In its first substantive court response to Compass’ lawsuit over the company’s new listing rules, Zillow pushed back strongly on accusations that it conspired on rules over private listings, while characterizing the New York-based marketing strategy as a “Hidden Listing Scheme” as the two real estate behemoths gear up for a legal showdown.
In a flurry of filings in the federal Southern District of New York this afternoon, Zillow CEO Jeremy Wacksman submitted a sworn statement that his company’s new rules around listings—which ostensibly ban certain properties from the platform if they are not submitted to the MLS—were a “unilateral decision,” after Compass alleged Zillow had conspired with Redfin and eXp to suppress competition, in violation of antitrust laws.
“I have never made any agreement with anyone from Redfin concerning Compass or implementing a policy like Zillow’s Listings Access Standards,” Wacksman wrote.
The filings come as Compass and Zillow ramp up a public and legal fight over how to handle private listing networks, which Compass has made a major part of its “Three Phase Marketing Plan,” but also exist on other platforms in various forms.
Zillow’s policy, announced in April, bans listings that are marketed publicly, but not on the MLS, claiming to align with the Clear Cooperation Policy recently reaffirmed by the National Association of Realtors® (NAR). Compass is currently seeking a court order to block the new rules, claiming that ZIllow worked with other brokerages to boycott the company and harm consumers.
In the most recent filing, Zillow urged the judge to deny the request for an injunction, saying that preserving the “status quo” as the lawsuit plays out is not inclusive of a pause on the new rules.
“For years, the status quo has been reciprocal access, to the benefit of consumers. An injunction would encourage brokerages to upend this status quo by hoarding listings and reducing consumer choice. Denying Compass’s injunction would further the public interest in an accessible, competitive market,” Zillow’s lawyers wrote.
A Compass spokesperson, speaking to RISMedia earlier this month, disputed whether Zillow was actually following the letter of this policy, claiming that the company’s agents have received warnings for listings that were submitted both to an MLS and marketed on Compass’ platforms (allegedly because they were not also circulated to Zillow through IDX feeds).
Compass has also claimed that during a meeting on April 1 with Zillow executives, Zillow CFO Jeremy Hofmann said the company “will not allow” other types of private networks, including those on MLSs.
Zillow denied that in the recent filings, as Hofmann wrote in a court declaration that “(a)t no point during the April 1 meeting did I or anyone at Zillow claim that we wanted to prevent home sellers from choosing to market their homes through channels and platforms other than Zillow.”
“We did express our view that homes marketed publicly should promptly be made available to everyone, consistent with the ideas behind the National Association of Realtors®’ Clear Cooperation Policy that the industry had been operating under for a number of years,” he continued.
Back and forth
Like Compass, Zillow also spent significant time in its filing defending its rules and practices as pro-consumer. As the lawsuit plays out on the complex grounds of federal antitrust laws, both companies have sought to argue their case in the public square. While industry lawyers previously told RISMedia that a ruling one way or another will have dramatic consequences for the industry, both sides have a chance to reshape real estate with their narratives regarding transparency, seller choice and listing practices.
“The (new rules) improve Zillow’s listing quality by maintaining Zillow’s promise to ‘turn on the lights’ and empower consumers with timely, accurate, and complete information that has not been manipulated with misleading ‘days on market’ and price history,” Zillow wrote. “Zillow believed it was important to take this stand to counter an emerging narrative that hidden listings were an inevitable industry trend.”
Zillow also responded to Compass’ recent announcement that it would share its private listings with other brokerages on some conditions, noting that those conditions effectively ban Zillow based on its own lead-generation business model.
But much of the latest filing focuses on Compass’ accusations that Zillow worked with Redfin and eXp to adopt a policy meant to suffocate the brokerage’s business model. Compass has pointed to a joint announcement with eXp, and the fact that Redfin announced it would adopt similar rules right after Zillow’s announcement (with Wacksman having spoken to Glenn Kelman the day before the announcement).
In its filing, Zillow acknowledged the call, characterizing it as part of regular “outreach” which included “select customers, partners and the press,” including numerous other brokerages, while strongly denying any accusation of conspiracy.
“Compass also cannot show that Zillow conspired with Redfin or eXp (or anyone else) to boycott Compass. Zillow acted independently of Redfin and has no agreement with Redfin regarding Compass’s listings,” Zillow wrote.
At the same time, Zillow acknowledged that it did negotiate a written agreement with eXp starting about a month before the announcement of the new rules, including “a license from eXp to Zillow to use a feed of eXp’s home sale listings and (a commitment by) eXp to comply with the Standards as to eXp’s listings.”
“Their agreement does not relate to Compass at all, nor affect how Compass distributes or obtains listings,” Zillow wrote. “Neither the agreement nor the (new rules) dictate how eXp operates its own website and eXp remains free to display all Compass listings to prospective buyers. In the absence of a restraint, the agreement is not unlawful.”
