Compass Files Suit Over California Home Listing Service Rules

(Bloomberg) -- Compass Inc., the top US broker for residential properties, sued California’s largest real estate listing service in the latest escalation of a broader legal fight over timely access to information about homes for sale.

The federal court suit filed Friday in Los Angeles accuses the California Regional Multiple Listing Service, or CRMLS, of adopting anticompetitive rules. Compass alleged the requirement that agents list homes for sale within one business day or face fines violates US antitrust laws. CRMLS covers 22 counties in the state, including areas around Los Angeles, the San Francisco Bay Area and San Diego.

The legal battle pits Compass’ effort to build a private listing network against the decades-old industry practice of relying on multiple listing services across the country.

“Homeowners should be free to choose how to sell their own homes without having a competition-killing real estate industry organization tell them how to do it,” Compass said in the complaint. CRMLS is “dictating how Compass and its agents can and cannot compete, how Compass and its agents can and cannot serve their clients, and how homeowners can and cannot market their own homes,” the company said.

CRMLS didn’t immediately respond to an email request for comment.

The California listings service, the second-largest in the US, preemptively sued Compass earlier this month in New York federal court, seeking a court order in support of its listings rules.

For decades, real estate professionals have relied on the multiple listings services, which aggregate listings for a particular geographic area. Seattle-based Zillow Inc. and other popular real estate websites rely on MLS data.

The dispute centers around the strategy employed by Compass of initially holding back some home listings from public marketing, part of an effort to build a private listings network. In the earlier lawsuit, CRMLS alleged Compass wants to publicly advertise homes on its own platform while withholding those same listings from the shared database — accessing competitors’ listing data without contributing its own.

In the lawsuit filed Friday, Compass said its three-phased marketing strategy – where it first markets homes internally to its own brokers before moving to a “coming soon” designation where they appear only on the Compass website – results in higher sales prices and more options for home sellers. The listing service’s rules require listings be submitted to the shared database within one business day or the agent can face fines of up to $2,500, suspension or expulsion from the service, Compass said, which unfairly limits competition.

The fight between Compass and the California listing service is one of several legal disputes about who gets access to information on homes for sale and when. Last year, Compass sued Zillow seeking to block the popular real estate website from enforcing a policy that barred home listings on its platform if they had been marketed publicly before being listed on an MLS.

A New York federal judge denied Compass’s request to temporarily bar Zillow from refusing to list homes that have been advertised elsewhere first. Compass subsequently dropped the lawsuit.

Compass and Zillow engaged in another skirmish earlier this year in Chicago after Midwest Real Estate Data, the multiple listings service for the Chicagoland area, cut off access to Zillow’s listings feed. Last month, a federal judge in Chicago dissolved an injunction forcing the listings service to continue providing Zillow data, and ordered Zillow and MRED to engage in arbitration.

Earlier this year, Compass acquired its next biggest rival, Anywhere, whose brands included Coldwell Banker, Corcoran and Sotheby’s International Realty. The combination now gives the company operations in 38 states and Washington DC, with about 37,700 agents, giving the brokerage significant market shares in major markets including New York, Chicago and San Francisco, among others.

Senator Elizabeth Warren, a Massachusetts Democrat, and other lawmakers have scrutinized the $1.6 billion merger, raising concerns over market consolidation and housing affordability. The Trump administration cleared the deal without conditions, though New York’s attorney general has subsequently opened a review of the transaction given the company’s significant market share in the state, including in New York City where it controls as much as 80% of real estate transactions by volume, according to some estimates.

More stories like this are available on bloomberg.com

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