Full disclosure: I’m not a fan of Zillow. I’ve never been there. And I have the utmost respect for Robert Refkin and especially all the agents who work with Compass and across the Compass International Holdings family of brands.
The content below is not personal. This is strategic analysis from someone who has watched the industry for 40 years and cares deeply about where it is going.
Two MLS systems. One has stopped feeding and the other is on its way. Tens of thousands of home sellers and countless home buyers are being harmed by all of this. One company is driving both movements. And real strategy has nothing to do with what anyone says publicly.
On May 27, RealTrax, a Tennessee-based MLS, gave Zillow a May 31 deadline to comply with updated IDX display rules or lose access to its listing data feed. The announcement comes days after MRED, a large MLS in the Chicago area, temporarily shut down its Zillow feed due to the same issue.
Both MLSs partnered with Compass to open the system to agents nationwide. Watch this play here. Both updated their IDX rules shortly thereafter, and those rules happened to conflict with Zillow’s rules. Both framed it as “seller’s choice,” a familiar topic at Compass.
In its federal antitrust lawsuit against Compass and MRED, Zillow called this a “coordinated campaign” initiated by Compass CEO Robert Refkin. A federal judge subsequently ordered MRED to reconnect its feed to Zillow. At the financial results conference, Levkin clearly acknowledged his intentions, saying, “I want to create a national MLS to compete with local MLS.”
What I believe Levkin really wants
So what is the endgame? There are several possibilities, but in my opinion they are not mutually exclusive.
Option A: Weaken Zillow’s data integrity
If enough MLSs block Zillow, its search results become unreliable. Consumers will stop trusting it. Compass’ own platform, Compass.com, Redfin partnership, and currently sponsored MLS networks provide a more complete source.
This will be a battle for market share against Zillow as the dominant portal. Anti-Zillow people will be happy to have taken away Zillow’s power, but it would also transfer that power to an even worse scenario: one brokerage firm controlling the nation’s inventory.
Option B: Have Zillow withdraw its criteria for access to listings.
Zillow’s standards are perhaps the only remaining enforcement tool for private listings. A clear cooperation policy is technically still in NAR’s handbook, but as I recently wrote for Inman, the vast majority of brokerages are currently ignoring it, and MLSs are not enforcing it.
If enough MLSs threaten Zillow’s feed, Zillow may eventually cave in and accept listings on the terms they send, including private-to-public transitions, which Zillow currently prohibits. This would remove the last barrier to Compass’ three-tier marketing model and make Compass a huge success.
Option C: Make the MLS system itself dependent on Compass
MRED and Realtracks were rolled out nationally through a partnership with Compass. BrightMLS and TheMLS/CLAW followed. There are four major MLSs and more on the way. Then they updated their IDX rules, which just happened to conflict with Zillow (wink wink).
Compass didn’t change the rules. Partnering MLSs will be putting themselves in a position to change their own rules. In my opinion, that’s both great and dangerous. While MLS believes Compass will protect its own interests, it becomes an instrument of Compass’ policy. MLS, please wake up.
Option D: All of the above
When MRED separated from Zillow, Zillow published instructions for creating a direct feed for brokers. Realtracs has named its own broker MLS Grid as an alternative path to Zillow.
Let’s think about what that means. Every broker that sets up a direct Zillow feed is another broker that doesn’t require a traditional local MLS to access the nation’s largest consumer portal. These traditional MLSs will lose their reason for existing.
However, the MLS affiliated with Compass is different. These offer something that a direct Zillow feed can never offer. It gives you access to Compass’ private and upcoming inventory before it hits the public market. Buyer agents who wish to view inventory must participate in one of the Compass-backed MLSs. There is no workaround.
Therefore, the direct feed dynamic strengthens the MLS’s partnership with Compass while at the same time weakening the MLS, which Compass has no control over. As legacy systems shrink, the Compass network becomes the default. It’s not a side effect. In my opinion, that’s the design.
Who actually wins this?
Now everyone needs to pay attention. In all these choices, there is only one winner, but there are many losers. Compass wins on all options. Losers: Brokers, their agents, homeowners, homebuyers, and the MLS.
Playbooks are now visible
MRED partnered with Compass and began its national rollout at the end of April. Realtracks did the same about a week later. Next is TheMLS/CLAW. Next is BrightMLS. All updated IDX rules. Everyone clashed with Zillow. All used the phrase “seller’s choice.”
As Inman reported, Compass currently has partnerships with four of the country’s largest MLSs, covering the Mid-Atlantic, South, Chicagoland and Greater Los Angeles areas.
Each new MLS that joins this pattern opens up a new legal front for Zillow to fight while advancing Compass’ national network. And all of that makes Zillow look like a bully picking on local MLSs, even though Zillow’s claims to protect consumers from hidden inventory have some legitimate weight.
Compass is trying to use our distaste for Zillow to control the narrative by distracting from the four options I presented. They’re making Zillow the bad guy and controlling inventory nationwide.
real victim
All eyes in the industry press are on the Compass vs. Zillow battle. That’s the headline. However, I believe the real victim may be MLS itself.
The longer this continues, the more brokers will establish direct portal relationships and the less they will require the MLS for distribution. The cooperative structure that has made the industry work for decades is being hollowed out on both sides. Compass and Jiro are fighting over the steering wheel. But no one is looking at the road.
If you are an agent, broker, or MLS executive reading this, ask yourself one question. When things settle between Compass and Zillow, where does MLS fit in? Because at this point, it seems like neither side needs the answer to be “in the middle.”
And that should scare you more than any feeding stop ever.
But it doesn’t have to end like this. As I’ve written before, the answer to a flawed system is reform, not replacement. With over 500 MLSs in the country, we still offer over 1 million agents and the most complete listing data anywhere. That’s leverage if they choose to use it.
CMLS has a forum, membership, and authority to create a national federation of MLS management with shared standards, shared data, and rules that serve the agents and consumers who pay into the system. The window to make that happen is shrinking.
Every month that passes without a coordinated response results in another month where the compass fills in the blanks. MLS: Stop reacting to the compass. Start building your alternatives.
Daryl Davis, CSP, is a nationally recognized real estate speaker, bestselling author, and coach with over 40 years of experience in the industry. For more information, visit darrylspeaks.com.
