Compass sues Zillow, escalating private listings fight

This story originally appeared on Real Estate News.

After relentlessly defending “seller choice,” Compass has filed suit against Zillow over private listings, with CEO Robert Reffkin claiming that the home search site is “abusing its monopoly power to ban homeowners and their agents” for marketing homes elsewhere.

The suit, filed in New York on Monday morning, is a response to Zillow’s policy barring listings that are publicly marketed but not widely available via the MLS. It was first reported by The New York Times.

What the lawsuit says: The suit calls Zillow “the vital, go-to destination for consumers looking to purchase homes,” a status achieved through “relentless acquisition of competitors” and “the power of network effects.” 

Compass’ “3-Phased Marketing Strategy,” meanwhile, poses “a significant threat to Zillow’s home search monopoly” by allowing consumers to sell their homes via private listing, free of “negative insights” such as days on market, the filing states.

The lawsuit also accuses Zillow of charging “an incremental tax on the real estate transaction” by redirecting the buyer “away from the listing agent of the property, who would not charge the buyer an incremental commission.”

An escalating battle: Reffkin’s push for private exclusives has escalated across the country, including in Seattle against leading local brokerage Windermere and NWMLS, which serves the region and was slapped with a lawsuit by Compass in April; in California against CRMLS, which has opted out of allowing a pre-marketing period; and more recently, in Chicago where the leaders of recently acquired @properties are echoing Reffkin’s “seller choice” message. 

A closer look at the policy: As of May 28, agents who have listings that are deemed to be out of compliance with Zillow’s listings standards will get a notification from the company. Starting June 30, “an agent’s third non-compliant listing — and any subsequent non-compliant listings — will be blocked from Zillow and Trulia for the life of the listing agreement between that listing broker and seller,” the company said.

“Our belief is that, if a listing is going to be marketed to a buyer or a subset of buyers, it really needs to be made available to all buyers,” Errol Samuelson, Zillow’s chief industry development officer, told Real Estate News in April.

How others in the industry have reacted to the listings ban: eXp and others have expressed support for Zillow’s listing ban, while Homes.com says it will boost listings that Zillow won’t display.

A recent survey of MLS and Realtor association leaders took a look at the bigger picture, revealing concerns about how NAR has handled the decision to add a delayed marketing option to the Clear Cooperation policy.

Most respondents (54%) disapproved of NAR’s actions, with 20.7% approving and 21.7% offering no opinion. Some expressed frustration with “rushed, vague” communications from NAR. Others viewed it as politically and legally sensible.