The Consumer Federation of America (CFA) has penned a letter requesting that the Federal Trade Commission (FTC) and the Department of Justice (DOJ) investigate mega-brokerage Compass for its several recent partnerships with MLSs that simultaneously expanded their platforms nationwide, alleging that the deals “raise significant anti-consumer concerns” and potentially “violate fair housing protections.”
Specifically, the letter calls out Compass’s partnership with Midwest Real Estate Data (MRED)—announced back in April—to take the Chicago-based MLS’s platform (and its private network) nationwide.
Since the announcement of this foundational partnership, the letter notes that Compass has now inked agreements with Tennessee-based Realtracs, Bright MLS and Southern California-based The MLS/CLAW.
The CFA has long criticized many real estate practices and policies, and its research on commissions was cited in the original commission lawsuit. The organization is a non-profit that focuses on research and advocacy in a wide variety of consumer-centric industries, from data privacy to energy markets.
The letter, published July 1, alleges that Compass’s partnerships “reduce consumer choice, impede price competition, and increase steering incentives by encouraging transactions within affiliated broker networks,” as well as “eliminate market competition between brokerages and harm small, independent brokerages.”
The letter makes the argument many others against private listings have made: reduced visibility harms both buyers and sellers. It also noted concerns about double-ended deals.
“Private listings are often marketed within brokerages first, enabling brokerages such as Compass to make money on both ends of the transaction while expanding market share,” the letter reads.
A Compass spokesperson said the brokerage was unable to comment at this time. Compass has campaigned aggressively for MLSs to adopt rules that allow private listings and “pre-marketing,” framing the issue as about “seller choice” in how homes are listed.
In terms of alleged Fair Housing violations, the CFA referenced a study previously released by Zillow, which claimed that within MRED’s Private Listing Network, homes in majority-white neighborhoods were over twice as likely to be listed privately compared to those in majority-non-white areas.
“By controlling who can even see houses for sale, these private networks raise broader concerns about the selective exclusion of protected classes of consumers, such as based on race or disability status,” the letter reads.
MRED disputed this study when it was released, stating that it takes fair housing very seriously, with rules and processes in place to scan all private and active listings for violations.
The MLS also implied Zillow had specific motives in releasing the study:
“(Zillow’s) criticism of MRED’s PLN does not seem to be about protecting consumers or advancing Fair Housing. It appears to be part of a broader strategy to secure complete control of listing distribution and undermine the cooperative foundation of MRED.”
Zillow, Compass and MRED are currently embroiled in a lawsuit filed by the former, alleging that Compass and MRED conspired to undermine its business in violation of federal antitrust laws. A judge is currently considering whether to temporarily block the MLS from cutting off Zillow’s listing feed.
Another point of concern raised within the CFA letter was Compass’s growing market dominance, particularly following its merger with Anywhere brands. The letter referenced a report written by Steven Brobeck, a senior fellow at the think tank Consumer Policy Center (CPC) and former CEO of the CFA, on the company’s market share.
That report found that Compass holds 30% or more market share in Boston, Massachusetts; Chicago, Illinois; Austin, Texas; San Diego, California; and Washington D.C., nearly doubling its market share in San Diego and Boston alone.
Compass is facing an investigation in New York from Attorney General Letitia James’s office for a similar reason, looking into the company’s dominance in the New York residential market.
The letter ultimately urges the FTC and DOJ to investigate whether Compass’s MLS partnerships constitute “an unlawful effort to reduce transparency and fair competition for homebuyers and sellers.”
“One company should not be able to monopolize access to the American Dream,” the letter reads. “At a time of severe housing unaffordability, federal regulators would ensure that dominant firms do not use consolidation and exclusive-listing practices to reduce transparency, entrench market power, and limit fair access to housing opportunities.”
