Just two months after the Federal Trade Commission (FTC) settled its lawsuit with Zillow and Redfin over the two portals’ alleged anti-competitive agreement, two U.S. Senators have issued a new letter petitioning the organization to take aim at alleged anti-competitive practices on the home-buying side of portals.
Senators Elizabeth Warren and Cory Booker penned the letter to FTC Chair Andrew Ferguson, requesting he and the organization “investigate anticompetitive and deceptive practices in the home-buying market, using every enforcement tool available to restore competition to the entire online real estate marketplace.”
Back in August, the FTC agreed to a settlement deal with Zillow and Redfin in the organization’s lawsuit against the portals for an alleged anti-competitive agreement between the two. In the agreement, Zillow affirmed it would “unwind” its $100 million partnership with Redfin in the rental listing market, with Redfin required to re-start its rental business within six months.
Now, Warren and Booker are taking aim at the buying/selling end of the industry, claiming in the letter that “dominant real estate industry actors are leveraging their market position through anticompetitive conduct that exacerbates the housing affordability crisis through higher home prices, inflated commissions, excessive fees and closing costs, and decreased transparency.”
The letter called out several practices that they say warrant investigation, namely “contact agent” buttons that usually route to platform-affiliated agents and allegedly cause buyers to incur hidden fees, as well as what the senators characterize as “steering” to platform-affiliated mortgage businesses.
Zillow has been named in lawsuits surrounding both hidden fees and alleged steering to Zillow Home Loans. One such lawsuit—known as Taylor/Armstrong—was previously dismissed, plaintiffs are currently trying to revive it as the portal fights back to close the case for good.
“These practices saddle homebuyers with higher-cost mortgages and thousands of dollars of additional agent fees, a large share of which are funneled to the market-dominant platforms or Brokerages,” the letter alleged.
In a statement, Zillow responded that “too many Americans are locked out of homeownership,” and that it “share(s) Sens. Booker and Warren’s focus on fixing that.”
“At Zillow, we’re committed to helping more people get home,” the statement read.
The letter also called out the use of private listings as a point of investigation, claiming that “this anticompetitive practice benefits the brokerages when its agents monopolize access to the listing, hurting buyers, sellers, and competing brokerages and listing services.”
Warren and Booker specifically cited the lawsuit filed by Compass against Zillow, a lawsuit that has since been dropped as Zillow changed its “Listing Access Standards” to allow more premarketed listings to be shared on the portal.
Compass declined to comment on the letter.
Zillow said in its statement that the portal agrees private listings “deserve further scrutiny and have long called for more transparency to ensure that every buyer has access to every home for sale.”
The Senators also cited Compass’s merger with Anywhere Real Estate, which propelled the brokerage to become one of the largest in the country and expand its private listings strategy.
