Regulatory Scrutiny Intensifies Over Private Listing Practices
Regulatory Scrutiny Intensifies Over Private Listing Practices
The issue of private listing networks is rapidly escalating from an industry debate to a subject of federal oversight. On July 22, the House Judiciary Subcommittee on the Administrative State, Regulatory Reform, and Antitrust initiated contact with Compass, Inc. and Midwest Real Estate Data (MRED). The subcommittee has requested briefings regarding private listing networks and a specific data partnership announced in April, setting an August 5 deadline for the requested information.
This move adds to a growing list of challenges facing the brokerage sector. Lawmakers are keen to understand the competitive implications when a portion of housing inventory is visible only to select agents while remaining hidden from the broader market. The concern is that such practices can reduce transparency for buyers and potentially distort competition among agents.
Whatever the outcome, the pressure on the sector is mounting. Compass, Inc. is currently trading at $10.78, having seen its shares rise 1.77% by midday, giving the firm a market capitalization of approximately $8.97 billion. However, the company faces legal hurdles beyond the recent Congressional inquiry. In May, Zillow Group, Inc. filed a lawsuit against Compass and MRED in federal court in Chicago. Zillow, whose stock was essentially flat at $29.58 today with a market cap of $7.56 billion, is challenging the same data partnership that has now attracted the attention of Congress.
The regulatory interest spans the political spectrum. In December, Democratic Senators Elizabeth Warren and Ron Wyden urged the Justice Department and the FTC to scrutinize Compass’s acquisition of Anywhere. Conversely, the July request from the House was led by a Republican subcommittee chairman. Additionally, on July 1, a coalition of consumer and civil rights groups formally requested an investigation into these practices. This bipartisan convergence suggests the industry is facing sustained scrutiny rather than a momentary political dispute.
The core of the issue appears to stem from the industry’s own rule-making. The National Association of Realtors’ Clear Cooperation Policy mandates that publicly marketed homes must be submitted to the MLS. However, exceptions for “Coming Soon” and “Office Exclusive” statuses were left undefined. Data from Bright MLS indicated that nearly half of office exclusives eventually move to Coming Soon status, suggesting agents are utilizing these loopholes to keep listings off the public market for extended periods.
What to watch
- The deadline for Compass and MRED to respond to the House Subcommittee is August 5.
- Progress of the federal lawsuit filed by Zillow Group in Chicago against Compass and MRED.
- Potential investigations by the FTC or DOJ following requests from senators and consumer advocacy groups.
Source: original release