The Compass/Zillow Fight Heats Up
I have previously published several blog posts regarding the push from Compass Real Estate to allow private real estate listings. Those posts can be found here, here, and here. In a nutshell, Compass Real Estate elected to give their property owner clients the ability to list with them privately, creating a private portal for its agents and their clients, so that they can engage in “pre-marketing”, directing sellers to private channels and seeking to make deals outside of the general open market. This policy is contrary to the many years of “clear cooperation” that requires agents to put their listings on the multiple-listing service (MLS) within one day of marketing to the public. Some companies, like Redfin and Zillow, have gained significant advantage from clear cooperation, hosting this information to the public soon after release onto the MLS. The Northwest MLS (which governs the multiple listing service in Washington State), additionally, currently requires agencies to follow the policy of clear cooperation.
Compass Real Estate’s decision to deviate from “clear cooperation” has caused significant debate regarding the benefit to sellers and buyers of allowing private listings instead of requiring that listings be released to the public right away. This debate has resulted in significant and immediate actions. Zillow announced in April that it would ban residential listings from appearing on Zillow if they have been marketed for more than 24 hours without being first placed on the MLS – its “Listing Access Standards” policy.
Compass Real Estate sued Zillow because of this ban, claiming anticompetitive practices in banning listings that were marketed elsewhere. Currently, the parties are in the middle of a four-day hearing in the U.S. District Court for the Southern District of New York to determine whether a preliminary injunction will be issued blocking Zillow from temporarily banning the listings while the lawsuit proceeds on the merits. The hearing is scheduled to last from November 18th until November 21st. Once the results are in, expect an updated post on the same. If a preliminary injunction is issued, it is anticipated that Compass will add a related damages claim to their lawsuit relating to the same.
Compass has also alleged that Zillow has colluded with Redfin to create a monopoly wherein brokerages must play ball with them to market to the public or else be essentially locked out, and further that the new Zillow ban has caused them irreparable harm. Compass stopped short of suing Redfin though. Zillow, on the other hand, has argued that it is not required to help “competitors” who do not list right away to the public, and further, that Redfin’s public support is simply because their interests are generally aligned, noting that Redfin has not issued a similar ban, and that both companies essentially act as types of listing platforms.
Zillow has also stated that Compass cannot prove irreparable harm where it has recently boasted extremely strong financial performance and is in the process of acquiring real estate service behemoth Anywhere Real Estate. More broadly, Zillow and Redfin have each argued that clear cooperation increases public transparency for the benefit of all parties, and that Compass is hiding behind the illusion of a new marketing strategy to assist sellers with the real intent to simply drive up its own revenue.
The lawsuit continues to heat up, and the results of the preliminary injunction will undoubtedly have important effects in the near term – determining whether, at least for now, Compass can show its listings on Zillow after a period of utilizing their marketing strategy. In any case, the ultimate outcome of this suit, and any parallel suits or appeals, may have significant ramifications for whether clear cooperation continues to be the policy at large in the residential real estate realm. Whatever side one supports, the implications of this lawsuit are big to the real estate industry.
The lawyers at Beresford Booth have significant experience with real estate transactions and disputes, including those involving the purchase and sale of residential and commercial real estate. If you need any legal assistance, please do not hesitate to contact us. Please feel free to contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.