Zillow, MRED, Compass Face Off

For the past two years, residential real estate has been consumed by commission lawsuits and compensation changes. This week, the battle over control of the listing comes to a head in a federal courtroom in Chicago.

Zillow, Compass and Midwest Real Estate Data, the Chicago-area MLS known as MRED, squared off this past week in a closely watched hearing stemming from MRED’s decision in May to cut off Zillow’s access to roughly 43,000 listings. At issue is Zillow’s policy barring listings that were publicly marketed elsewhere before hitting the MLS from appearing on its platform, a policy largely seen as a response to Compass’ aggressive push into private listings.

The courtroom arguments were ostensibly about nine Compass listings and whether Zillow should be allowed to keep them off its site. But the fight is actually much bigger.

Zillow says Compass and MRED are trying to create a “velvet rope” around inventory by encouraging homes to be marketed outside the traditional public channels that buyers have come to expect. Compass and MRED argue that Zillow is using its enormous reach to dictate how brokers market listings and punish those that don’t play by its rules.

The case has become a proxy war over some of the industry’s biggest questions. Who controls listing data? How much power should portals have? And can brokerages build their own inventory ecosystems outside the reach of companies like Zillow?

The outcome could influence how brokerages, MLSs and portals across the country think about private listings and access to inventory. It’s also arriving at a moment when Compass itself is facing increasing scrutiny over the size and reach of its business.

Earlier this year, Compass closed its $1.6 billion acquisition of Anywhere Real Estate, creating the largest residential brokerage company in the country with more than 340,000 agents and franchisees under its umbrella. The brokerage has since rolled out a series of initiatives aimed at getting more value from each transaction, including fixed transaction fees and an in-house referral program that routes buyer inquiries to Compass agents and generates additional revenue for the company.

Those initiatives have already come under scrutiny. A proposed class-action lawsuit in Florida alleges Compass’ transaction fees are unfair and deceptive, while New York’s attorney general is reportedly probing the company’s growing footprint and market power following its acquisition spree.

Compass has spent months criticizing Zillow’s lead diversion business, arguing that portals insert themselves between consumers and listing agents and profit from the relationship. Yet its own referral program bears some similarities, directing online inquiries to buyer agents and collecting fees in the process.

As Compass grows larger, it increasingly faces the same questions it once directed at Zillow. How much influence should one company have over listings, leads and the economics of a transaction?

This week’s courtroom showdown in Chicago could start offering some answers.

There was plenty of other real estate news this week. We’ll take deep dives into how the Jills Zeder Group climbed to the top, the tenant groups running New York City and the story of how the Shabsels brothers’ summer camp empire spiraled into bankruptcy. These and more stories below.

“They loved debt”: How the Shabselses’ play to leverage a half-billion-dollar summer camp empire spiraled into bankruptcy

David and Michael Shabsels’ summer camp empire catered to more than 20,000 children, and now it’s at the center of one of real estate’s most surprising bankruptcies. Simad Holdings, led by the Shabsels brothers, is under investigation by Israeli securities authorities after revealing that it defaulted on roughly $214 million in Israeli bonds and diverted $34 million to affiliated companies.

How the Jills Zeder Group climbed to the top

Jills Zeder Group’s core eight-person team is No. 1 in the country. The South Florida team is No. 1 in the country. In 2019, when The Jills team — Jill Eber and Jill Hertzberg — merged with Judy Zeder’s Zeder Group, they announced they’d sold a combined $5 billion, but that was seven years ago, before the billionaires rolled into their territory. Climbing to the top is one accomplishment, but staying there is another.

Steve Croman’s sons find path in real estate

Steve Croman’s sons are making their own play in Manhattan multifamily, betting on rent-stabilized buildings despite an increasingly difficult operating environment. Brothers Jake and Adam Croman have quietly assembled a portfolio of small multifamily properties across Manhattan, often partnering with fashion heir Jeremy Tahari and focusing on older buildings with retail components.

These tenant groups are running NYC

New York’s tenant organizations and advocacy groups, long foes of the real estate industry, have seen their power swell. They have allies in influential positions at city agencies, City Council, and, of course, Gracie Mansion. These groups are now a major part of the progressive coalition that is running New York and setting policy for the real estate industry. But, like any broad coalition that comes to power, the groups are also navigating internal decisions about where they stand, both in relation to City Hall and to each other.

Reuben brothers take keys to Witkoff’s West Hollywood hotel

Another trophy property has slipped from Steve Witkoff’s grasp as the Reuben brothers seized the keys to the West Hollywood Edition. An entity tied to Witkoff handed over the 190-key Sunset Strip hotel to an affiliate of the British billionaires through a deed in lieu of foreclosure tied to more than $211 million in debt.

Gary Barnett presses on in legal battle with ex-partners

Gary Barnett’s fight with two former business partners is heading to the appeals court after nearly three years of litigation and more than $15 million in disputed claims. The lawsuit began in 2022 when Yoel Weber and Yoel Leonorovitz sued the Extell founder over allegedly unpaid fees for electrical work on four development projects, prompting Barnett to countersue over ownership stakes in several jointly held businesses and properties.

Hamptons developer Jeremy Morton’s unfinished projects — and debts — stack up

Jeremy Morton has a growing Hamptons real estate portfolio. But according to multiple partners, buyers and investors, as well as lawsuits and liens against his properties, Morton sometimes skimped on paying contractors, was loose about project budgets and quietly stepped away from struggling projects on his way to building his portfolio. His precise outcomes are hard to track because he sometimes invested alongside partners, often cross-collateralizing projects. But a review of lawsuits shows he allegedly owes more than $12 million to three different lenders, not including interest.

Jared Solomon wants out of Brooklyn detention center

Jared Solomon claims to be “a broken man” after two months locked up in the notorious Brooklyn detention center — and he wants out. But the U.S. Attorney’s Office says the convicted Vornado fraudster is “unsupervisable” having broken prison rules, and can’t be trusted to be released.