‘Unfiltered’: An ‘easy win’ for Zillow in Compass suit? 

Editor's note: The Real Estate Insiders Unfiltered podcast explores the people and forces that shape the real estate industry. Check out our top takeaways and this episode from NextHome CEO James Dwiggins and Keith Robinson, NextHome's chief strategic officer.

The views, thoughts and opinions expressed in the Real Estate Insiders podcast belong solely to the podcast creators and guests.

On this episode of Real Estate Insiders Unfiltered, Ed Zorn uses his legal expertise to predict how several high-profile industry cases will proceed.

While it's been over a year since the National Association of Realtors settled in the Sitzer/Burnett case, there's still an appeal lingering. But Zorn, the vice president and general counsel of California Regional MLS (CRMLS), thinks it's "extraordinarily weak."

Meanwhile, Compass has filed lawsuits against Zillow and Northwest MLS, and the pocket listings website co-founded by The Agency CEO Mauricio Umansky recently revived an earlier suit against NAR. 

Zorn breaks down each case and highlights which legal arguments he believes are strongest.

Where Sitzer/Burnett stands: "Don't be concerned" about the appeal, Zorn advised, adding, "I don't expect that to overturn the settlement agreement."

But if it does? "The fact is, now the rules have been changed. What you do day to day as brokers and agents won't change, even if the appeal is granted," Zorn said. "We're already on this new road."

And in Zorn's view, "This is a better road. The consumer-centric model is what we should all be doing anyway," he said.

Does Compass' lawsuit against Zillow stand a chance? The brokerage giant sued the home search leader in June in response to Zillow's policy barring listings that are publicly marketed but not widely available via the MLS. 

Should Zillow be worried? "I don't think the case is going anywhere," Zorn said, calling it "extraordinarily weak from Compass' perspective."

"Zillow will have an easy win here," Zorn predicted. In the meantime, Compass' preliminary injunction request is still looming — but Zorn said an injunction "is unlikely," and he believes it should be denied "if the judge is doing his job."

Zillow filed a motion on July 17 opposing the injunction and pushing back on Compass' claims.

Is Zillow a monopoly? Compass says the portal's actions are anticompetitive and monopolistic — but Zorn disagrees. "If Zillow.com went away tomorrow, not a single sale will be impacted," he said. For example, CRMLS currently sends its listings to 29,000 websites, so even if a big home search portal like Zillow were to disappear, "they don't control the buying and selling marketplace."

"The same number of properties will sell with no Zillow in existence," he said.

The outcome of Compass v. NWMLS won't impact the industry: Compass levels similar "monopoly" claims in its lawsuit against Northwest MLS, which prohibits office exclusives — a key part of Compass' marketing strategy. But NWMLS is "very unique," Zorn said, noting that the organization has essentially had its own "more stringent" version of the Clear Cooperation Policy for over 15 years.

"No matter what happens in this case, it will have zero ramifications on what happens across the country," Zorn said. While he believes Compass' arguments are "very weak" and NWMLS' motion to dismiss is "well crafted," the MLS may need to make concessions around open listings.

"I think that's the space where there's really an opportunity for maybe a resolution or a settlement," he said. "If Northwest MLS took a step back off of the open listings ban and Compass could live with that, then I think there's a resolution. But I'll be honest with you: I think there's a 60-70% chance that Northwest MLS wins anyway, even with their open listings ban."

An Umansky-NAR rematch? When it withdrew its original case against NAR last year, ThePLS.com left the door open to refiling — which it did earlier this month. Zorn thinks it's likely the pocket listings website "was not satisfied" with NAR's handling of Clear Cooperation and decided to revive the case, which Zorn also described as "very weak."

"The reason that PLS is going to lose that case is the open listing agreement exception," Zorn explained. "They also argue that the reason NAR and the MLS agreed to this is because we were afraid of these competing MLSs. That's a laughable argument, because PLS has been around for a long time."

"I don't think it will really go anywhere," he added.