agreement with Compass to create rules that can harm consumers and are antithetical to rules supporting competition through cooperation.”
MLSs told not to ‘weaponize’ Compass’ data
The public-marketing fight is not Compass’ only recent confrontation with MLS organizations. Last week, Compass International Holdings sent letters to MLSs concerning their relationships with recruiting technology companies such as Courted, BrokerMetrics and Brokerkit, Inman learned exclusively.
“While we support MLS data sharing for cooperation, the data we provide the MLS for cooperation purposes should not be sold to a technology company like Courted that in turn further sells that data with their agent recruitment technology. The MLS exists to facilitate real estate transactions — not to weaponize our operational data against us for competitor poaching.”
In that letter, Compass asked MLSs to identify which vendors receive its brokerage and agent data, exclude Compass brands from recruiting feeds and clarify brokers’ ability to opt out.
CRMLS prepares its own claims (and fund)
CRMLS, meanwhile, is signaling that it would not simply defend itself if Compass follows through on its litigation threat.
“If Compass decides to move forward with any litigation, let there be no confusion that, in addition to CRMLS’ vigorous defense of our right to operate a broker cooperative, including the implementation of rules to prevent free-riding subscribers, CRMLS will also assert additional direct claims against Compass.”
Zorn’s response goes on to list seven categories of potential claims, including alleged violations of California’s Cartwright Act and Unfair Competition Law, intentional interference claims, breach of fiduciary duty and breach of contract. CRMLS also issued a broad litigation-preservation demand covering documents tied to Compass’ three-phase marketing program, portal negotiations, recruiting payments, government inquiries and other business practices.
CRMLS also says it is preparing an industry-backed legal defense fund and has already approached the California Association of Realtors’ Legal Action Fund and the National Association of Realtors’ Legal Action Program, with plans to seek support from other MLSs, consumer advocates, attorneys, vendors and real estate portals.
‘Aggressive defense and meaningful counterclaims’
Despite the increasingly confrontational rhetoric, Zorn ended CRMLS’ response by leaving open the possibility that litigation could still be avoided.
“It is my sincere hope that cooler heads will prevail, and that there will be no need for litigation between Compass and CRMLS. But let there be no confusion: should Compass assert these frivolous claims against CRMLS, they will be met with an aggressive defense and meaningful counterclaims.”
