Chicago MLS Responds to Zillow Fair Housing Attack

Chicago’s MLS hit back at Zillow’s accusation that a Private Listing Network can pave an avenue for racial discrimination, accusing Zillow of weaponizing fair housing concerns to protect business interests.

Midwest Real Estate Data (MRED), which runs the MLS, said Zillow’s recently publicized research was motivated by profit and protecting the online home search giant’s access to listings. MRED dismissed the Zillow analysis that found listings on the MLS’s private network were more than twice as common in majority white neighborhoods than majority non-white neighborhoods.

“Zillow’s approach in Illinois and its recent criticism of MRED’s PLN appears to be driven less by data and more by a cynical strategic objective: securing control over listing distribution to protect its revenue,” MRED said in the statement, which was also sent as an email to MLS members.

The MLS pointed to an internal document recently made public as part of Zillow’s court case with Compass.

The document, authored in December 2024 and shared widely by Compass CEO Robert Reffkin, detailed Zillow’s plans for enforcing public listings and punishing brokers and brokerages who advertise off-market listings in the event that the National Association of Realtors’ Clear Cooperation Policy is rolled back. Among other strategies the document outlined, it detailed Zillow’s plan to “mobilize local and national organizations to publicly warn brokers and agents on the fair housing risks of reduced access to real estate information.”

Zillow has been blasting MRED’s Private Listing Network — which allows sellers to show their homes to all the agents in MRED’s network while keeping them off public channels like Zillow —since the company introduced its new Listing Access Standards earlier this year. The standards would block listings that were previously on the private network from appearing on Zillow, but Zillow hasn’t yet begun enforcing them in the Chicago market. Zillow argued in its analysis last week that private listings cloud the market and deepen segregation in Chicago.

A Zillow spokesperson said the company document referenced by MRED, which was labeled “outdated as of 12/17/2024” was “created as a scratch pad by a few employees in December 2024 but quickly sunset” because the business changed course and began developing its listing standards. The Zillow spokesperson said MRED should consider “if there are unintended consequences to your practices that are leaving buyers of color out in the cold in the Chicago market.”

“It’s disappointing to see defensiveness when the data is so clear that this practice is continuing Chicago’s long and sad history of a segregated housing market,” the spokesperson said.

Private listings key to marketing strategy

The fight between Chicago’s MLS and the home search giant comes amid a court battle in Compass’ lawsuit against Zillow over the listing standards. In Chicago, the Private Listing Network is a crucial part of the three-phased marketing for Compass at the center of that lawsuit.

In the Chicago market, 45 percent of listings this year by Compass agents started out as office exclusives, Regional Vice President Fran Broude told The Real Deal in a recent interview. Of those listings, 87 percent end up on the Private Listing Network. If sellers don’t accept an offer during those private periods, the listings generally then go public.

But properties that do sell during the private marketing period essentially cut Zillow out of the equation and prevent consumers who aren’t already working with an agent from seeing the homes are available.

The frequency varies from agent to agent, and sellers have the final say on how their property gets listed. Broude said the popularity of private listings among Compass clients shows that sellers view them as a valuable way to test pricing and market their homes.

“They’re choosing to pre-market their properties and find out as a seller what their options are, from what their needs are, through our private exclusives,” she said.

Compass has defended its private listing strategy from fair housing critiques, noting that consumers who search on the Compass website are told when there are exclusive listings that match their search — though consumers have to contact a Compass agent or visit an office to see those listings.

Fair housing advocate questions MLS system

As Zillow and MRED trade attacks about the scale of the problem, an Illinois fair housing advocate said he has been worrying for years about the threats private listings pose.

“I have had this unshakeable, deep concern that this migration toward more and more private listing networks will just create a new age of redlining,” said Michael Chavarria, executive director of Wheaton-based HOPE Fair Housing Center.

Although brokers have equal access to listings in MRED’s private network, Chavarria said the system is still unfair because it keeps the listings out of sight of potential buyers who haven’t started working with an agent. About 43 percent of homebuyers begin their search by looking at online listings, around twice as many as the share who start by contacting a real estate agent, according to NAR research.

Chavarria said he sees brokerage-exclusive listings as a bigger problem than the MLS-wide private network, but that both limit transparency for consumers.

“To me, the only way it’s truly available is if it’s available to the consumer, and it’s not this fee for service that you have to have a real estate license to do it,” he said. “And it really goes back to my firm belief that people start their housing search these days long before they start their Realtor search.”

MRED vows to protect fair housing

In its statement, MRED said it is committed to fair housing and that the Private Listing Network was created to address the transparency concerns presented by off-market offerings.

“MRED takes fair housing very seriously, with rules and processes in place to scan all private and active listings for violations,” the MLS’s statement said. “We also believe that any bad actors deserve all consequences, professionally and legally, that come to them.”

MRED also questioned the methodology Zillow used in its analysis, which surveyed listings available on a single day in October. It noted that majority white neighborhoods have three times as many listings as non-white neighborhoods and institutional investors and companies that make fast cash offers on homes tend to target purchases in non-white neighborhoods. MRED argued that since every broker has access to the Private Listing Network, it promotes a fair market.

Zillow claimed its analysis controlled for price, home type, location and broker activity.

“MRED was built to safeguard open access, prevent discrimination, and ensure that every brokerage, large and small, can compete on equal footing,” the MLS said. “Our PLN was created to prevent exclusionary shadow markets, not enable them.”