The Journal. - Compass vs. Zillow: The Real Estate Wars

Episode Date: December 15, 2025

Compass CEO Robert Reffkin wants to change the way Americans buy and sell homes by encouraging sellers to list their homes privately when they first hit the market. That strategy is challenging companies like Zillow, which have made information about home listings accessible to buyers. WSJ’s Nicole Friedman explains why Compass wants to overhaul the real estate market, and why Zillow is putting up a fight. Jessica Mendoza hosts. Further Listening: - A Case of Conspiracy in Real Estate - Think It's Expensive to Buy a Home? Try Owning One. Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

If you're in the market for a home, good luck. It can be really difficult right now. I think the general experience for home buyers is that it's stressful. That's our colleague Nicole Friedman. She covers real estate. It's very expensive to buy a home, especially these days. Home prices are high. Mortgage rates are high. And in a lot of parts of the country, there are still not enough. homes to choose from. The inventory is lower than it was before the pandemic. And so they're really

kind of glued to the listing sites, you know, waiting for a new home to pop up, hoping that this could be the one. Those online listing sites have become an essential part of buying a home. Sites like Zillow and Redfin list thousands of homes for sale across the country. I think for a lot of buyers, that's where they start the process. If they're thinking about buying a home, even just casually like, oh, is this the maybe we should buy, they go to one of these portals. They set up, you know, search alerts for their neighborhood or their budget. And so looking at home listings is often the very first step. And for home buyers, these sites can be a treasure trove of information, everything from how many days a home has been on the market to how many other buyers have viewed the listing.

But one real estate brokerage wants to change how the system works to give more power and flexibility to sellers, and in the process, upend the way real estate is done. That brokerage is Compass. So Compass is trying to promote essentially a different strategy for selling your home. Compass is telling sellers, you know, widely advertising your home for sale immediately, is not the best strategy for everybody. Instead, the company is focusing on private listings and limiting what information is shared with buyers. But this strategy has created a giant rift in real estate. This is a really contentious issue,

and agents are very passionate on both sides. Brokerages are very passionate on both sides. This is a huge debate going on in the industry about really what is the right way to sell a home, and how open and transparent should the market be? Yeah. And who is speaking for consumers? Welcome to The Journal, our show about money, business, and power.

I'm Jessica Mendoza. It's Monday, December 15th. Coming up on the show, how Compass is trying to change the way you buy and sell your home. This episode is brought to you by Fidelity. You check how well something performs before you buy it. Why should investing be any different? Fidelity gets that performance matters most. With sound financial advice and quality investment products, they're here to help accelerate your dreams.

Chat with your advisor or visit Fidelity.ca. Performance to learn more. Commissions, fees, and expenses may apply. Read the funds or ETFs prospectus before investing. Funds and ETFs are not guaranteed. Their values change and past performance may not be repeated. People probably won't know this because why would they? But you and I are neighbors here in Washington, D.C.

And if you're a buyer walking around our neighborhood, how often would you say, you know, you'd pass a compass real estate sign? I mean, in D.C. all the time. All the time. Yeah, I see compass signs all the time. Walking around our neighborhood or just around the city. And, you know, they have pretty distinctive branding, that black and white logo. And it seems to suggest that they really got a huge presence now. Yeah, definitely.

In D.C., they have a major presence. But around the country, Compass is the biggest real estate brokerage by sales volume. And they have really grown rapidly. Compass was co-founded in 2012 by its CEO, Robert Refkin. So Robert was an outsider to the real estate industry. he came from finance. He had previously worked at Goldman Sachs. He had also worked at McKinsey and Luzard. He was a White House fellow. He is from California, from the Bay Area. Originally, he was raised by a single mother who is also a real estate agent who now works at Compass. Wow. Family business. For my entire life, I saw her as someone who was an entrepreneur, just like you, who dreams big. And every year, this is my best year, who never gives up. and, you know, he wanted to found a brokerage that provided excellent technology and support to really help real estate agents grow their business.

Since its founding, Compass has grown to have 40,000 agents, and the company is only getting bigger. In September, Compass agreed to buy Anywhere real estate for $1.6 billion. Anywhere owns brands you might have heard of, like Century 21 and Sotheby's. If the deal is approved by regulators, Compass would grow to more than $2.6 billion. 200,000 agents in the U.S. And the combined company could control about 18% of U.S. home sales volume, according to some analyst estimates. And so it's really going from, you know, a big industry player to a giant.

And once it becomes a giant, Compass could have the power to change the way real estate works nationwide. Why do they want to do that? What do they see as the problem with the way that? things are done today? So Compass's argument is that the way things are done today is kind of too rigid and that that doesn't give enough options to sellers. Normally, homeowners looking to sell their home would have an agent list their property

online on local databases called multiple listing services, or MLSs. Sites like Zillow automatically collect those listings from those databases, making them available to the public. Refkin wants to upend that whole model. Instead of posting listings on these listing sites right away, Compass is advocating for a slow and steady approach, one that Refkin says prioritizes flexibility for sellers. The Compass approach has three phases.

Here's how it works. Phase one is your listing is only shared kind of within the Compass network. So it's only shared with other Compass agents and their clients. If other buyers or brokerages want access, they have to ask a Compass agent for the information. In other words, the listings are kept in-house. Compass says this approach lets sellers test out how their homes might do on the market. And it doesn't have to be fully ready for sale. Maybe you haven't finished cleaning out your house yet, or you haven't staged it yet,

or you haven't taken the professional beautiful photos yet. But maybe you put some details out there, share them with the other Compass agents, and their clients and get some feedback and say, you know, what do you think of this price? What do you think of how we're marketing it? Does this seem like the right approach? And maybe there's a buyer who's willing to buy it right now. If the home isn't sold, it moves on to phase two,

posting the listing on compass.com. So anybody can find it there, but it's not on the other portals. And so, again, that's a more limited advertisement. And they really are like advertisements. They don't include anything that might put off, buyers. And Compass's argument for this is they say the portals put this data on your listing that you as the seller might not want there. They say the portals put days on market on the listing, how long it's been on the market. They put the history of price cuts and that that information

helps buyers. That information doesn't help sellers. So they say, you, the seller, you don't want days on market on your listing. You don't want people to know that you haven't been able to sell this house, basically. Yeah, exactly. If the home still isn't sold through Compass's website, then it lands on the final phase. Phase three is once you're ready, it does go to the full market, and it gets advertised everywhere. But by the time it goes onto the full market, it may already have been on the market for three, four, five weeks, and it may have even come down in price. But you, the buyer, wouldn't know that because it looks like it just went on Zillow today at zero days on the market. Compass says sellers can choose how much to opt-in to each step in their strategy.

They also say this approach helps sellers get the best price for their homes. The idea is that by making listings exclusive, they set up sellers for higher offers. What would it mean if the Compass model became the norm in real estate? It would be a sea change for the real estate industry if this really caught on. If this three-phase marketing strategy continues to catch on, buyers now have to go, to more than one place. They have to go to Zillow, to Compass, and maybe to other brokerage websites. Maybe they have to look at five or six or seven different websites in order to get a complete picture of everything that's for sale, which is a more cumbersome process. You're really

shopping it around. Yeah. But by pushing these changes, Compass is challenging the rules of real estate and making some enemies. Everything in this moment is about choice, versus control. Who is going to be able to decide how homes are market in this country? Will it be controlled by organized real estate, dictated by them in fear of bans and fines, or will the homeowner with their agent

be able to decide how they market their home? After the break, a battle over the future of real estate. Hello, Compass! Thank you to everyone for flying across the country to be here in Denver together. In June, CEO Robert Refkin took the stage at Compass's annual company retreat, facing a sea of Compass agents. I want to spend the entire speech talking about an incredible ground-breaking concept. Private exclusives. He is really passionate about this approach and this strategy,

and he really believes that this is a positive thing for home sellers, for home owners. At the same time, Refkin rallied the crowd. against what he called organized real estate. Now, what is organized real estate? NAR, MLS's, Zillow, entities that create mandatory rules on how real estate agents must be organized, on how you must work with your clients. And if you do not follow these rules, you will be fined or banned.

And he really called out the National Association of Realtors and Zillow. And he said, NAR, this huge organization, one of the biggest lobbying groups in the country and Zillow that these two groups are trying to prevent us from implementing this strategy and that we need to fight back. That's why I am fighting so hard because it helps you. And that's my job to invest in anything that can help you with your clients. And the reason why organized real estate is fighting back is. is they do not want the three-phase marketing strategy to exist. Because three-phase marketing strategy means there are listings that are not on their platform, period.

That's all it is. They want all activity, all transactions in their platform. In a statement, a Zillow spokesperson said, quote, while Americans are struggling to access and afford housing, Compass wants to hide available listings from the public. The other group that Refkin singled out, the National Association of Realtors, said that NAR, quote,

fosters a competitive, fair, and pro-consumer market. NAR is a trade organization that sets the rules for most multiple listing services. In the past, the organization has tried to regulate private listings. In 2020, NAR enacted a rule that limited how brokerages like Compass advertise private listings, a rule that Refkin very much opposed. Then, in 2023, a jury found that NAR rules had kept commission rates for real artificially high. A jury decided that the system that had been in place for decades about how real estate agents

got paid was a violation of antitrust rules. Interesting. And as part of this, there was a huge legal settlement, and the rules were changed for how real estate agents got paid. And a lot of the biggest brokerages, including Compass, had to pay large legal settlements in order to settle these lawsuits against them. A federal jury in Missouri on Tuesday found that the National Association of Realtors liable for artificially inflating commissions and awarded plaintiffs $1.8 billion in damages. Compass has agreed to a settlement of over $57 million.

This comes just after one week after the National Association of Realtors' landmark settlement. Nicole says the settlements left many in the real estate industry feeling angry, including Refkin. Robert Refkin came out in 2024 being very critical of NAR, and he essentially said, this is a liability. And so he started to criticize these other NAR rules that were aimed at limiting private listings. And he said, NAR needs to get rid of those rules too. And also, by the way, I don't think these rules are any good because I think that my private listing strategy is positive. And so he was very critical of these NAR rules about private listings. And it kind of started this huge debate.

Earlier this year, NAR tried to fight a middle ground, adjusting its policies to give sellers more options and add flexibility to private listings. NAR had been lobbied by Compass, which had lobbied it to get rid of the rule, and by Zillow, which had lobbied it to strengthen the rule. And it was trying to strike a balance that maybe addressed some of the concerns with the rule without getting rid of it entirely. But in the battle over private listings, Zillow decided to step it up by introducing a rule of its own in April. Under Zillow's rule, if a listing is advertised publicly, say, with a lawn sign or on social media, but it's not listed on an MLS within one business day, then Zillow reserves the right to ban the listing from its site entirely. What does this new rule mean for Compass? So this is a threat to Compass because sellers know Zillow. Everybody knows Zillow.

And so if you go to a seller and you say, hey, I want to be your real estate agent, I want to list your home, you know, here's this really cool strategy we have at Compass, the three-phase marketing strategy. And here's why I think it could be a good fit for you. And oh, by the way, your home won't appear on Zillow. The seller's like, yeah, the seller's going to say, what? A lot of sellers, they use Zillow too. And they know that buyers use Zillow. And so maybe they like the idea of this three-phase marketing strategy, but not if it's going to mean not appearing on Zillow ever. How did Compass respond to this rule?

So Compass responded by suing Zillow. And Compass fought back in court and said that Zillow's rules were hurting Compass. And so this is currently being fought in the courts. and we are in the legal process. So it's going to be a while, but we are waiting to see. Compass filed its lawsuit in June and accused Zillow of being a monopoly. Compass said that Zillow's rules discouraged agents and sellers from using its private listing strategy. Zillow has argued that its rules haven't hurt Compass's business.

Everybody involved says they're speaking for consumers. Everybody says, you know, their approach is the right way. one for consumers. And at the end of the day, you know, it is the consumers who are going to decide, right? It is ultimately up to every single seller when they're selling their home. How do they want to do it? Do they want to take on this compass three-phase marketing strategy? Do they want to start selling privately and then go on to the open market? Or do they want to go straight to the open market? It's going to be up to every seller to decide. And then it's going to be up to buyers too. You know, how much our buyer is going to start going to compass.com, right?

And even start working with Compass agents because they say, oh, I want access to these listings. You know, I need to be in the know. What does the story say to you about the future for how real estate works or like what's in the balance here? I think one thing the story says to me is that big companies are getting more power in the real estate industry. And we're seeing that scale matters, that the more listings a brokerage has, the more power it has right now. And that brokerages are starting to use that power to try to keep their listings in-house and to try to build that advantage. And so that means that probably we're going to see more consolidation. And so that means that consumers might have fewer options for brokerages that they can work with.

and that these brokerages might have more ability to kind of control the process for consumers. Before we go, we're working on our year-end episode and we want to hear from you. Send us a voice note sharing your favorite episode of the year and any other questions you want us to answer. That's all for today, Monday, December 15th. The Journal is a co-production of Spotify and the Wall Street Journal.

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