Compass’s lawsuit against Zillow highlights the growing power struggle in online real estate

Two of the nation’s real estate titans are on a collision course.

Compass, one of the largest brokerages in the country, has filed a complaint in a New York federal court against Zillow, alleging the online behemoth is engaging in “anticompetitive tactics” and violating antitrust laws.

The suit accuses Zillow of banning listings that were marketed elsewhere first, saying the company has “retaliated against competitive threats by enacting an exclusionary policy.”

“This lawsuit is about protecting consumer choice,” said Robert Reffkin, Compass founder and CEO, in a statement to Fast Company. “No one company should have the power to ban agents or listings simply because they don’t follow that company’s business model,” he added. “Consumers should have the right to choose how they sell their homes.”

Zillow did not respond to Fast Company’s request for comment about the suit.

The face-off between the two companies has been brewing for some time. Compass has been growing steadily, most notably with last December’s acquisition of Christie’s International Real Estate in a deal worth $444 million. Earlier this year, Compass was also reported to be in talks to buy the real estate brokerage business of Berkshire Hathaway.

Compass has been promoting its “Private Exclusives” and “Coming Soon” online listings for several months, which feature thousands of homes available only to Compass agents and their buyers. Two months ago, Zillow unveiled a new policy that any home put on the market but not made available to Zillow within 24 hours would be banned from the site.

“Instead of competing on the merits for home sellers, home buyers, and the agents who work for them, Zillow has sought to rely on anticompetitive tactics to protect its monopoly and revenues in violation of the antitrust laws,” the filing reads.

The suit says Zillow has become the “vital, go-to destination for consumers looking to purchase homes,” through the “relentless acquisition of competitors” and “the power of network effects.” That, Compass claims, effectively makes it a tollbooth for agents, with Zillow allegedly collecting up to 40% of the buyer agent commission for referring the buyer. Additionally, it accuses Zillow of charging potential buyers to tour listed properties—something that is typically free.

“Every time a buyer requests a tour on Zillow, Zillow redirects the buyer away from the listing agent of the property, who would not charge the buyer an incremental commission,” the lawsuit states. “Instead, Zillow directs the buyer to a Zillow-affiliated buyer agent who charges the buyer an incremental commission to show the property.”

Compass argues that it and other realtors should have the right to market homes themselves, without being required to send listings to Zillow. This sometimes involves an extended “coming soon” period, which Compass says allows sellers to showcase homes before they are fully market-ready, gauge early interest, and test demand—without increasing the “days on market” count or triggering price reductions.

Zillow, in April, argued that everyone should have access to that information, citing the National Association of Realtors’ long-standing “clear cooperation” policy, which requires agents to list homes on their local multiple listing service (MLS) within 24 hours of beginning any public marketing.

“Listings shouldn’t be used as leverage to control who gets to participate in the home-buying process,” Zillow wrote when announcing its new rules. “Practices that selectively share listings . . . create confusion, harm consumers, and erode trust in the marketplace. It’s a bait-and-switch move, where agents or brokerages try to get the best of both worlds.”

Compass, in its lawsuit, counters this argument, saying Zillow should not be allowed to ban listings that don’t align with its business model.

“Zillow is so comfortable with its size and power that it has adopted a policy that governs what other real estate companies can do on platforms other than Zillow,” the complaint reads. “It effectively is leveraging its power to promulgate and enforce industry-wide rulemaking like a government regulator, despite being a private company that does not even provide brokerage services, represent home sellers and buyers, or create the listings on which it profits.”

https://www.fastcompany.com/91356929/compass-lawsuit-against-zillow-highlights-the-growing-power-struggle-in-online-real-estate?partner=rss&utm_source=rss&utm_medium=feed&utm_campaign=rss+fastcompany&utm_content=rss