The housing market is set to heat up again as interest rates shift to a more favorable level for both buyers and sellers. But as housing inventories return to pre-pandemic levels in many cities, buyers may not be able to see every listing on the country’s largest online platform for home searches.
Zillow is in a legal battle with the nation’s largest real estate brokerage over exclusive listings that consumers may access only by logging into the broker’s website.
The outcome of a federal lawsuit filed in New York could determine whether virtually every listing remains on not only Zillow but also other platforms such as Redfin or Realtor.com.
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Since 2023, every homebuyer has used the internet in some capacity during the process, according to the National Association of Realtors.
Zillow changes the game
Zillow initiated new “listing access standards” at the end of June that require homes to be placed on a Multiple Listing Service (MLS) within one day and published on Zillow and other sites. That applies to offerings through a yard sign, a social media post, or a broker’s website that promises exclusive inventory behind a consumer’s login.
“We just believe that if a listing is publicly marketed somewhere, it should be publicly marketed everywhere,” Racquel Russell, the vice president of agent success for Zillow Group, told Straight Arrow News. “And that’s the crux of our philosophy.”
Zillow is an important cog in the real estate machine. It collects information from Multiple Listing Services around the country, the same databases that real estate brokers and agents pay to access. By making that data public, the company estimates it attracted 67% of homebuyers to its websites or apps in 2023. It featured more than 130 million homes in 2024.
Online home shopping extends beyond Zillow. The National Association of Realtors says that since 2023, every buyer has used the internet at some point while searching for a home.
Zillow’s new standards — which mirror those of the Realtors’ “MLS Clear Cooperation Policy” — took effect as the housing inventory in 22 of the 50 largest U.S. cities returned to pre-pandemic levels, according to Realtor.com. However, it’s not yet a buyers’ market, with rates on a 30-year fixed mortgage averaging around 6.5%, according to Freddie Mac. Those rates discourage existing owners from looking for new homes because they don’t want to give up their current mortgages, which have rates as low as 3 or 4%.
Private listings: A benefit to sellers?
Zillow said exclusionary practices by real estate brokerages prompted the change to its listing standards.
“Private listings have always existed, but they’ve always been the exception, not the rule, and quite frankly, they still are,” Russell said. “The majority of transactions and listings today are still publicly marketed and get the most exposure they can across the industry.
“But with more and more of these brokerages talking about these private listing networks, we felt like it was important for us to make our position clear and to make sure that we were providing the best experience for all consumers, both sellers and buyers, on our platform,” Russell said.
The nation’s largest real estate brokerage is fighting back.
Compass, which sells more homes than any other brokerage in the country, filed a lawsuit in June in the U.S. District Court in Manhattan, claiming Zillow is breaking federal antitrust laws.
Compass said Zillow is merely trying to retain its hold over the house-buying process.
“Consumer behavior and the explosion of the internet, and the way in which buyers and sellers think about shopping for homes alongside all the other things they shop for, has evolved, which created an opportunity that I think portals, but most importantly, Zillow, has benefited from,” Ashton Alexander, the senior vice president of strategy and business operations for Compass, told SAN.
Compass employs a three-phased marketing strategy for certain homes.
A property is initially listed as a Compass Private Exclusive, which is marketed to a smaller audience of Compass clients. The second step is Compass Coming Soon, which is published online and can be seen by anyone with internet access. The third phase goes live on all platforms, including the appropriate MLS and is pushed out to third-party sites, including Zillow.
“Most listings ultimately go to that broadest public launch, regardless of how many days they spend in that private exclusive or coming soon phase,” Alexander said. “In 2024, 94% of our listings, inclusive of the ones that were pre-marketed along the lines of the three-phase marketing strategy, ended up going fully public and were sold on the MLS.”
This marketing plan wouldn’t meet Zillow’s 24-hour requirement. But Compass contends its strategy benefits sellers.
“You’re not going to be penalized with the days on market starting to accrue,” Alexander said. “You’re not going to be penalized by price drop history being visible.”
Zillow: What about the buyers?
Zillow has a different argument: What’s good for the seller, it said, isn’t always good for the buyer.
“We do believe that prospective buyers in a free market should see what’s happening in the market,” Russell said. “[They] should see the days on market for a home. [They] should see if there has been a price drop on the home.”
Zillow said sellers lose from private listings, too — roughly $5,000 per home, or a total of more than $1 billion over two years.
Requiring all listings to be public within a day, Russell said, is “about consumer transparency and making sure that buyers have access to all the homes that are available.”
‘Very expensive, very expensive’ Zillow leads
Compass’ lawsuit claims that Zillow is acting as a “gatekeeper” of home listings and is attempting to protect its business model on the platform.
“They’re a for-profit company,” Alexander said. “They’re trying to make money, and the way they do that is by selling leads. They want to get the maximum number of clicks, and that’s what they’re driving for.”
When prospective homebuyers who don’t already have agents are interested in a listing on Zillow, the site directs them to a “contact agent” button. The agent at the other end of that interaction has purchased the “lead” – that is, the potential buyer – from Zillow.
“Oftentimes, consumers on their website don’t even know that,” Alexander said. “The average consumer who clicks ‘request a tour’ or ‘contact an agent’ doesn’t necessarily know that they’re not being connected to the agent who the home seller has hired, who knows the property best.”
Those agents have paid dearly for the leads.
“I’ve been a customer where I bought Zillow leads before, and I’ve also been on teams where the team leaders bought Zillow leads before,” Robert Keilman, host of the Real Estate Talk Podcast, told SAN. “And here’s what I could say about Zillow leads: They’re good, and they’re very expensive, very expensive.”
Agent perspective
Real estate agents know a lot is at stake as two industry heavyweights fight it out in court.
“I think actually both Zillow and Compass are being disingenuous for their reasons for doing this,” Kati Spaniak, an agent and host of Sell Your Home with Kati Spaniak, told SAN. “Zillow is what I’d call a necessary evil for us as real estate agents, because truly, it is the most user-friendly website out there that shows all the homes that are on the market.
“The problem I have, though, is that Compass is saying, ‘We’re going to just market your listing to Compass agents,’” added Spaniak, an agent with eXp Realty, which competes with Compass in some markets. “And that is not giving the sellers enough exposure.
“Zillow needs to continue to get people to go to Zillow,” she said, “and if they don’t have all of the listings that are out there, they can’t get the agents to get the leads, because their agents won’t pay for leads if they know all the listings aren’t there.”
As more homes hit the market, Keilman said he doesn’t see the need to adjust listings right now.
“I’ll give Zillow some flowers and (the National Association of Realtors) some flowers on this,” Keilman said. “I like the fact that everybody’s on a level playing field. And, I can compete against agents at other firms with no problem in that regard, because we’re using the same tools.
“So buyers might have limited options and sellers might have more options,” he said. “So, why are we fooling with listings right now? We should just focus on helping buyers out more, so that they can buy.”
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Author: Alan Judd
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