Real estate’s biggest turf war is playing out this week in a Manhattan courtroom, where a federal judge must decide if the so-called “Zillow ban” is fair.
Compass, the nation’s largest real estate brokerage by sales volume, is fighting the ban, under which Zillow excludes home listings from its site and penalizes brokers when properties were previously listed as private “exclusives” elsewhere.
“A listing marketed to any buyer should be marketed to every buyer,” Zillow, the nation’s most popular online destination for home buyers, said in announcing the strict new policy in April.
Compass quickly sued to end the ban, arguing that it is monopolistic. On Tuesday, CEO and cofounder Robert Reffkin took the stand in hopes of convincing US District Judge Jeanette Vargas to temporarily halt the ban as the lawsuit plays out.
“I believe in choice versus control,” Reffkin said on the stand, during questioning by Compass attorney Chahira Solh.
“I think consumers and sellers should have the choice of how their homes are marketed, and it should not be mandated and dictated by platforms,” Reffkin said.
Closing arguments in the hearing are set for Friday. Vargas has not said when she will rule.
The ban — Zillow calls it a listing-access policy — bars home listings from its site if they’ve been selectively pre-marketed on another site instead of quickly shared through a multiple-listing service.
Under the new policy, once a listing has been banned from Zillow it can only be listed on the popular website if the home seller severs ties with their agent and brokerage.
“The agents are being intimidated,” Reffkin told the judge. “The agents are being bullied,” he said. “Because if they market a home off Zillow, then they’re banned.”
Reffkin noted that his mother is a Compass broker who uses Zillow.
“If my mom gets kicked off of Zillow, the only way that the listing will get back on Zillow is if they fire my mom,” Reffkin said. “So my mom’s terrified — absolutely terrified.”
On cross-examination, Zillow attorney Bonnie Lau tried to counter claims that the home-search site is a monopoly bent on ruining Compass’ bottom line.
She confronted Reffkin with in-house emails in which he downplayed the ban’s impact and Zillow’s importance.
In an email from April displayed in the courtroom, Reffkin brainstormed with Compass Chief of Staff Will Hardy on how to assure client brokers that being on Zillow is — in Reffkin’s words — “not necessarily in their best interest.”
“Zillow has built its business around the illusion that it is essential to the home-selling process,” Reffkin said in a May phone call to top Compass brokers, according to a transcript that was also shown in court.
Reffkin told his top brokers during the call that, according to Zillow’s own numbers, only 3% of all home sales are Zillow transactions.
Compass listings that get banned from Zillow can still appear on other sites, such as Sotheby’s and eXp, the attorney noted in her questioning.
“In fact, some sites, like Homes.com, have boosted a Compass listing that was impacted by Zillow’s listing-access standards, correct?” Lau asked.
“Homes.com has boosted some listings that were blocked by Zillow, but I don’t think all,” the CEO responded.
Zillow CEO Jeremy Wacksman is also slated to testify as the hearing continues.
