Ford and Ferrari make cars from many of the same raw materials. steel. rubber. glass. aluminum. The difference between the two is not the material. That’s the strategy.
Ford sells great products at scale. Ferrari sells unusual products as experiences. We demand a fair price. The other commands premiums that have broken every auction record on the planet at various points in history.
I’m writing about Zillow’s lawsuit against Chicago MLS (MRED) and Compass. So let’s talk about it. But I’d like to start with Ford and Ferrari. Because looking at this incident through this lens reveals the impact it will have on the future of our industry.
The battle is not about transparency. I’m not talking about a “private list.” Fundamentally, it’s not about Zillow. It’s about whether American real estate professionals retain the right to sell homes like a Ferrari sells Ferraris, or whether they are forced by obligation to sell all homes like a supermarket sells bread on its shelves.
What Compass is trying to achieve
Compass isn’t trying to hide the list. Compass is not trying to break the MLS system that has served the industry for decades.
Compass seeks to put at the disposal of distributors the strategies that luxury goods companies around the world employ to maximize the value of the products they sell.
Those strategies aren’t new. They are taught in every business school in the country. These are practiced by Ferrari, Rolex, Hermès, and all the new iPhone launch teams. Exclusivity, scarcity, urgency. I call this the ESU effect, and I’ve been writing about it for years.
Here we will introduce how real estate works. Buyers who believe they know about the home before anyone else, sense that other interested buyers are waiting, and don’t realize that previous buyers have seen and rejected the property will almost always act faster and make more offers than buyers who feel like they’re part of an indiscriminate crowd staring at a property that’s been sitting in the open for weeks.
bread on the supermarket shelf
Next, think about how your listings appear on Zillow and other major search portals. All buyers in the market will see it at the same time. Every buyer knows that every other buyer is looking at it. The release date counter will start moving.
That’s not Ferrari’s positioning. It’s the bread that every shopper sees on the supermarket shelves, visibly becoming less fresh over time.
We know what happens to bread on the shelf. It becomes obsolete. Prices will fall.
Compass asks a simple question. Why should America’s real estate professionals, who have a fiduciary duty to maximize sales prices for sellers, be forced to sell every home as a commodity through a third-party vendor, when the entire history of premium product marketing tells us that that strategy leaves money on the table?
Reversing the antitrust debate
Zillow’s lawsuit takes the position that allowing MLS members to sell homes outside of Zillow is somehow a violation of antitrust law. With all due respect, that argument interprets the antitrust issue precisely backwards.
Vendors asking in federal court to legally prohibit their suppliers from offering alternative marketing methods to their customers does not protect consumers. It protects the business model. Antitrust laws in the United States are in place to prevent this.
Antitrust laws exist to protect free and open competition, not to force the use of a particular vendor.
Why this matters beyond the compass
Some readers may be tempted to view this battle as a Zillow vs. Compass MRED story. it’s not. This is a story about whether real estate professionals of all brands in America retain the right to choose the best marketing strategy for their individual sellers.
If Zillow wins, the precedent will extend beyond Compass. Every agent at every brokerage firm in this country will forever be bound to a single, vendor-mandated, instant release marketing model. The Ferrari strategy, the phased launch strategy, the off-portal first strategy, all of these things will be effectively outlawed for everyone.
Ford and Ferrari
To be clear, it’s easy to be misunderstood when the debate gets heated, and I’ve spent 50 years in the industry as an agent, trainer, and lawyer. I’m not against housing search portals. I’m not advocating that all homes should be sold off search portals. Also, I’m not arguing that being widely available to the public is a bad thing.
Mass exposure is a powerful tool. In many markets and situations, this is an appropriate tool.
I argue that it should be a tool, not an obligation. Optional, not required. Choices that sellers and their trustees make together based on a particular home, a particular market, a particular moment in time.
Ford makes great cars. Ferrari makes great cars. The world would be a better place if we had both. But imagine a world where Ferrari was legally required to sell cars just like Ford cars. It’s the same store. It’s the same ad. Same immediate, undifferentiated mass market positioning.
We all instinctively understand that something valuable will be lost. The same goes for cars. The strategies that made them legends will be lost.
This is exactly the kind of world Zillow is asking federal courts to impose on America’s real estate industry.
Compass asks sellers and their trustees to decide which approach works for their particular home, their particular market, and their particular moment.
That is our obligation to our sellers. Because the purpose of antitrust law is to protect freedom and promote competition, I believe this is ultimately what the law protects.
Greg Haag is CEO of 72SOLD, Director of Home Sales Strategy for Compass International Holdings, and a real estate attorney, broker, and agent with 50 years of experience in the industry. Connect with him on Facebook or LinkedIn.
