Real estate brokerage Compass (COMP) sued Zillow (Z, ZG) after the listings giant banned certain privately marketed properties from appearing on its website, the latest escalation in an ongoing fight over semi-secret listings.
In the lawsuit filed Monday in New York, Compass argued that Zillow’s ban violates antitrust laws because “it was adopted to harm a competitive threat, it eliminates a new and innovative business model that creates competitive differentiation in the market, and it reduces homeowner choice.”
“The Zillow Ban is designed to make it hard, indeed nearly impossible, for home sellers to sell their home outside of Zillow, in an effort to force all listings to be on Zillow where Zillow makes money selling leads off the homeowners’ listings,” the lawsuit stated.
Zillow and Compass have been two of the most outspoken voices in a real estate industry fight over what’s known as the Clear Cooperation Policy, a rule designed to limit homes that are marketed semi-secretly in what are known as “pocket” or “off-market” deals.
“Zillow believes the claims in this lawsuit are unfounded and will vigorously defend against them,” a representative for the company said in a statement. “At the heart of this issue is a simple principle: when a listing is publicly marketed, it should be accessible to all buyers — across all platforms, including Zillow.”
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Zillow, which makes money through ads on its listings platform, has supported the policy, arguing that the transparency helps sellers get higher prices for their homes, improves buyer trust, and better aligns with fair housing laws. Compass, which touts its access to off-market listings and its private-first marketing approach, has said the policy limits choice for sellers and buyers.
Most home sellers want to market their homes to the widest possible pool of potential buyers. But a small group, especially those with luxury homes, seek off-market listings to maintain privacy or test their listing prices without having information on price cuts or time on the market visible to all.
In April, after the National Association of Realtors announced a new rule designed to settle the fight by giving sellers the option to delay broadly advertising their homes online while keeping in place a rule requiring agents to list homes on shared databases known as multiple listing services (MLS) within a day of beginning public marketing, Zillow said it would not allow homes that were first marketed only to select buyers to appear on its website.
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Zillow’s move effectively banned Compass listings because the brokerage encourages sellers to use its “3 Phased Marketing Strategy” that first makes a property available only to Compass agents, then publicly displays it on Compass’s website as a “Coming Soon” property, and finally launches the property on the MLS and third-party listings services.
Compass said in the suit that 94% of the listings the company sold last year were eventually broadly marketed on the MLS and sites like Zillow, but sellers like the phased marketing approach.
“Zillow is an unfriendly place for home listings because it tracks metrics like time on market and price cuts and provides estimates of home values and climate risks that may not be accurate,” the lawsuit said.
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
This story is developing. Check back for updates.
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