Zillow’s ‘pre-emptive strike’ on private listings

Staunch supporters

“In this system, sellers don’t get maximum exposure, leaving money on the table, and buyers, especially vulnerable groups, are not getting full access to the most important tool for upward economic mobility,” he said. 

NextHome was the second firm to sign on to Zillow’s policy, announcing its adoption on Friday. 

In a post on LinkedIn, NextHome co-CEO James Dwiggins called the move a “CHECKMATE.” 

“NextHome proudly supports Zillow in this move. It protects homebuyers and sellers and puts an end to the greed and lying that has been growing in the industry,” Dwiggins said. “Good luck explaining to your seller that if your home is marketed as an ‘Office Exclusive’ or ‘Private Listing’ it will never be allowed on Zillow or Trulia unless it’s listed with another brokerage.”

On Monday, Redfin, which is to be acquired by Rocket Companies for $1.75 billion, announced that it was adopting a similar policy.

“Redfin.com will not publish any listings that have been publicly marketed before being shared with all real estate websites via the MLS,” Glenn Kelman, Redfin’s CEO, said in a statement.

Kelman said Redfin is doing this because it “believes that all buyers should be able to see all listings.”

Kelman said Redfin is also “asking MLSs to create a coming-soon designation for listings that precludes search sites from showing how long a home has been for sale and at what prices.”

However, Kelman’s ideal coming soon listing policy would differ from the one most recently proposed by Compass, which would limit access to just agents and potentially only to the agents in the brokerage the listing belongs to. 

Anthony Lamacchia, the broker-owner of Massachusetts-based Lamacchia Realty, said that if a homeowner doesn’t see their property on Zillow within a few hours of the listing going live on the MLS, they’ll ask their agent why the listing isn’t up yet.

“Zillow knows that and they’re flexing their muscles, and I have to say I don’t blame them,” Lamacchia said in a video on his YouTube channel last Friday. “This is a brilliant move and the irony is that it is somewhat going to save organized real estate, which is good for buyers and sellers.”

Lamacchia feels that NAR’s MLOS policy came out of a place of distress as the trade group was stuck between trying to provide more options for sellers while protecting buyers’ ability to access all the available inventory. While it does create more options for sellers, it opens the door for more private listing networks, possibly preventing buyers from seeing all of the inventory available to them. 

“Zillow has made a huge power move here. They have basically made themselves the enforcer,” Lamacchia said. “All along NAR and the MLSs have been the enforcer, but Zillow just stepped in.” 

Zillow ‘protecting consumers’

Consumer advocacy group the Consumer Policy Center (CPC) is another strong supporter of this policy, which it views as an effort “to stop, or at least slow down, the effects of Compass and other big brokers to dominate the residential brokerage industry and “disadvantage consumers through private listing networks.” 

In addition to harming both buyers and sellers, senior fellow Stephen Brobeck asserts the private listing networks reduce competition.

“The U.S. Department of Justice (DOJ) should take a close look at potential antitrust violations by those brokers who use deceptive practice to try to dominate markets,” Brobeck said in a statement on Monday. “We encourage all brokers to support Zillow’s effort to maintain the transparency of real estate markets and prevent their balkanization.”

Neutral territory

While some brokerages, like NextHomes and eXp Realty, are vocal supporters of this policy, Keller Williams, RE/MAX and Anywhere Real Estate have all had more measured responses to Zillow’s move. In emailed statements, reps at all three firms noted that while they support transparency and believe broad access to listings should be preserved, they also support providing their sellers with options as to how they want to market their home, and they believe that their agents will help their clients to decide what is best for them.

Zillow’s opposition

Taking a more oppositional stance to the policy is CoStar, the parent company of Homes.com. In a letter sent to agents over the weekend, CoStar CEO Andy Florance called the move “a pure power play of epic proportions,” noting that delayed IDX syndication is allowed under NAR’s new MLOS rule.

“Zillow is asserting that they — not NAR, not your brokerage, not you the listing agent — and not even the homeowner whose house it is and is paying the commission — should decide how a listing is marketed. This isn’t about protecting consumers,” Florance wrote. “It’s about protecting Zillow’s ability to profit from your listings by selling your leads to competing agents.”

Florance went on to reiterate his frequent claim that Zillow’s “lead diversion model is  anti-consumer and anti-agent.” 

As Homes.com continues to make a play for the No. 1 listing portal spot, Florance is positioning his firm as the “agent friendly” alternative, promising that it will never take a split of an agent’s commission or sell the buyer lead on their property to another agent.

“Zillow has overplayed its hand. I believe they panicked at the thought that agents might have real choice in how they market their listings. And when agents have a choice, many won’t rush to publish listings on a site that siphons off their leads,” Florance continued. “Even if just a few agents hold back from listing on Zillow, buyers will quickly follow suit—and stop searching there. Rest assured, if Zillow does block your listing it will still be seen on Homes.com and the other sites.”

Compass, a vocal critic of CCP, has been noticeably silent about Zillow’s announcement though Compass CEO Robert Reffkin wrote on LinkedIn in a post sharing Florance’s letter, “Andy and Homes.com support agents. So I support Andy and Homes.com.”

Considering options

Florance’s letter and Reffkin’s support of it in opposition to Dwiggins’ and Pareja’s alignments with Zillow give the impression that battle lines are being drawn in the sand, but the other major listing portal, Move’s Realtor.com (which just exited a legal battle with CoStar) has yet to take a side. 

“We’re giving the topic thoughtful consideration. We firmly support listing cooperation—it ensures buyers see more homes, sellers get maximum exposure, and the market stays fair and competitive,” a Realtor.com spokesperson wrote in an email. “For sellers, the benefits of broad listing exposure are clear—it draws more potential buyers, leads to stronger offers, and ultimately helps secure the best possible price for their home.”

The spokesperson added that the Realtor, which like Zillow also allows buyer agents to advertise on seller listings, feels NAR’s MLOS policy is a “sensible approach” to the issue as it “balances flexibility for sellers, agents, and MLSs with the need for fair and equal access to listings.”

Analyze this

Real estate analysts don’t necessarily see Zillow’s move as a big deal. 

“These [private listing] networks so far span a small number of listings and aren’t being ‘publicly’ marketed. [Zillow Group] ZG’s policy feels more like a pre-emptive strike than counter-attack,” BTIG analyst Jake Fuller wrote in a note. 

Given that having as many of the available listings as possible is key to driving traffic to Zillow, Fuller and the team at BTIG are not surprised by this move, but they don’t believe that this will now escalate to a battle between Zillow and Compass or any other brokerage that decides to pursue an internal private listing network structure. 

“So is this now a Zillow-Compas Battle Royale? We don’t think so. First, the numbers are small with [Compass] COMP at 7.5K Private Exclusive-Coming Soon listings as of the 4Q call vs. 849K active listings reported by St. Louis Fed in February,” Fuller wrote. “Second, COMP’s Private Exclusives are only accessible by contacting an agent and half of Coming Soon listings go to the MLS within a day, so neither appear to be a problem vs. ZG’s policy. The other half of Coming Soon listings do appear to be a problem, but are just a subset of the 7.5K. Finally, our sense is that there is probably a willingness on both sides for dialogue.”