As two real estate giants escalate a war over how homes should be listed for sale online, both sides say they’re acting in the interest of consumers.
Both sides also stand to make a lot of money if they win.
The issue intensified at the end of 2024, when Compass, the country’s largest brokerage by sales volume, began advising its sellers to use a three-phased marketing approach — making their homes visible only to Compass agents and clients as a “private” listing, making them viewable only via Compass.com, and reserving the option to later make them public on popular house-hunting sites like Redfin and Zillow.
In the real estate industry, listings are currency. Faced with thousands of them disappearing from its site, Zillow punched back.
The Seattle-based company, starting at the end of June, plans to block any former private listings from appearing on its site — an ultimatum it hopes brings an end to Compass’s practice of selectively sharing listings before they appear on big search portals. Redfin will follow with a similar ban in September.
Each of these players pitches itself as a pro-consumer brand. Compass says its selective marketing approach offers sellers privacy and control. Some sellers want to market to more exclusive groups before their home appears on big listing sites, which feature details like days on market and price cuts, which can signal a seller is willing to negotiate on price.
Zillow and Redfin say they are for transparency in the market, which is good for both homebuyers and sellers. The only way to know a home’s true price, they argue, is to advertise it as broadly as possible.
But Brian Boero, chief executive of 1000watt, a marketing agency for residential real estate companies, says their pro-consumer stances are largely just messaging.
“These companies are using the consumer as almost like a human shield here to protect their business interests,” Boero said. “They may believe these things sincerely, but this is first and foremost about rational self-interest.”
Should Compass win the private listings war, it would upend the paradigm in home listings that buyers have grown used to over the last two decades.
When Zillow and Redfin arrived in the mid-2000s, they promised to democratize the home search, pulling back the curtain on a market once controlled by agents and the local databases they operated called multiple listing services. For buyers, the experience changed overnight: Homes that were once buried in classified ads or hidden in books that could only be viewed alongside a broker were suddenly just a click away.
Sellers’ agents at first rejoiced — they didn’t have to work as hard to advertise their properties, and listing on the sites was free.
But someone was paying: buyers’ agents. When a prospective buyer clicks a listing’s “Contact an Agent” button, Zillow or Redfin sells that inquiry to a paying agent. They also take as much as 40% of the agent’s commission if they close the sale. Brokerages like Compass have long bristled at the steep fee.
But as home sales drag for a third straight year, Compass is trying to change the game. By publishing listings exclusively on Compass.com, it cuts out the referral middlemen.
“Organized real estate has been implementing rules that have been stripping homeowners and their agents of flexibility and choice,” Rory Golod, president of Growth and Communications at Compass, said in an interview. “They are trying to monopolize where inventory goes and how people sell.”
Redfin and Zillow, of course, have their own interests to protect — as well as the model that’s come to shape the modern home-buying experience.
“This isn’t just about Zillow or Redfin — the internet has changed home search for the better, where every buyer can have access to all of the inventory,” said Joe Rath, Redfin’s head of industry relations. “Gatekeeping in any form is antithetical to the internet.”
Matt Kreamer, Zillow’s spokesperson, said that transparency is core to Zillow’s philosophy: “We believe that home listings that are available to some buyers should be available to all buyers,” he said.
Their calls for openness also happen to preserve their business: more listings, more traffic, more fees.
Ultimately, Boero, the marketing chief, believes that Zillow’s market power will force Compass to blink.
“Zillow is the most powerful brand in the history of housing,” Boero said. “You just can’t imagine not having your home on Zillow as a home seller — it sounds like a stupid thing to have happen.”
But others see an opportunity for Compass to prevail in bringing traffic directly to its site.
“Southwest Airlines didn’t sell tickets on any of the online aggregators for years, and they’re doing great,” said Mike DelPrete, a real estate tech consultant. “People look at multiple sources.”
The dispute appears to be heading toward a compromise that would allow both Compass and the listing aggregators to uphold their business models, rather than a solution centered around buyers and sellers.
Redfin’s Joe Rath said his company would be open to hiding certain data, like days on market and price drops, if that’s what it took to keep listings public. “We would much rather give ground there and have the listing,” he said, “than not have the listing at all.”
Because all of these companies are paid a percentage of a home’s ultimate sales price, it benefits both the brokerages and the search portals to keep buyers in the dark about details that might lead to a lower price. The battle over transparency, it seems, has limits.
Whether Compass or the search portals win, both victories would also preserve an as-yet unshakable status quo in real estate: a 2% to 3% commission for buyers’ agents. A landmark legal settlement earlier this year threatened that fee structure paradigm — but so far, traditional models have held, although a few flat-fee agencies have broken the mold.
So why are the rules governing home listings decided by two major corporations that stand to benefit from pushing prices as high as possible?
“With how important housing is to our economy, society and individuals, there is a question of why the information about homes for sale isn’t federally regulated,” Boero said.
But government intervention in home sales isn’t likely to happen at the federal level under President Donald Trump, who has promoted deregulation and free markets.
The state’s regulator, the California Department of Real Estate, lacks the legal authority to make a ruling on private listings that would tip the scales toward either Compass or Zillow. But it can, for example, require agents to give sellers adequate warning on the financial consequences of not appearing on the major home listing sites, said Summer Goralik, a former investigator with the department who now works as a compliance consultant to brokerages.
“They’ll need to explore whether brokers are breaching fiduciary duty to sellers,” Goralik said. “Are they giving all of the information that seller needs to make an informed decision about listing privately?”
For her part, Goralik doesn’t believe the push for private sales and putting listings back into the brokerages’ hands helps buyers or sellers.
“A wide-scale campaign for private listings seems to do more harm than good,” she said. “It seems like we’d be going back in time. I’m for the future.”
Originally Published:
