Kompas turns the industry upside down. ‘It really looks like war’

When Compass announced this week that it had partnered with Rocket Companies to list its Private Exclusives on Redfin, the mega-brokerage staged a potentially industry-changing strike in its war with organized real estate.

For a minimum of three years, Redfin will host ads that fall within Compass’ three-phase marketing process. The portal will prominently display the entries, which will not provide days in the history of market or price changes. And Redfin sends buyer leads directly to Compass listing agents. Compass’ “Coming Soon” listings will appear immediately on Redfin, while “Private Exclusive” properties will follow later.

The action took direct aim at two of Compass’ enemies: the multiple listing services that enforce policies that Compass views as restrictive on agents, and Zillow, the leading search portal that established its own rules that sought to limit Compass’ preferred marketing approach.

It also put the industry at an existential moment, one that will likely lead to a ripple effect of competing brokers charting their own path forward and threaten the future of the MLS itself, industry experts told Inman.

“[Compass CEO Robert] Reffkin draws his line in the sand. He lines up his arsenal and says, “Continue with the program or we will withdraw. Join us or you’re against us,” ACME Real Estate CEO Courtney Poulos told Inman. “It really does look like war.”

The partnership is especially important for the MLS itself, Poulos said.

“Welcome to the beginning of the end of MLS. This is it. This is what it looks like,” Poulos said. “They are making a deal around the MLS.”

Compass has long been critical of certain industry regulations, including the National Association of Realtors’ Clear Cooperation Policy – ​​a policy that requires brokers to post listings in the MLS within the day marketing begins. At the same time, the brokerage has worked to build a broad network of listings that were only available to consumers through Compass agents.

Over time, that network became a competitive threat to other brokers, with some subsequently rolling out their own exclusive listing networks.

But the proliferation of those networks also posed a threat to Zillow, which relies on its listings to attract consumers, generate leads and generate revenue. As a result, last April the portal announced that it would ban any listing that was publicly marketed for more than a day without being listed on the MLS.

Redfin quickly announced that it would adopt and enforce a similar policy. But the company later decided to pause the ban indefinitely, citing a change of heart after being acquired by Rocket Companies.

After Zillow made progress on its ban, Compass sued the portal in an attempt to prevent it from enforcing its rule, although an early ruling in the case showed that Compass faces a steep hill in the legal battle.

Some MLSs, meanwhile, have their own rules, regulations and potential fines that also restrict Compass agents from marketing properties in a manner the brokerage chooses.

With its new partnership, however, Compass effectively undermined Zillow and the MLSs by finding a way to publicly market its exclusive listings to tens of millions of visitors per month.

“It’s uncertain what Zillow will do, but you would think they would have to do something here and not just let this happen,” industry veteran Russ Cofano told Inman. “If they let it play out, and it is successful for Compass, they may win their lawsuit, which is the battle, but they will lose the war.”

After acquiring Anywhere Real Estate, Compass essentially created a behemoth of approximately 340,000 real estate agents that handle a significant portion of all real estate listings. That merger – which one continues to be scrutinized by lawmakers and closed months sooner than expected — allowing Compass to move forward with the Rocket partnership, Cofano argued.

“None of this would have been possible without the Compass-Anywhere merger,” Cofano said. “As we see in other sectors, where there is scale and market power, in this case market power over listings, this is clearly the most important asset and can transform a sector.”

Whether and how the sector will change in response to the partnership will become clear in the near future.

“I know Zillow is obviously going to figure out what the reaction is here. I’m sure major brokerage firms will be evaluating what their play is here because they have a recruiting problem against Compass,” Cofano said. “If I were a major MLS, I would be in the war room having discussions about what our model will do in a worst-case scenario.”

Cofano said he expects brokers and competing portals to hold discussions about potential partnerships of their own.

When asked about the situation, Zillow said in a statement to Inman that it is the most comprehensive platform available. The portal also said it was focused on “executing our strategy, investing in innovation and delivering long-term value” to the industry.

“In a housing market already facing significant affordability challenges, approaches that limit the visibility of broad listings reduce transparency, limit access to resale inventory, and fragment the market,” the statement continued. “Broad access to real estate information has always been fundamental to a healthy, competitive housing market that serves buyers, sellers and all real estate agents.”

Beyond the portals and MLSs, some experts also suggested that the Compass-Rocket deal could have implications for real estate management — especially at a time when NAR has somewhat stepped away from its role as an industry regulator.

“The consolidation that’s happening in the industry, creating these mega brokers or big power players, is going to dictate the rules going forward,” real estate strategist Mike DelPrete told Inman. “The combination of Anywhere and Compass won’t just mean they have a lot of agents and listings. They will be the ones dictating the rules and the state of play.”

“NAR can’t get out of this by dumping everything on the MLS because the reality is that the MLS won’t exist if they don’t meet the real needs of the agent community,” Poulos said. “We prefer to create something that we understand.”

Either way, the deal is likely to trigger a ripple effect of change, experts agreed.

“They’re clearly going to cause a series of reactions to this latest move,” Cofano said. “People don’t sit on their hands.”

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