Democratic firebrand Elizabeth Warren is joining a handful of other lawmakers in calling out Compass and MRED for their private-listing centered partnership, penning a letter with accusations that their practices could “perpetuate” discrimination and make housing harder to access.
First reported by Realtor.com®, the letter is the second time in about two weeks that federal lawmakers have reached out to Compass CEO Robert Reffkin and MRED CEO Rebecca Jensen to scrutinize the partnership and demand more information on policies that have driven a wedge in the real estate industry.
Warren’s office provided a copy of the letter to RISMedia, which is dated Aug. 6. In it, she asks Reffkin and Jensen to “explain any and all steps you
have and will take to mitigate the potential harms of your partnership.”
“While buyers stand to lose access to listings, and sellers miss out on potential equity under (private listing networks), brokerages stand to profit,” Warren claimed.
A Compass spokesperson declined to comment on the letter. MRED, in an emailed statement, said “it would be an honor to speak with Senator Warren and explain the important role of the MLS in the Real Estate marketplace.”
“Issues such as fair housing, data quality, and rules are critical to any MLS. We look forward to discussing MRED’s value with her,” the spokesperson said.
The letter represents now-bipartisan pressure from Congress on the increasingly high-profile private listing debate. Last month, Republican lawmakers on the House Judiciary Committee brought similar concerns, saying they also worried the practice could impact housing affordability and setting a deadline of Aug. 5 for Compass to “brief” them on the issue.
And just last week, Derrick Johnson, the president of the NAACP, penned an op-ed in Time Magazine calling private listings “a civil rights issue” and warning that the practice “risk(s) breeding the kind of widespread inequity that harkens back to redlining.”
Warren spent much of her nine-page letter focused on these same “risks,” alleging that most of MRED’s private listings are concentrated in majority-white neighborhoods and citing a study released by Zillow earlier this year. MRED has pushed back on the conclusions of that study and claimed Zillow refused to provide its methodology.
Compass and MRED are currently embroiled in a lawsuit with Zillow, with the portal claiming that deal violates antitrust laws and was designed to undermine its business, A federal judge is mulling whether to block MRED from cutting off Zillow from its listing feed.
But the questions of fair housing, affordability and consumer access appear to be much more urgent to lawmakers on both sides of the aisle. Historically, pre-Clear Cooperation pocket listing practices were associated with discriminatory practices, acknowledged by academics and real estate leaders.
Warren specifically highlighted Clear Cooperation as a rule meant “to promote open competition and guide agents’ fair and ethical use of MLSs.”
“The (policy) is intended to promote accountability and transparency in the market, uphold fair housing laws, and ensure listing services are accurate for real estate agents, realtors, and the consumers who benefit from them,” she wrote. “Compass, however, has publicly opposed (Clear Cooperation).”
Warren’s letter finishes with 23 questions and requests for information from Compass and MRED, asking among other things, if either of them has ever conducted an antitrust analysis of their partnership, what the variation in commission is between privately-listed sales and other sales for Compass agents, what rules and processes MRED uses to “mitigate fair housing risks” and what systems they both have in place to receive complaints about fair housing violations.
Compass has consistently defended its practices as pro-consumer, with Reffkin saying during a recent court hearing that the company hired a fair housing lawyer, who he claimed signed off on the company’s use of certain private listing practices.
“The only way that you can claim that this is bad for, let’s say, Black people, is by saying Black people can’t use the internet,” Reffkin said at the hearing.
MRED has noted that its private listing network is more than a decade old at this point, and similarly pointed out that listings on that network are available to any agent, claiming it helps reduce the use of “shadow networks.”
Many others in real estate, however, have claimed private listing practices like those MRED and Compass champion are likely to have discriminatory impacts. NextHome CEO James Dwiggis, highlighting Johnson’s op-ed this week, warned that the issue is “about to become a bigger conversation between local, state and the federal government.”
A handful of states have already enacted legal limitations on private marketing, though bills have stalled in some states—including Illinois, where MRED is based.
Editor’s note: this story was updated at 10:00 a.m eastern time with information from Elizabeth Warren’s letter, and more details throughout.
