Introduction to the Real Estate Debate
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.
The Listing Wars: Compass vs. 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.
The Argument for Transparency
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.”
The History of Home Listings
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.
The Business Interests at Play
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.
The Potential Outcome
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.
Regulation and the Future
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, enforce the laws that 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.
Conclusion
The debate between Compass and Zillow highlights the complexities of the real estate industry and the need for transparency and regulation. While both companies claim to be acting in the interest of consumers, their actions are ultimately driven by their business interests. As the industry continues to evolve, it is essential to consider the impact of these changes on buyers and sellers and to ensure that the rules governing home listings are fair and transparent.
FAQs
- Q: What is the main issue between Compass and Zillow?
A: The main issue is whether home listings should be made public on popular house-hunting sites like Zillow and Redfin, or if they should be kept private and only visible to Compass agents and clients. - Q: How do Zillow and Redfin make money from home listings?
A: Zillow and Redfin make money by selling inquiries from prospective buyers to paying agents and by taking a percentage of the agent’s commission if they close the sale. - Q: What is the potential outcome of the dispute between Compass and Zillow?
A: 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. - Q: Why isn’t the information about homes for sale federally regulated?
A: 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. - Q: What can the California Department of Real Estate do to regulate private listings?
A: The California Department of Real Estate can enforce the laws that require agents to give sellers adequate warning on the financial consequences of not appearing on the major home listing sites.
