Real estate brokerage company Compass has filed a lawsuit against Zillow, claiming the real estate website is refusing to accept home listings for properties that have been initially advertised for sale elsewhere.
In a filing with the U.S. District Court for the Southern District of New York, Compass claims that “Zillow has sought to rely on anticompetitive tactics to protect its monopoly and revenues in violation of the antitrust laws.”
Compass says that Zillow has implemented an exclusionary policy that says if a home seller and the seller’s real estate agent market their property off Zillow for more than one day that Zillow and its allies, Redfin and eXp Realty, will ban that home from being listed on their search platforms.
“The Zillow Ban seeks to ensure that all home listings in this country are steered on to its dominant search platform so Zillow can monetize each home listing and protect its monopoly,” Compass said in the lawsuit.
Compass alleges that the “Zillow Ban” was enacted to prevent rivals from competing against it and reduces homeowner choice.
“In a free and competitive market, competitors’ products and strategies should rise and fall on merit — not the whims of a monopolist gatekeeper like Zillow,” Compass said.
Home sellers generally benefit from having their home advertised to as many potential home shoppers as possible.
More interested buyers often can translate to multiple offers, which helps sellers ensure their property sells for the highest price the market can offer.
One drawback, however, to listing a home on the multiple listing services, or MLS, and large listing search sites such as Zillow, is that such listings show how long a home has been on the market and whether it has had any price reductions over time.
Such information can be a signal to potential buyers that they may have more leverage to negotiate a lower price, or other concessions, from the seller.
To mitigate this, Compass and other brokerages give sellers the option to initially just share their home listing internally among their own brokers, avoiding the internet and the MLS, what is known in the real estate industry as a pocket listing or office exclusive.