What to know about Compass and Zillow's battle over home listings

Until June 30, Long Islanders who wanted to quietly sell their homes had options — they could allow an agent to share the property only within their brokerage or give permission to their agent to post it on the brokerage's website, testing the market before going public.

If that didn’t work, they could expand their reach by uploading the listing to a multiple listing service, where sites like Zillow would pick it up. But a new Zillow policy just shut that door — if sellers want access to the country's largest online real estate marketplace.

That has sparked a legal showdown with Compass that could affect how Long Islanders sell what is often their biggest financial asset. On Long Island, where the typical home sells for significantly more than in the country as a whole, sellers have more to lose, and homebuyers are already facing a significant shortage of for-sale options.

Compass, which has 19 offices on Long Island and hundreds of agents, last month sued Zillow in U.S. District Court in Manhattan, arguing Zillow's policy violates federal antitrust law. 

“Consumers should have the right to choose how they sell their homes,” Compass founder and CEO Robert Reffkin said in a statement.

Zillow's policy requires agents to list properties within one day of kicking off marketing — through yard signs, email blasts and social media — if they want their property to appear on the company's website.

Zillow contends that Compass’ strategy creates new barriers for home shoppers. 

“Hiding listings creates a fragmented market, limits consumer choice, and creates barriers to homeownership,” the company said in a statement to Newsday.

Here’s what Long Islanders need to know about how the legal battle between Compass and Zillow affects buyers and sellers.

What are private listings?

A private listing — sometimes called a pocket listing or an office exclusive — is a home for sale that is not publicly shared on the local multiple listing service, a database that allows Realtors to share information on properties.  

Compass argues its strategy only keeps listings private temporarily, and more than 90% of these listings eventually get listed on the MLS, said Rory Golod, president of growth and communications at Compass. But Zillow no longer allows listings that have been advertised exclusively on Compass.com for more than a day. Redfin has announced it will do the same starting in September.

How do private listings affect buyers and sellers?

Private listings allow celebrities and public figures — as well as others who want to avoid the spotlight — to sell their home without price details and pictures of the home appearing across the internet.

Compass says this also gives sellers more control. Zillow gives information to buyers, such as the number of days a home has been on the market and a score related to a home’s flooding and wildfire risk, that could affect the sale price.

Listing privately isn’t the best option for most sellers because it limits the pool of buyers, said Joseph Moshe, owner of Charles Rutenberg Realty in Plainview.

“The job of a real estate agent is to get the highest and best price for a seller. To me, that includes the most exposure,” he said.

For buyers, fewer public listings mean a smaller selection, Moshe said.

Why is Compass suing Zillow?

Compass’ lawsuit against Zillow alleges the company is using its leading position in the online home search business to compel real estate agents to list homes on its website so it can make money selling leads to agents. A Zillow spokesperson said Compass’ claims are unfounded.

To prevail, Compass needs to prove Zillow is using its market power to harm consumers, Hofstra University law professor Ronald J. Colombo said.

“Just because you’re doing something that hurts a competitor doesn’t mean it hurts consumers,” he said.

What are the rules for Long Island agents?

Long Island agents who are members of the National Association of Realtors are bound by its clear cooperation policy requiring submission of a listing to the local multiple listing service within one business day of public marketing.

“We support giving sellers and their brokers flexibility and choice in how properties are marketed — so long as those options align with fair housing and ensure buyers have equal access to MLS data,” Doreen Spagnuolo, CEO of the Long Island Board of Realtors, said in a statement.

What’s next?

The National Association of Realtors in March proposed a change to allow brokers to delay sharing listings publicly while making them visible to agents who participate in the local MLS.

NAR gave multiple listing services until Sept. 30 to implement local rules, and OneKey MLS, which covers Long Island, has not yet announced its policy.

OneKey MLS is “continuing to evaluate the options that will best benefit consumers and real estate professionals alike,” CEO Richard Haggerty said.