Photo: Gabby Jones/Bloomberg/Getty Images
Even after hiring a broker, most people in the market for a new home spend a lot of time on sites like StreetEasy and Zillow, browsing what they assume is pretty much everything available. But recently, Compass has been talking up its exclusive in-house listings network, on which sellers can soft-launch their listings discreetly and buyers can get early access to the good stuff before it’s swarmed by the general public. It’s not surprising that Zillow (the parent company of StreetEasy) opposes it, since its business depends on being a comprehensive listings database. Now it has escalated that fight: As of May 1, Zillow will ban listings that are up for more than a day on a private brokerage network or are otherwise marketed “whether through a sign in the yard, an Instagram post or on a brokerage website behind the lure of exclusive inventory,” according to the company. The ban intensifies the monthslong battle between Zillow and private listings networks — a battle that began with Compass but has now expanded to include several other major brokerages like Corcoran and Douglas Elliman.
Compass has described its exclusive listings network as a benefit to both its sellers and its buyers: Sellers can test pricing and things like staging before their listing accrues days on the market, which can make a house seem less appealing, while buyers can look at a listing (and make an offer on it) before it goes out to a larger pool of buyers and potentially gets caught up in a bidding war — a pretty nice perk in a market where there’s a lack of new inventory. In an earnings call last year reported by the Real Deal, Compass CEO Robert Reffkin described how the private listings network would give the company an edge: “Compass agents and Compass.com have more inventory than third-party sites, sending a strong signal to buyers that if you aren’t working with Compass agents or aren’t searching Compass, you are not seeing all the inventory.” (While sellers ultimately decide whether they want to launch on the private network first, this winter the company was offering incentives for doing so.)
Zillow argues that the practice hurts not just buyers but also sellers, who get the highest sales price with the largest possible pool of buyers. Brown Harris Stevens also says that open, rather than private, listings are best for all clients. “You always want to give a listing maximum exposure and have all eyes on it,” Brown Harris Stevens CEO Bess Freedman told the Real Deal. Besides the allure of an exclusive network, it’s obvious what Compass stands to gain; she points out that in-house deals mean more money, as the company gets to take a cut from both sides. “It’s not for some greater good, like he’s trying to help the world. He’s trying to get as much money as he can,” she said, speaking about Compass CEO Reffkin. As for smaller brokerages, they may be at a real disadvantage — even if they start their own exclusive networks, they won’t be able to compete with Compass’s scale.
There is some question of what qualifies as “private” — Zillow has exempted truly private listings, often known as whisper listings, which it defines as those not advertised on exclusive networks or in agent email blasts, from the ban (although the sellers of such listings — celebrities, people with security concerns, high-profile sellers going through, say, a divorce — presumably wouldn’t want them on StreetEasy, either). Compass, however, seems to believe its private listings network won’t be impacted. A spokesperson wrote in an email that the ban would impact only “Coming Soon” listings that were up on its public site for more than 24 hours — typically the ones that are transitioning out of the private listings network to the open market or simply those that are viewable on the site for a brief time before they go out to StreetEasy and other aggregators. Not the approximately 7,500 listings it has previously said are in its exclusive network nationwide. Zillow did say that banned listings would be unbanned if they are relisted with a different brokerage or agent at a later time — that is, after the initial contract expires.
Will Zillow’s hard-line stance against exclusive listings networks pressure Compass and other brokerages to reconsider? One broker I spoke with thought so, calling the move a “game changer” — “I’ve been doing this 25 years. Good luck telling your seller, ‘You can’t be on StreetEasy, you’re banned,’” he said. “It’s not going to happen.” But a Compass broker sent me Newsweek’s headline on the ban: “Zillow Will Stop Showing Some Home Listings Next Month,” adding “I think they’re shooting themselves in the foot.”
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