Most of us shop for a house on a phone or a laptop, and we take it for granted that the whole market is on the screen. For about two decades that was mostly true. Now the biggest brokerage in the country is changing it. Compass (COMP) lets sellers market homes first as private exclusives on its own site, before the public portals or the local MLS, the shared listing database agents use. It’s been nudging agents to pull listings off those portals too. In New York it recently offered agents a $1,000 credit to take listings off StreetEasy.
The fight got big because Compass did. Founded in 2012, it bought Anywhere Real Estate in January for $1.6 billion. That brought Coldwell Banker, Corcoran, Century 21 and Sotheby’s International Realty under one roof, and took its U.S. agent count from about 40,000 to more than 200,000. By some estimates it now handles more than 80% of Manhattan home sales by dollar volume, and more than 30% of listings in other big markets. Compass says those numbers are wrong, though it says it doesn’t track them. It’s in court with Zillow Group (Z) and with the California Regional MLS. Katherine Clarke tells the story on Friday’s Mansion cover.
Who wins when fewer people see the house
Compass’s case rests on its own numbers. Homes it listed privately first sold for 4.6% more than comparable homes, the company says. They also went under contract 34% faster once on the MLS and were 29% less likely to cut price. One Quincy, Mass., waterfront house sold privately for $1.63 million, above the seller’s target of $1.55 million to $1.6 million. Critics point the other way. Appraiser Jonathan Miller cites 40 years of research that more eyes on a house mean better odds of a higher price. Critics also say a listing that stays in-house raises the chance a Compass agent brings the buyer, which can mean both commissions for Compass. Compass says double-ended deals aren’t its goal. Bess Freedman of rival Brown Harris Stevens put it shortest. Pocket listings were the exception. “Compass is making them the rule.”
Zillow isn’t neutral either. It makes money from listing traffic and from selling agents leads, and it now blocks any listing marketed outside a traditional MLS for more than 24 hours. Compass answers that homeowners have the right to decide how their own home is marketed, and that every listing can be seen on its site or by calling Compass.
Our read
This is Housing, M6, with a Consumer Protection, M11, edge. We don’t know which side is right about price. Compass’s 4.6% is Compass’s figure, and Miller’s 40 years of research is the other camp’s. What we do know is who holds the information. A private listing helps a seller who wants privacy or a quiet test of the price. It may hurt a seller who never learns what the open market would’ve paid. And it hurts a buyer who can’t see what’s for sale. Neither Zillow (Z) nor Compass (COMP) is held in any of our books.
Your check this week is the listing agreement, or the buyer agreement, sitting in your email. If you’re selling, read the marketing section and ask your agent in writing where the home goes, when it reaches the MLS, and whether the firm could represent both sides. If you’re buying, ask your agent to send the coming-soon and private-exclusive inventory too, in writing. The house is usually the biggest line on the net-worth page, and this is a cheap question to ask before it moves. Freedman’s email to her rival’s CEO asked, “Why are we playing detective?” If the paperwork’s in front of you, bring it to a review and we’ll read it together.