The Battle for Online Home Listings: Compass vs. Zillow and Redfin
As two real estate powerhouses, Compass and Zillow—along with Redfin—wage a heated battle over how homes are marketed online, both claim to prioritize consumer interests. However, underlying this conflict is the potential for substantial profits should either side prevail.
New Strategies in Home Listings
In late 2024, Compass, the largest U.S. brokerage by sales volume, started a three-step listing process. They recommend:
- Private Listings: Making homes visible only to Compass agents and clients.
- Exclusive Exposure: Displaying the listings only on Compass.com.
- Public Listing Option: Eventually listing properties on popular platforms like Zillow and Redfin.
The real estate industry views listings as a crucial form of currency. With a significant number of listings slipping from Zillow’s database, the company retaliated by announcing that it would block private listings, an action intended to halt Compass’s selective sharing practices. Redfin is expected to implement a similar ban soon.
Competing Philosophies
Each player projects itself as a champion of consumer rights. Compass advocates that its selective approach offers sellers enhanced privacy and control over their listing process. Some sellers prefer to test the waters with a more exclusive audience before fully exposing their home to market scrutiny on larger sites, which can include sensitive market data such as days on the market and price reductions.
Conversely, Zillow and Redfin argue that transparency benefits both buyers and sellers. They contend that widespread advertising is essential for establishing a home’s true market value.
However, Brian Boero, CEO of 1000watt, a residential marketing firm, suggests that these claims may serve more as a shield for corporate interests than genuine consumer advocacy. “These companies are using the consumer as almost like a human shield here to protect their business interests,” Boero remarked.
The Stakes of the Listings War
Should Compass succeed in reshaping the landscape of home listings, the shift could disrupt the established norms that buyers have come to expect over the past two decades.
When Zillow and Redfin launched in the mid-2000s, they promised democratization of the home search process, making previously hidden listings easily accessible online. This transformation significantly relieved sellers’ agents from the burden of advertising, as they could list properties for free on these platforms.
However, the cost of this convenience lay with buyers’ agents. Whenever potential buyers expressed interest via a listing, Zillow and Redfin sold that lead to a paying agent, taking a cut of their commission as well. Brokerages like Compass have long been critical of these fees.
A New Era for Listing Practices
With declining home sales for the third consecutive year, Compass is pivoting towards a model that aims to eliminate intermediary costs by publishing listings only on its own platform. Rory Golod, Compass’s president of Growth and Communications, states, “Organized real estate has been implementing rules that have been stripping homeowners and their agents of flexibility and choice.”
Redfin and Zillow, on their end, cite the open-access nature of the internet as vital for home listing transparency. Joe Rath, Redfin’s head of industry relations, argues that such gatekeeping undermines the internet’s foundational principles.
Zillow spokesperson Matt Kreamer emphasizes that home listings should be universally accessible: “We believe that home listings that are available to some buyers should be available to all buyers.”
Toward a Compromise?
The dispute is likely heading toward a resolution that allows both Compass and the listing aggregators to maintain their business models. Redfin’s Rath has suggested that the company might consider withholding specific data, such as days on market and price adjustments, to keep core listings accessible.
Ultimately, both sides benefit from preserving traditional commission structures, often factoring between 2% to 3% for buyers’ agents. A recent landmark legal settlement aimed at addressing these fees could also play a role in defining the future of this highly lucrative real estate market.
The Call for Regulation
Questions arise about why the standards governing home listings are dictated by two major corporations that aim to keep prices elevated. Boero notes, “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.”
However, federal intervention seems unlikely, especially under current deregulation trends. The California Department of Real Estate, while unable to make a definitive ruling on private listings, can still enforce transparency laws ensuring sellers understand the ramifications of opting for private listings. Former investigator Summer Goralik points out the need for brokers to fulfill their fiduciary duties to sellers.
Conclusion: The Future of Home Listings
As the conflict intensifies, discussions around the necessity of private listings versus public transparency will remain central to the conversation. Goralik warns that a blanket push for private listings could be regressive: “A wide-scale campaign for private listings seems to do more harm than good.”
This ongoing battle entails high stakes for both buyers and sellers, and as the landscape evolves, the ultimate victor may well be determined by shifting market preferences and technological advancements.
For continued updates on the state of home listings and real estate trends, follow Zillow and Redfin.