In the movie “The Circle,” Eamon Bailey, played by Tom Hanks, addresses an auditorium filled with employees of his California-based social media company, announcing the firm’s latest initiative — a worldwide surveillance network powered by tiny hidden cameras, dubbed “SeeChange.”
“I agree with the Hague, with human rights activists all over the world,” says Bailey, clad in jeans and a pullover sweater and flanked by a stage-to-ceiling screen. “There needs to be accountability.”
The scene, derived from the Dave Eggers novel, is a Silicon Valley staple. Swap Hanks for Mark Zuckerberg, and you’re at Meta Connect in September, where the tech giant CEO showcased the Meta Quest 3S, a version of the company’s virtual reality goggles.
Fast forward seven months to a Denver stage, another chief executive — dressed in a suit, though sporting sneakers and absent a tie — appeared before an expansive screen behind him emblazoned with the company’s logo.
“This is simply right versus wrong,” the executive said, proselytizing about the firm’s newest initiative.
This time, the leader wasn’t Zuckerberg or Google’s Sundar Pichai; it was Robert Reffkin, the founder and CEO of the real estate brokerage Compass, who has long sought to position his company as a tech-forward disruptor.
“Organized real estate dictating how you work with your clients is wrong,” Reffkin told the crowd at the firm’s annual retreat. “That’s why I’m fighting so hard, because it helps you.”
The fight Reffkin is referring to is one over listings — specifically, who gets access to them and when.
The model of a brokerage is fairly simple — my agent sells a home, gets paid a cut, I take a piece. In this ecosystem, listings are gold. An exclusive sales agreement means guaranteed commission once the home sells. Agents who know about for-sale properties are more valuable to buyers. The more homes a listing portal can display, the more buyer eyeballs it attracts.
He who holds the listings makes the rules — and the profit.
So when Reffkin announced in November that Compass would launch what it dubbed its three-phased marketing strategy — a listing advertising sequence that would begin with marketing homes exclusively within its own network of agents, otherwise known as private exclusives — the industry responded with vigor.
Zillow moved to ban agents from listing properties that were previously marketed as private exclusives, as Redfin threw its weight behind the policy. Compass cried monopoly and sued Zillow. Commercial giant CoStar pushed back against Zillow’s new rules and vowed to promote listings banned on the platform on its Homes.com.
Thus, the industry’s top power players became locked in a duel, each preaching their way as optimal for agents and consumers.
Reffkin claims his campaign is rooted in “seller choice,” meaning platforms such as Zillow, multiple listing services and trade groups like the National Association of Realtors shouldn’t dictate when and how sellers advertise their homes.
On the agent side, Compass has lambasted Zillow for its lead diversion model, a practice agents have long criticized and one that will likely suffer if Compass’ private exclusive strategy takes hold. Reffkin claims he’s out to put control back into the hands of the agents who won the business in the first place.
But Zillow argues that marketing listings off MLSes and platforms does homeowners a disservice. The practice prevents sellers from getting the most eyeballs on their homes, and therefore, the highest price possible. As for agents, Compass’ detractors claim the firm is the Big Bad Wolf to the little guys — it’s only out to double-end deals and box smaller brokerages out of the market, making it even more difficult for those agents to service their clients.
With both sides of the debate proclaiming to be the industry’s protector, their posturing raises questions about who will ultimately land on the right side of history, and how that’s measured will largely depend on whom you ask. For consumers, only time will tell which system of home buying and selling renders the best experience.
But agents have much more riding on the outcome of the fight — it could change how they do business, what information is accessible and which firms are worth working with.
“Is the status quo better? That depends on who you are,” said real estate consultant Rob Hahn. As for the question of the ethics advantage in a Compass or Zillow victory — “A few years ago, I gave up on the moral argument.”
What’s happened so far?
Before the fighting reached a fever pitch, there was a meeting.
On April 1, Reffkin and Compass’ general counsel, Brad Serwin, walked into Zillow’s headquarters in downtown Seattle.
Chief among Reffkin’s foes is Zillow, led by CEO Jeremy Wacksman. Two decades after coming on the scene as an industry disruptor, villainized among agents and heralded among consumers, the listing portal is now a vital piece of the homebuying and selling ecosystem that far surpasses its nearest competitors.
The platform still has its fair share of detractors, but is now an industry mainstay. Wacksman, a serial executive in the company, is the image of a buttoned-up, straightlaced executive that you’d expect at the helm of a company with a $20 billion market capitalization — a steady player and a sharp contrast to his predecessor Rich Barton, a true tech entrepreneur who walked around the office barefoot and was a regular at Burning Man.
Joining Reffkin and Serwin were Wacksman, Zillow co-founder Lloyd Frink and chief financial officer Jeremy Hofmann, among other executives. The platform’s leaders, Compass claimed in a lawsuit against the company, called the meeting to reason with Compass over its three-phased marketing plan, launched six months earlier.
“It’s not good when Compass and Zillow are warring.”
“[We] will not allow Compass to have listings that aren’t on Zillow,” warned Hofmann, a former investment banker-turned-tech bigwig. When Reffkin pointed to other brokerages that had already launched their own private listing networks, Hofmann said, “we will not allow that to happen.”
But Reffkin wouldn’t budge, and neither would Zillow’s leaders.
“‘Compass would have to choose’ whether it wanted to be a ‘partner of Zillow or not to be a partner of Zillow,’” Frink cautioned, according to court documents.
About a week later, Hofmann called Reffkin, again offering him a partnership with Zillow and urging him to ditch the marketing strategy. Reffkin declined.
The next day, Zillow dropped a bombshell in the form of new Listing Access Standards, guidelines that targeted Compass’ use of private listings. Under the new rules, brokers caught advertising listings outside of the MLS and Zillow would be banned from posting those listings on Zillow later — a blow to Compass’ grand plan.
That afternoon, Redfin CEO Glenn Kelman texted Reffkin requesting a phone call, a message that struck Reffkin as odd considering the two hardly chatted one-on-one. Reffkin pushed for the respective general counsels to join, and the four of them spoke later that night.
It’s “not good when Compass and Zillow are warring,” Kelman told Reffkin. He added that Redfin would publicly back Zillow and urged Reffkin to back down. The four hung up with no resolution.
Then Andy Florance jumped in on the action, aiming his ire at Zillow.
The CoStar executive is known for taking his feuds to the courts and sharpening typical corporate speak into near-open attacks against his competitors. Since Homes.com’s launch, Florance has engaged in a messy public fight with Realtor.com’s Damian Eales that had the two accusing each other of false advertising and stealing trade secrets.
CoStar has much to spend, and gain, in the fight over the residential pie. A titan in the commercial industry, the company debuted in the residential space in 2020 when it acquired HomeSnap and has spent billions on advertising its listing platform, Homes.com.
After Zillow announced its new listing standards, Florance scolded the platform, arguing it “overplayed its hand” and echoing his previous condemnations of listing portals weighing in on a National Association of Realtors rule known as Clear Cooperation, which mandates when listings should be added to the MLSes controlled by the trade group. He then vowed to promote listings that Zillow barred.
By June, the fight had landed in federal court. Compass sued Zillow, accusing the company of being a monopoly and using its market dominance to thwart competition with its listing access standards. In the complaint, Compass alleged that Zillow conspired with Redfin and eXp to “retaliate against competitive threats.” The lawsuit seeks to halt Zillow’s new “exclusionary policy.”
“At the heart of this issue is a simple principle: when a listing is publicly marketed, it should be accessible to all buyers,” Zillow responded in a statement. “Hiding listings creates a fragmented market, limits consumer choice and creates barriers to homeownership, which is bad for buyers, sellers, and the industry at large.”
A means to an uncertain end
On a panel at The Real Deal’s New York Forum earlier this year, celebrity broker Ryan Serhant took aim at Compass, fresh off its latest deal in a yearslong acquisition spree, a $444 million acquisition of @properties and Christie’s International Real Estate.
“Compass’ goal is to break everything and own the pieces,” Serhant said on stage. “You try to get as big as you can so you can’t fail.” The concept, he added, isn’t a new one — “They’re not building Amazon, they’re building Barnes and Noble.”
As Compass added brokerage after brokerage, the company was also laying the groundwork for what would become an all-out war over private exclusive listings. Since at least 2019, the firm has been betting on eschewing the confines of traditional brokerage and building something bigger, including attempting to draw more consumers to its site with initiatives like “Coming Soon” listings and listings exclusively viewable on the Compass page.
For Compass to “fully realize its ambitions, it needs to become more than a brokerage, and more than a technology company,” real estate strategist Mike DelPrete wrote in a post in 2019. “It needs to become a platform — and in doing so, radically change brokerage economics and, consequentially, the role of agents.”
Finally, after building up a hefty amount of inventory available only on its site, Compass stepped on the gas pedal late last year, rolling out its three-phased marketing strategy and taking on NAR, Zillow and other brokerage leads who tried to stand in its way. Now running full steam ahead, Compass is after what DelPrete predicted more than five years ago — to become not just a brokerage, but a destination for consumers on their home search, with its own catalog of agents and exclusive inventory to service them.
To do that, DelPrete said Compass is carving out leverage in an industry where the status quo, upheld by platforms like Zillow, longstanding brokerages and NAR already dictates how the system is run.
“If you’re someone like Compass, you’re out there doing your job helping people buy and sell houses, and real estate portals are taking your inventory and monetizing it back to agents,” DelPrete said. “This is a move to pull some of that power back.”
Of course, Zillow doesn’t want to cede that power. It needs to hold onto it to keep making money under its current model. But CoStar would like to see Zillow lose some of that power, and condemnations of its lead diversion strategy bode well for Homes.com, the business of which relies on a “your listing, your lead” slogan to push agents to buy subscriptions. Homes.com, though it claims to be the No. 2 portal, is still miles behind Zillow despite billions in ad spend, and Florance needs to do what he can to keep the platform relevant even as its growth has slowed.
If private listings become the norm, the new world order will look similar to New York City’s commercial real estate industry, where three “big dogs” dominate the market, control most of the business and attract more agents, according to Hahn.
Under this model, Hahn proffered that Zillow, potentially starved of its lead diversion model if brokers opt to keep listings to private platforms, could pivot to become a national MLS and serve the role that CoStar’s LoopNet does for the commercial industry. Or perhaps, he theorized, that’s been CoStar’s plan with Homes.com all along.
“Maybe they’re just waiting to see where the other shoe drops,” Hahn said of CoStar. “When they entered, my theory then was that they’re trying to replicate their playbook in commercial.”
For many who depend on Zillow for leads, a move toward private exclusives could spell the end of a key part of their business. Brokers who work more often with buyers and who aren’t part of major brokers like Compass will lose out if a significant chunk of listings never makes it to the MLS.
Whatever the fallout of the feuds, DelPrete warned against what he deemed “conspiracy theories” about the future state of the industry. With litigation pending, the outcome is still in flux, and some of the visions offered by industry insiders are, as he described it, skipping several steps ahead. Even if Compass gets its way, the status quo as the industry knows it likely won’t topple immediately — after all, Rome didn’t fall in a day.
“Is it possible? Yes,” DelPrete said. “But it’s not probable.”
As for what all this infighting means for consumers? “Jack shit,” according to DelPrete.
“There’s winners and losers and heroes and villains, but that’s where it starts and stops,” he said. “It’s just an interesting story that hasn’t played itself out yet.”