Consumer groups urge probes into Zillow, Compass over housing practices

Nineteen consumer groups urged state attorneys general to probe Zillow and Compass's housing practices.

Nineteen consumer advocacy groups, including the American Economic Liberties Project, the Consumer Federation of America, and the Open Markets Institute, have sent a joint letter to the National Association of Attorneys General president, Connecticut Attorney General William Tong. The letter urges state attorneys general to investigate major real estate platforms Zillow and Compass for practices alleged to reduce housing affordability nationwide.The letter argued the housing market is "a series of toll booths, each operated by an entity that has captured a chokepoint in the transaction flow."

Consumer groups argue that Zillow’s recent settlement with the Federal Trade Commission, which addressed alleged anti-competitive agreements with Redfin, fails to fully restore market competition. They believe the measures fall short of undoing market distortions caused by Zillow’s past conduct. Industry analysis highlights that Zillow denies engaging in practices like pocket listings, which it identifies as a primary concern for market consolidation.

Compass’s 'Private Exclusives' strategy, involving private listings restricted from broad distribution, is criticized for reducing transparency and limiting the supply of publicly available listings. This approach reportedly harms both buyers and sellers by creating an artificial scarcity.The groups emphasize that Compass promotes exclusivity and scarcity to command higher prices, as noted by Zillow Group Chief Economist Mischa Fisher.

The competitive tension escalates as Compass has filed state-level ethics complaints against Zillow through 30 Realtor associations, at least 50 MLSs, and real estate regulators across 26 states. These complaints target alleged misleading property designations on Zillow listings. Reports show this battle is part of a broader conflict over market control.

Additionally, a class-action lawsuit accuses Compass brokers of hiding thousands of homes from Zillow, creating a fake supply shock and artificially inflating rents in New York City. The lawsuit underscores concerns about opaque listing practices impacting local housing affordability.

Yes, but: Zillow disputes some allegations, asserting it opposes pocket listings and claims such practices cause market harm rather than its own policies.

What's next: State attorneys general may decide whether to launch multistate investigations into these real estate platforms, potentially leading to regulatory actions affecting compliance and industry practice.