By Patrick Clark and Jennifer Epstein | Bloomberg
Zillow Group is setting new rules for marketing properties on its websites and apps, escalating a fight between the online real estate company and brokerage giant Compass over how US homes are sold.
Sellers’ agents wanting to market their properties on Zillow’s sites must follow a new standard requiring that the listings be available widely, according to a statement issued April 10. If a for-sale home is online and hasn’t been posted to a multiple-listing service within 24 hours, that listing will be banned from Zillow.
The new rule, slated to take effect in May, is designed to promote transparency and benefit consumers on either side of the home-sale transaction, said Errol Samuelson, chief industry development officer at Zillow. It also stands as a rebuke to brokerages that have been promoting private-listing services as key areas for growth.
“There are a small number of very loud voices trying to make the argument that somehow hiding listings is a good thing,” Samuelson said. “They are absolutely in the minority. Why are these handful of brokerages suggesting it’s a good idea? Often because they’re putting their own interests ahead of the interests of the seller.”
Zillow’s move comes amid an industry feud over what is known as clear cooperation, a policy from the National Association of Realtors that requires agents to submit listings to multiple-listing services within one day of publicly marketing the property.
The policy places limits on efforts sometimes called pocket or whisper listings, which critics say put some buyers at a disadvantage while also making it harder for sellers to maximize proceeds.
Opponents of clear cooperation argue that the rule takes agency away from consumers and results in homes being marketed alongside information — like the number of days a listing has been on the market or price reductions — that can make properties harder to sell. Compass Chief Executive Officer Robert Reffkin has called the policy “anti-homeowner” and sought to keep some listings as private ones.
In March, NAR updated its clear cooperation policy, allowing individual MLS to formulate standards for when a seller wants to delay marketing a listing widely.
Zillow’s new standard wouldn’t conflict with NAR’s policy on delayed marketing. The online real estate company also announced that eXp Realty, the third-largest US brokerage by sales volume, is committing to work with Zillow in distributing listings widely, with Samuelson expressing hope that others would soon follow suit.
“eXp will always take a position that protects consumers first, that’s non-negotiable,” said Leo Pareja, CEO of eXp Realty. “By tapping into Zillow’s massive consumer reach, eXp agents are positioned to serve more people and create more opportunity.”
Private listings
Zillow said in a blog post Thursday that sometimes sellers, on rare occasions, have privacy or safety reasons to keep listings among a select group, a move the firm said it would support. Those listings don’t end up on their sites or apps.
The real estate company’s move is the latest shoe to drop in a time of transition for the US home-sales industry, which has been wracked in recent years by a historically slow market and class-action settlements over how agents set commissions.
The turmoil has spurred some players to adopt new strategies. In March, mortgage company Rocket Cos. agreed to buy brokerage Redfin Corp. and servicer Mr. Cooper Group Inc. And Keller Williams Realty, another major brokerage, raised money from Stone Point Capital to arm itself for expansion.
Compass has loomed large in this period. The firm is the biggest US residential brokerage by sales, and has grown further in recent months with its deal to buy Christie’s International Real Estate and other businesses. Reffkin’s firm is now looking to further extend its lead with an in-house network of listings.
“In any market where Compass has No. 1 market share, we have a clear path over the near term to have more publicly searchable listings than any other public site,” Reffkin said on an earnings call last year.
A Compass spokesperson didn’t have an immediate comment.
Creating an inventory of exclusive listings can help brokerages like Compass attract and retain agents, according to a recent note from Mike DelPrete, who teaches courses on real estate technology at the University of Colorado Boulder.
But the new Zillow policy will give agents pause before advising clients to list privately, he said.
“Up to this point, there’s been no negative consequence to going into a private-listing network,” said DelPrete. “Now, with Zillow’s new policy, agents are going to be forced to have a conversation with consumers about why their home will never be listed on the country’s largest real estate portal.”
