Compass is going to war with Zillow. The outcome could greatly shape the future of finding your dream home.
On Monday, Compass, one of the nation’s largest real estate brokerages, filed an antitrust suit against Zillow, arguing that the most popular destination for online home buyers is breaking antitrust law by banning listings that don’t meet its guidelines.
At issue is Zillow’s policy, which permanently bans any listing that is posted elsewhere but not on the well-trafficked website within 24 hours. Compass calls this a “Zillow ban.”
“The Zillow Ban seeks to ensure that all home listings in this country are steered onto its dominant search platform so Zillow can monetize each home listing and protect its monopoly,” the lawsuit reads.
Zillow said in April that it was changing its policy so that all homebuyers had access to the same information.
Many agents use a multiple listing service, or MLS, a local database that makes listings widely available online, including to companies like Zillow. Brokerages like Compass have increasingly found ways to selectively post some listings before they get shared more widely via the MLS. These so-called hidden listings offer select agents and then later, the public early access to properties exclusive to the broker. Zillow has argued that these listing practices create an uneven information playing field for homebuyers and favor large brokers.
“Zillow is an unfriendly place for home listings, which is one of the reasons home sellers have welcomed Compass’s strategy,” the lawsuit reads.
As BI previously reported, Zillow’s declaration came amid an uneasy time in the real estate market. Existing home sales remain slow, agents are facing pressure over their commissions, and the rules for the entire process are getting overhauled.
Zillow said in response to the suit that Compass’s claims are “unfounded” and the company is prepared to mount a vigorous defense.
“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,” a Zillow spokesperson said in a statement to Business Insider. “These practices are widely supported by most brokerages, consumer advocates and fair housing experts, because open access and maximum exposure lead to better outcomes for buyers, sellers and agents alike.”
When it released its policy, Zillow cited the National Association of Realtors’ own guidelines.
Compass’s suit says that Zillow lobbied to strengthen the trade group’s standards to block practices like Compass’ “Private Exclusive” listings. When those efforts failed, Compass says Zillow rolled out its listing policy.
It’s not just Zillow that Compass is targeting. Compass says that Zillow conspired with Redfin and eXp Realty to implement their own similar bans.
eXp, the third-largest brokerage by sales volume, strongly disputed Compass’ claims in the lawsuit. CEO Leo Pareja called Compass’s suit an act of “desperation” and said its claims about eXp are “without merit.”
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“eXp is not a named defendant, and any implication of co-conspiracy is categorically false,” Pareja said in a statement to BI. “Our business strategies were developed independently in response to a rapidly evolving real estate market.”
