As a cascade of “premarketing” partnerships and programs sweep through the industry, Compass International Holdings (CIH), Rocket and Redfin have sent out a letter asking MLSs to change their policies to support phased listing distribution and cease punishments on agents for “seller-directed marketing plans.”
The letter, obtained by RISMedia, was seemingly shared with MLSs and agents across the industry, and specifically calls out seven large MLSs who Compass say have chosen to “double down” on policies the brokerage alleges are harmful to sellers.
“We can no longer stand idly by while our real estate professionals face punitive actions for following duties to their clients. Compass International Holdings and Redfin are committed to defending our agents who are unfairly disciplined or penalized by an MLS for executing a seller-directed marketing plan,” the letter reads.
Those MLSs named are ARMLS, CRMLS, FMLS, Georgia MLS, NWMLS, OneKey® MLS and Stellar MLS. Representatives of those MLSs could not immediately be reached, or did not immediately respond to requests for comment.
The letter represents a somewhat unprecedented grassroots pressure campaign by the mega-brokerage, which has for multiple years now campaigned against rules it claims restrict “seller choice,” specifically the use of private listing strategies to market homes.
At the same time, Compass affirms in the letter that “filling with the MLS for cooperation is something we support and will continue to do.”
“But the MLS, a private business entity, does not have the right to decide which websites a seller’s home appears on before the listing goes active,” the company continued.
Compass is well-known for its pro-private listings and phased marketing stance, going so far as to sue Zillow over its listing standards that essentially banned private listings from the portal. However, Zillow recently amended its listing standards and stance, following which Compass dropped its lawsuit against the portal.
The letter specifically cites this change of policy by Zillow, writing that “(t)he MLS is now one path to public marketing, but not the only one.”
Last month, Compass announced its own partnership with Redfin (and Rocket Companies, the now owner of Redfin) to debut its exclusive inventory on the portal, which created some waves in the industry. CEO Robert Reffkin said it was his “personal view” that the deal “marks the end of the restrictions that MLSs have had on agents and sellers on how they market homes.” However, some industry veterans and experts were not convinced of this view.
Following the Compass-Redfin partnership announcement, others have followed suit in their own partnerships to promote exclusive listings. Zillow, in its announcement of its changes to its listing standards, also announced Zillow Preview—a partnership with Keller Williams, HomeServices of America, United Real Estate, REMAX and Side to host exclusive listings on Zillow platforms. Closely after this, eXp announced a partnership with Realtor.com®, Homes.com and ComeHome.com to syndicate “Coming Soon” listings to the three portals.
Keller Williams co-founder and executive chairman Gary Keller, in response to the Compass letter, referred RISMedia in a statement to previous comments he made that called MLSs “an imperfect vehicle” while still lauding the “enormous flexibility” they provide sellers.
“At that point, the conversation’s no longer about private listings. It’s about how listings are distributed,” Keller said.
Ken H. Johnson, a broker turned economist who currently serves as Chair of Real Estate at the University of Mississippi, previously said that the Compass-Redfin partnership “will not be the thing that brings down the MLS.”
But Compass seems intent on lobbying for MLSs to modify their policies to allow the kind of premarketing it has made its trademark, as more and more big brokerages (and portals) appear to recognize the demand (or power) of these strategies.
The letter also names six MLSs who Compass claims “have built seller-choice frameworks into their rules.”
“These MLSs don’t weaken transparency and they don’t decrease their own value. They strengthen both by being the place where seller choice lives. We urge every MLS to follow their lead,” the letter reads, naming MRED, MLSPIN, Bright MLS, Unlock MLS, Realtracs and Canopy MLS.
The letter also cites the National Association of Realtors®’ (NAR) decision last year to step back from MLS policymaking, claiming that NAR “deferred” its Clear Cooperation policy to MLSs (the rule is still mandatory, according to NAR’s website, though Reffkin has previously claimed that around 60% of MLSs do not enforce it).
NAR could not immediately be reached for comment.
And while many states have passed or proposed bills that purport to restrict private listings, Compass’s letter cites recent laws in Connecticut, Washington state and Wisconsin which it claims still allow premarketing as long as there is seller consent.
“Many lawmakers are reaching the same undeniable conclusion: real estate professionals should honor the informed marketing decisions their homesellers’ select,” the letter reads.
Many of these laws were supported by state Realtor® associations, as well as Zillow.
Kristen Haseney, a lawyer who formerly worked as general counsel for the Connecticut Association of Realtors® and is currently a professor of real estate at the University of Connecticut School of Business, also previously noted that there is still “strong support” for open access to listings across the industry, and that she doesn’t see the deal as putting pressure on MLSs to implement private listings of their own.
“(A private exclusive is) not a new concept, and hasn’t become an industry standard because it’s not 100% successful every time for every single listing,” she said.
Johnson, however, opposed Haseney’s view slightly, expressing that he felt the deal could push MLSs to implement their own version of a private network or coming soon status, as many already have.
Also in response to the several recent developments from Compass, Brown Harris Stevens’ CEO Bess Freedman—who holds a notoriously staunch stance against private listings—called the brokerage’s Private Listing Network and push to expand private listings and phased marketing a “gimmick that will help shield inventory and information from buyers searching the open market at the expense of efficiency and transparency.”
“Exclusion is what kept so many minorities out of pursuing their dream of buying a home; that’s why Fair Housing laws now exist,” she continued. “If Compass can now work within its own opaque private listing web, no one will know who they are letting in or out of seeing homes. No wonder more than a dozen lawmakers are now pressing the Department of Justice as to why the Compass acquisition of Anywhere Real Estate happened so quickly.”
Seemingly speaking to the company’s own agents, the letter ends by urging agents who are fined or punished for “honoring seller choice” to contact their broker of record, saying that Compass and Redfin will “fight to change rules.”
“It is time to put the client first in this industry. We are jointly committed to dismantling any system that stands in the way of that mission,” the letter concludes.
