If you're not in the market at the moment to buy or sell a property you'd be forgiven for missing what could be negative and long lasting changes in the real estate brokerage business around the country. Starting with Compass, many large firms around the country are now refusing to share exclusive listings with each other as they have always done. This has resulted in less visibility of properties for buyers and as a result, less visibility for sellers hoping to trade their homes. Its also resulted in back and forth lawsuits between Zillow, Compass and others. The fate of the US real estate industry is in the balance, and transparency is on the chopping block unfortunately.

Why on earth would they do this and why would sellers go along with it? A little Background first

Zillow got greedy

I am not a fan of Streeteasy, nor it's parent company Zillow. Many of you have called on a listing or emailed the broker only to find out you are not speaking to the listing broker but one assigned to you instead by Streeteasy. Other platforms like realtor.com have followed suit as well in diverting inquiries away from the actual listing agents. Zillow's motives are purely financial. Even though real estate agents and firms have freely shared their properties for years, Zillow and others profit by selling your interest in a property and information to other agents who will pay them 35% - 40% of their commissions if they successfully land you that property or another. These referral fees used to be 25%, then 30% but Zillow has been greedy and has bitten the hands that feed it for far too long. So to be clear, no sympathy for Zillow.

What Zillow, Redfin, Homes.com and other platforms have done right however, is to freely share every listing publicly so buyers can see the whole market and make informed choices. We have grown accustomed to seeing everything and this transparency has served to make the US real estate industry the model of the free world.

Compass got even greedier

Compass concocted it's Compass Private Exclusives program to satisfy two objectives, neither with their clients in mind.

1) Revenue. By keeping listings private and not sharing them to the wider public, Compass is artificially gaming the system to act as broker of record on both the seller and buyer side of the transactions traded behind this wall.

2) Recruitment. Compass currently leads national firms with roughly 5% of the 2 million agents under its brand. By forcing more buyers to sign up with its website to see additional listings, they are betting that more agents will want to join to have access to these additional listings and share that access with their clients, thereby growing its roster of agents even more (the lifeblood of its business).

Transparency and honesty have always been at the core of any successful agent or brand thats stood the test of time. Before I started Alta, I spent many years at Douglas Elliman where "pocket listings" were not only frowned upon as ethically suspect, but also in direct contradiction to the ethos that the open marketplace is the place to settle value fairly, and any serious seller would want their property exposed to the widest audience to achieve the best price. Even today, when I get emails of off-market listings, the predominant feature of these properties is that they would need to be at a different price or in a different condition to be successful in the open marketplace.

Don't Believe the Hype

The line that Compass is trying to sell you (and me) is that with this "private" club, you can test your unrealistic pricing expectations at no cost, reach a large "private" audience before releasing publicly, and in general get the kinks worked out. Its almost like a new show that rehearses in the Catskills before coming to Broadway. And if you get an offer within this "private" club, then look - its a win-win. Do not worry that you could have done better in the open market place. That's sooo unnecessary. You're with Compass right? Of course we will take care of you. Of course we know best. Just TAKE IT!

Long Term Damage to the Marketplace

The negative consequences to the US real estate market from Compass's selfish and self-serving gimmick may be a more difficult, frustrating and murky experience for the consumer if more firms follow suit - not unlike the fragmented streaming market in cable, where you now need to subscribe to 5,6 or 7 different platforms just to be able to see the movies you want. You may have to have a "private" membership on 6 or 7 different brokerage sites just to see all the homes for sale going forward. And if that doesn't sound like fun, or transparent, it wont be. Just look at France, Italy, Portugal. Is that really in the consumer's best interest? Id say not.

"I will be keeping an eye on this space and although I dont appreciate Zillow's overly aggressive stance on referral fees, I also do not want to give up the free and open marketplace for buyers and sellers that we have today." RK