Zillow, Compass Head to Court

Zillow’s courtroom showdown with Compass is grabbing headlines this week, but it’s only the tip of the legal iceberg the listings giant is navigating right now.

The immediate drama is in Manhattan, where Compass is urging a federal judge to halt Zillow’s private listing restrictions. The hearing has become a proxy battle over the next era of listings. Compass CEO Robert Reffkin spent day one touting the firm’s three-phase marketing strategy and arguing Zillow’s so-called “ban” has throttled it. Zillow countered with internal documents and steady testimony framing its standards as a guardrail for broad access.

By day two, the spotlight shifted to Zillow’s executives and the company’s rapid rollout of those standards. A familiar picture emerged as Zillow explained that it saw private-listing networks gaining momentum and moved quickly to stop the trend, relying on a carrot-and-stick playbook to restore transparency. Compass’ attorneys tried to link calls and texts between Zillow’s Jeremy Wacksman and Redfin’s Glenn Kelman to a larger narrative of coordination. Both executives denied any such effort.

But Compass is only one chapter in Zillow’s current legal saga.

Outside the Manhattan courtroom, Zillow is facing a growing list of lawsuits. The company is also dealing with separate action from the FTC and five states that challenges Zillow and Redfin’s $100 million multifamily syndication pact. Regulators say the agreement undercut direct competition and encouraged Redfin to wind down its rentals platform. Another class-action complaint focuses on how the company uses its Flex program and listing rules, and the plaintiffs argue that certain agents and teams are harmed by the structure.

Then there’s CoStar, which is pressing a copyright claim that accuses Zillow of lifting tens of thousands of proprietary images. The real estate data giant’s CEO Andy Florance told investors on an earnings call that Zillow is “under siege.”

Taken together, the throughline is the same debate animating this week’s Compass hearing: how much control any one platform should have over the flow of listings, whether for-sale or for-rent.

That question is also spilling into local markets, where Zillow’s rules are already reshaping long-standing practices.

In Chicago, MLS heavyweight Midwest Real Estate Data is clashing with Zillow over its private-listing network. MRED cites seller privacy concerns, including situations involving divorce, death and disability, as a reason to preserve private placement. The tension goes both ways because MRED objects to Compass’ office exclusives for the same reasons Zillow objects to MRED’s private-listing network.

San Antonio offers a similar version of the same mess. The local MLS also operates a private-listing database, and on paper Zillow’s standards would block those homes from its site. Some brokers say there’s been no crackdown at all, and even those trying to comply aren’t sure how Zillow could meaningfully police off-market activity in a non-disclosure state. The MLS is still debating what “compliance” even means.

Despite the noise, Zillow notched a $10 million profit last quarter on the strength of rentals and mortgage revenue. Executives barely mentioned the lawsuits on the earnings call, waving them off as background chatter.

But between the Manhattan showdown, the regulatory heat and the skirmishes unfolding market by market, Zillow is fighting a multi-front war over who gets to control what the public sees.

There was plenty of other real estate news this week. Steve Croman is facing more than 28 active foreclosure lawsuits, Bill Witte is stepping down as CEO of Related California and Gary Barnett is poised to take over Worldwide Plaza. These stories and more below.

One of California’s most influential developers is passing the torch as Bill Witte is stepping down after 36 years leading Related California. Effective Jan. 1, the 74-year-old CEO will become chairman emeritus, with longtime executives Gino Canori and Ann Silverberg splitting leadership of the Irvine-based firm.

Steve Croman defaulted on $231 million in principal, lenders allege

Embattled Manhattan landlord Steve Croman is facing a fresh avalanche of legal trouble, with lenders filing more than 28 foreclosure suits alleging over $231 million in defaulted principal tied to his properties. Twenty-one of those actions came just last week from Orange Owner LLC, which inherited nearly $189 million in Croman-linked loans after New York Community Bank’s collapse.

Worldwide Plaza surprise: Gary Barnett lined up to take over

Gary Barnett’s Extell Development acquired the mezzanine debt on Worldwide Plaza, positioning the firm to take control of the Midtown office building at its UCC foreclosure auction scheduled for Jan. 15. The debt went to special servicing in September 2024 after law firm Cravath, Swaine & Moore vacated 617,000 square feet for Brookfield’s Two Manhattan West, leaving Worldwide Plaza about 40 percent vacant.

Here are the real estate loose ends of the Adams administration

Every mayoral administration leaves office with unfinished business, be it specters of campaign promises gone unfulfilled or ambitious plans approved but not yet enacted. Such loose ends can haunt incoming administrations but can also lay the groundwork for future wins. Others are tossed aside as a new mayor sets their own agenda. Mayor Eric Adams is passing the torch to Mayor-elect Zohran Mamdani, and here are some of the biggest outstanding real estate issues as Adams exits City Hall.

Michael Shvo moves to strip Core Club of lobby privileges

Michael Shvo is asking a Manhattan judge for permission to bar Core Club from stationing its security staff in the lobby of 711 Fifth Avenue to check in guests, a privilege Core Club has enjoyed throughout its escalating legal war with the developer. Shvo describes the lobby check-in as a voluntary courtesy that is not written into the lease.

Despite bubble fears, Brookfield tees up $10B AI infrastructure fund

Brookfield is betting that the artificial intelligence gold rush isn’t a bubble but an arms race — and it wants to control the real estate that powers it. The Canadian investment giant is raising a $10 billion equity fund to build and buy the infrastructure behind artificial intelligence, from hyperscale data centers to dedicated power generation and chip manufacturing sites.

Ostad brothers face foreclosure suits over $70M in loans

The Ostad brothers, a trio of New York real estate investors, have been named as defendants in nine foreclosure suits related to loans totaling more than $70 million. Edward and Michael Ostad are named in all the cases, while Steven Ostad is named in three of them. In court filings earlier this year, the two older Ostad brothers painted Steven as the black sheep of the family, alleging he racked up millions in judgements and debts.

Sapir Corp puts Nomo Soho into bankruptcy, prepares for liquidation

Alex Sapir’s unraveling real estate empire hit a new low as Sapir Corp pushed its Nomo Soho hotel into Chapter 11 to force a sale and address $155 million in bond debt. The 26-story, 264-key property is now headed for a court-supervised auction, three weeks after the company entered insolvency in Israel and handed control to a court-appointed trustee.

Brookfield-owned DTLA office tower hits market after $500M default

A distressed Brookfield-owned downtown office tower is on the market, according to an Eastdil Secured offering memorandum viewed by The Real Deal. The materials do not include an asking price, only an offering to purchase the mortgage loan connected to 333 South Grand Avenue, which includes the office building, called the Wells Fargo Center — North Tower, and an adjacent three-story retail asset called the Halo.