Compass sues Zillow for home listing practices

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    Compass, a real estate brokerage firm, has taken legal action against Zillow, accusing the well-known property search website of blocking home listings if they were initially marketed on other platforms. This lawsuit was submitted to the U.S. District Court for the Southern District of New York, where Compass alleges, “Zillow has leveraged anticompetitive tactics to preserve its monopoly and revenue stream, contravening antitrust laws.”

    In particular, Compass criticizes Zillow’s policy, which reportedly prohibits listings if sellers advertise elsewhere for over a day. According to Compass, Zillow, along with Redfin and eXp Realty, enforces this ban to capture all home listings on its platform, enhancing monopolization and revenue. Compass believes this approach significantly limits competition and consumer choice. “In a truly competitive market, products and strategies should succeed on their strengths, not be stifled by a gatekeeping monopolist like Zillow,” Compass stated.

    Traditionally, home sellers thrive on broad advertising of their homes to attract a wide buyer audience. More offers usually mean sellers can secure the highest market price. However, listing on multiple services, including Zillow, reveals how long properties have been on the market and any price changes. Buyers may use this information to negotiate lower prices or other deals. To combat this, Compass and similar firms offer “pocket listings” or “office exclusives,” where properties are shared internally before broader advertising.

    Compass further provides a platform for sellers to list their homes publicly on Compass’s own site, avoiding Zillow and which does not display how long a property has been listed or if its price has changed. However, Zillow maintains a policy resulting in Compass-listed homes not appearing on its site if marketed for over a day elsewhere. To counteract this, Compass is seeking a court injunction against Zillow’s ban and similar policies and a jury trial for undefined damages.

    Zillow, on its part, claims the lawsuit’s accusations are baseless. A spokesperson stated, “We are dedicated to fostering a fair marketplace that supports everyone involved in home transactions.” Meanwhile, the real estate market remains fiercely competitive. According to the National Association of Realtors, sales of existing U.S. homes dropped recently due to high mortgage rates and escalating prices, deterring potential buyers.

    Specifically, in April, existing home sales fell by 0.5% to an annual rate of 4 million units, marking the slowest April sales since the U.S. housing crisis in 2009. This decline continued into May, with a slight 0.8% increase to 4.03 million units annually, hindered by high mortgage costs and rising home prices. An ongoing issue is the imbalance of more sellers than buyers, leading to fewer purchasers actively looking for homes. Reports from April showed there were 34% more home sellers than buyers, a situation not seen since April 2020 during the pandemic-induced slowdown.