Why Zillow vs. Compass-MRED is the Ford Vs. Ferrari

Ford and Ferrari build cars from many of the same raw materials. Steel. Rubber. Glass. Aluminum. The difference between the two is not in the materials. It’s the strategy.

Ford is bringing a great product to market at scale. Ferrari markets a rare product as an experience. People ask a fair price. The other has a premium that has broken every auction record in the world at various times in history.

I’m writing about Zillow’s lawsuit against the Chicago MLS (MRED) and Compass. We’ll find out. But I want to start with Ford and Ferrari, because once you look at the matter through this lens, its impact on the future of our industry becomes clear.

The fight is not about transparency. These are not ‘private mentions’. It’s actually not even about Zillow. At issue is whether America’s real estate professionals will retain the right to market a house the way Ferrari markets a Ferrari, or whether they will be forced by mandate to market every house the way a supermarket markets a loaf of bread on its shelves.

What Compass is trying to achieve

Compass does not attempt to hide listings. Compass is not trying to break the MLS system that has served our industry well for decades.

Compass seeks to give its agents the freedom to use the strategies that every premium product company in the world uses to maximize the value of what they sell.

These strategies are not new. They are taught in every business school in the country. They’re practiced by Ferrari, Rolex, Hermès and the launch teams behind every new iPhone. Exclusivity, scarcity and urgency. I call it the ESU effect, and I’ve been writing about it for years.

Here’s how it works in real estate. A buyer who believes he is among the first to know about a house, who senses that other interested buyers are waiting in the wings, and who has no impression that previous buyers have seen the property and been rejected, will almost always move faster and offer more than a buyer who feels like he is part of an undifferentiated crowd staring at a listing that has been visible to the public for weeks.

Bread on the shelf of a supermarket

Now think about how a listing appears on Zillow and the other major search portals. Every buyer in the market sees it at the same time. Every buyer knows that every other buyer sees it. The days on market counter starts ticking publicly.

That is not Ferrari’s positioning. That is bread on the supermarket shelf, which every customer sees and becomes visibly less fresh by the hour.

We know what happens to bread on a shelf. It’s getting stale. The price drops.

Compass asks a simple question. Why should America’s real estate professionals, who have a fiduciary duty to maximize their sellers’ sales prices, be forced by a third-party seller to market every home as a commodity, when the entire history of premium product marketing tells us that strategy leaves money on the table?

The antitrust argument, in reverse

Zillow’s lawsuit takes the position that an MLS that allows its members to market homes outside of Zillow is somehow a violation of antitrust law. With all due respect, this argument puts the antitrust question backwards.

A seller who demands in federal court that its suppliers be legally barred from offering an alternative marketing path to their customers does not protect consumers. It protects a business model. This is what US antitrust laws are designed to prevent.

Antitrust laws are there to protect free and open competition, not to enforce the use of a particular supplier.

Why this matters beyond Compass

Some readers may be tempted to see this fight as a Zillow-versus-Compass-MRED story. That’s not it. It’s a story about whether real estate professionals of every brand in America retain the right to choose the marketing strategy that best serves each individual seller.

If Zillow prevails, the precedent won’t stop at Compass. Every agent at every real estate agency in this country will be permanently tied to a single, seller-mandated marketing model for immediate public exposure. The Ferrari strategy, the phased launch strategy, the off-portal-first strategy, they will all be effectively banned for everyone.

Ford and Ferrari both

Let me be clear, because in the heat of the moment it’s easy to be misinterpreted, and I’ve spent 50 years in this industry as an agent, trainer and attorney. I’m not against home search portals. I’m not saying that every home should be marketed through the search portals, or that widespread public awareness is a bad thing.

Mass exposure is a powerful tool. In many markets and in many situations it is the right tool.

I argue that it should be an instrument, not a mandate. An option, not a requirement. A choice that the seller and his fiduciary make together, based on the specific home, the specific market, the specific moment.

Ford makes great cars. Ferrari makes great cars. The world is better when it has both. But imagine a world where Ferrari was legally required to sell its cars the way Ford sells its cars. Same dealers. Same commercial. The same direct, undifferentiated mass market positioning.

We all instinctively understand that something valuable would be lost. The cars would be the same. The strategy that made them legendary would be gone.

That’s the world Zillow is asking a federal court to impose on the U.S. real estate industry.

Compass asks to let the seller and their fiduciary decide what approach serves that specific property, in that specific market, at that specific time.

It’s what we owe our vendors. I believe the law will ultimately protect that, because protecting liberty and promoting competition is what antitrust law is intended to do.