Stop calling marketing materials “data,” writes Darryl Davis. Zillow research is a position. Compass survey responses are one position. CMA with local comp for this house is data.
Last month, Zillow gave the industry numbers. The portal published research claiming that privately listed sellers lost a combined $1.36 billion over a three-year period and that sales prices for non-MLS listed products were 1.3% lower than those sold on the open market.
The study was published two days after Zillow filed a federal antitrust lawsuit against Compass and MRED, and one day before Compass CEO Robert Reffkin launched his own counterattack on LinkedIn.
This is the moment when the fight stops being about lawyers and starts to become about upcoming listing negotiations.
context
On May 12, Zillow filed a Sherman Act lawsuit in Northern Illinois, alleging that MRED, the Chicago-area MLS, and Compass worked together to use MRED’s rulemaking powers to force Zillow to display Compass’ private listings nationwide or lose access to the Chicago feed. A Compass spokesperson said Zillow is punishing “agents” for following the wishes of their customers. “Compass believes homeowners should have the right to decide how their homes are marketed.”
Two days after filing, Zillow continued its investigation. Survey later. The study estimated that sellers choosing to go private would have lost $1.36 billion over three years, and an additional $1.49 billion if a single brokerage firm represented both sides of the transaction.
The survey expressed seller preferences in percentages, with 61% saying they would get better results with widespread online exposure rather than a private network, and 85% wanting an agent who could pre-market their home to the widest online audience.
Levkin pushed back. He revived Zillow’s internal strategy document on LinkedIn, which he said highlights Zillow’s plan to “sue brokers to prevent agents and home sellers from marketing outside of Zillow.”
So now we have two stories, two amounts, two investigations, and two CEOs talking to each other. And there is only one agent. you.
analysis
Let’s be fair to both parties.
There are weaknesses in Zillow’s methodology that are worth naming. This study used the Zestimate as a benchmark for how much a home “should” have sold for. The Zestimate has long been criticized for being directionally useful but not surgically accurate. Comparing the Zestimate to the sales price and referring to the difference as a “loss” is a useful framework, not an established fact.
Let’s be fair in the other direction. The real estate industry has been telling sellers for a century that more exposure produces better results. Auction theory supports this. Common sense supports that.
Placing the home in front of all qualified buyers in the market will drive the price up. If you put it in front of a smaller group, there will be less competition. The directional truth behind Zillow’s $1.4 billion number is jarring to the private listing discussion. Because on average, the calculation should bend like that.
Both can be true. Although this study is exaggerated, the underlying logic is sound. That’s an honest reading.
When two big companies set a dollar amount on a customer’s decision, you’re the only person in the room who can honestly do the math for that particular home. Don’t delegate that conversation to corporate research or corporate communications personnel.
Compass’s “seller selection” framework is not wrong. The seller has the right to decide. Some people have real reasons for keeping it private. A homeowner in the midst of a divorce. This is a trust sale. Properties with sensitive tenants. A list that has had one bad round and needs to be carefully repositioned. These are real situations. They are also a minority.
The honest question is not whether the seller has the right to choose. that’s right. The honest question is whether the agent explained how much that choice would cost. According to Zillow data, the average cost is about 1.3%. A $750,000 home would cost about $9,750. A $1.5 million home costs $19,500. These numbers belong to the seller’s hands before signing anything.
A seller’s right to choose is only valid if the agent lays out specific numbers for how much that choice will cost, rather than industry averages. Coach, please don’t close. Don’t sell, give.
About 55 percent of Compass’ listings are through private, proprietary or soon-to-be-public channels, according to the company’s shareholder report last year. In other words, more than half of all sellers choose to list their homes privately, knowing the loss of their home.
Really? do you believe it? Internal data from the loudest brokerage firms tells a quieter story than press releases.
What agents should do
Perform calculations on the 10 most recently sold listings. Ask yourself two questions.
Were the homes priced and sold for maximum exposure? Did the seller net move 1.3% more on average?
If the answer is yes, you already know what a good conversation would be.
Create a short, plain one-pager that explains the three options to the seller. Broad public disclosure on day one, delayed marketing based on the National Association of Realtors carve-out, and private only. It shows you what each route would look like at its actual price range. Please cite their home, not their industry.
Document your recommendations in writing. Whatever the seller chooses, be sure to document the trade-offs in your listing agreement and on file. Lawyers will spend the next two years arguing over who said what. The file should be boring.
Please stop referring to either side’s marketing materials as “data.” Zillow research is a position. Compass survey responses are one position. CMA with local comp for this house is data.
At the end
This week’s battle is a corporate one. Lawsuits, research, and LinkedIn posts. Next week, the battle is on your listing reservation.
The seller is going to ask what this means for their home. The answer is not the sides. The answer is a mathematical conversation, an honest conversation that ends with the seller understanding exactly what choices they are making and how much they will cost.
That’s the job. That was my usual job.
