Massive Compass Merger Likely To Increase Private Listings

In April of this year, I published two blog posts here and here regarding the push for private real estate listings spearheaded by Compass Real Estate. In a nutshell, Washington State real estate brokerage firms have traditionally agreed to share all real estate property listings publicly through the multiple listing service. This policy is known as "Clear Cooperation." The policy has led to robust sharing of listings and has facilitated the development of significant businesses like Redfin and Zillow to serve as "go-to" sites for prospective real property purchasers and others.

Some brokerages, however, have lobbied for private listings that allow exclusivity (rather than requiring all listings to be public), arguing that this can achieve better results for buyers and sellers. While Compass Real Estate has served as this chief proponent, other parties have opposed this push, such as the Northwest Multiple Listing Service (NWMLS) itself, Zillow, Redfin, and Windermere.

In the last five months, these issues have only heated up. In May, Zillow adopted a policy (starting June 30^th) barring real estate listings from its website not made available on the multiple listing service. More specifically, it required that home listings be published on Zillow within one day of original listing, or else not be published at all. Thereafter, Redfin adopted the same rule. In response, Compass Real Estate filed a federal antitrust lawsuit against Zillow in June, accusing it of anticompetitive practices that hurt consumers by disallowing sellers from testing the market before pursuing public exposure. Compass also labeled Redfin a co-conspirator but did not name Redfin as a defendant. Zillow responded that its policy promotes public transparency, and that private listings fragment the market and limit consumer choice, creating barriers to homeownership.

Now, in the aftermath of this lawsuit, Compass is engaging in a massive real estate brokerage merger, making an all-stock purchase of Anywhere Real Estate for $1.6 billion. Anywhere Real Estate includes enormous real estate franchises such as Century 21 Real Estate and Coldwell Banker. This acquisition will expand Compass's number of agents more than five times over, combining the two of the largest real estate brokerages in the nation. This will further cement Compass's power, and as Compass continues to encourage its sellers to first make private listings available to its own agents and their clients, the conflict between those seeking the expansion of private listings and those who wish to preserve Clear Cooperation, will likely only intensify. While up until now, the NWMLS has remained committed to Clear Cooperation and retains the right to fine Compass for private listings, it nonetheless has not commenced doing so. Given the likely expansion of this struggle, it remains to be seen whether the NWMLS takes more forceful action, and what the ramifications of such action might be.

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