I Never Thought I’d Defend Zillow

By Richard Montgomery

After 55 years in real estate, having facilitated over 20,000 transactions and served as president of my local Board of Realtors, I never imagined I’d find myself defending Zillow. But in its legal battle with Compass over listing transparency, Zillow has taken the pro-consumer position—and the industry should pay attention.

The dispute centers on Compass’s “3-Phased Marketing Strategy.”¹ Phase one shows a property only to Compass agents. Phase two displays it as “coming soon” on Compass.com. Only in phase three does the home appear on multiple listing services. Zillow’s policy requires listings to appear on its platform within 24 hours of any public marketing—essentially forcing immediate visibility.

Compass CEO Robert Reffkin frames this as protecting “consumer choice,” comparing Zillow’s policy to “Amazon banning a seller for offering a product on their own website first.”² But houses aren’t widgets. A home is likely the largest financial transaction most families will ever make, and information asymmetry matters profoundly.

What Compass calls “consumer choice” looks remarkably like the dual agency arrangements that eight states have banned.³ Those bans exist because legislatures concluded that no agent can serve two masters with adverse interests. When Compass holds listings exclusively for its own agents, it creates the same conflict: an incentive to match buyers and sellers internally rather than find the best market match.

The data is unambiguous. Research in the Journal of Real Estate Finance and Economics found dual agency reduced sale prices by 8.0% before disclosure requirements and 1.4% after.⁴ More recent research confirms that “internal transactions tend to occur at the expense of lowering the selling price.”⁵ Zillow’s 2025 analysis found off-MLS homes sold for nearly $5,000 less on average, exceeding $30,000 in California.⁶

The pattern is familiar. The Multiple Listing Service itself was originally designed not for consumer benefit but to facilitate commission sharing among agents.⁷ The industry just emerged from its largest antitrust settlement, with the National Association of Realtors paying $418 million to resolve claims that its cooperative compensation rules artificially inflated commissions.⁸ That settlement mandated transparency—prohibiting compensation offers from MLS platforms and requiring written buyer agreements.⁹

Now Compass wants to preserve opacity in a different form. Instead of hidden commissions, it’s hidden inventory. The effect is the same: reduced competition and potential consumer harm.

The irony is rich. Compass positions itself as a technology innovator bringing transparency through tools promising “24/7 transparency before, during, and after the transaction.”¹⁰ Yet its 3-Phased Marketing Strategy does exactly the opposite—restricting transparency by controlling when and where properties become visible.

Reffkin’s monopoly framing misses the point. Yes, Zillow dominates online search and monetizes leads, charging agents $20 to over $100 per contact in competitive markets.¹¹ Yes, Zillow’s business model creates conflicts. Being right about transparency doesn’t require being right about everything else.

But when eight state legislatures concluded that certain agency relationships are so conflicted they must be prohibited,¹² they aimed to protect consumers from exactly the information control Compass defends. The question isn’t whether Zillow has too much power—it’s whether any company should hide available inventory from buyers.

This matters because real estate transactions aren’t normal market exchanges. Homes are illiquid assets in fragmented local markets where information asymmetry dramatically affects outcomes. A buyer who doesn’t know a property exists can’t compete for it. The economic research is clear: restricted information flows reduce market efficiency and harm consumers.

The solution isn’t letting brokerages control information to benefit their own agents. It’s complete transparency—every listing immediately visible to every buyer through every platform.

Zillow isn’t perfect. Its Zestimate has drawn criticism. Its iBuying venture lost hundreds of millions. Its lead-selling creates conflicts. But on requiring listings to be publicly visible once publicly marketed, Zillow is right.

Sometimes the industry’s biggest disruptor gets something right, even when it’s inconvenient for everyone else to admit it.

ENDNOTES

  • Compass’s lawsuit describes the “3-Phased Marketing Strategy” beginning with “Compass Private Exclusive” listings available only internally, followed by “Coming Soon” listings on Compass.com, then finally full MLS exposure. Compass Inc. v. Zillow Group, Inc., No. 1:25-cv-05234 (S.D.N.Y. filed June 23, 2025); Ashley Sutphin Watkins, “Compass sues Zillow over its ‘Zillow ban,’ alleging antitrust breach,” CBS News, June 23, 2025, https://www.cbsnews.com/news/compass-sues-zillow-ban-real-estate-mls-listings-antitrust-monopoly/.
  • States that have banned dual agency include Alaska, Colorado, Florida, Kansas, Maryland, Texas, Vermont, and Wyoming. This information is commonly reported in real estate industry sources discussing agency relationships.
  • Joseph M. Gardiner, Richard E. Hevert, and Raymond M. Cadogan, “Transactions Costs and Residential Dual Agency,” Journal of Real Estate Finance and Economics 35, no. 2 (2007): 161-181. The study examined Hawaii real estate transactions and found dual agency reduced sale prices by 8.0% before disclosure requirements and 1.4% after disclosure.
  • Qi Li, Kangmin Shi, and Jing Wu, “Intra-Firm and Inter-Firm Brokerage in Residential Real Estate Markets,” Journal of Real Estate Finance and Economics, published online January 30, 2023, https://doi.org/10.1007/s11146-023-09928-3.
  • Zillow Research, “Off-MLS Home Sales Data” (2025). According to lawsuit filings and industry reporting, Zillow’s research found off-MLS homes sold for $4,975 less on average, with California markets showing discounts exceeding $30,000. Fingerlakes1.com, “Zillow ban lawsuit shakes real estate: What sellers need to know,” July 3, 2025, https://www.fingerlakes1.com/2025/07/03/zillow-ban-what-you-need-to-know/.
  • The Association of Real Estate License Law Officials (ARELLO) history notes: “Through the first two decades of the Twentieth Century, the National Association of Real Estate Boards (NAREB), later National Association of REALTORS (NAR), began to press U.S. jurisdictional governments to adopt license laws. NAREB hoped those laws would result in both greater professionalism of its members and, through effective discipline of licensees, greater protection of the public from the actions of unscrupulous or incompetent practitioners.” The MLS system emerged from this industry-driven effort to facilitate commission sharing among agents. Association of Real Estate License Law Officials, “History of ARELLO,” https://www.arello.org/about/history-of-arello/.
  • See note 3 regarding the eight states that have banned dual agency after legislative review of the conflicts inherent in agents representing both parties to a transaction.

 

by Monty