Compass, Rocket to MLS leaders: ‘We can no longer stand idly by’ 

In an open letter addressed to MLS leadership and real estate professionals, Compass International Holdings and Rocket Companies accused some MLSs of "actively working against the interests" of the agents they serve.

"We can no longer stand idly by while our real estate professionals face punitive actions for following duties to their clients," the companies said.

The letter surfaced three weeks after Compass announced a partnership with Rocket allowing Compass agents to display "Coming Soon" listings on Redfin — the search portal and brokerage Rocket acquired last year.

It signals another escalation in the battle over how brokerages can market home listings, and it follows notable shifts to pre-marketing policies announced by a handful of major industry players this week.

Some MLSs 'unwilling to change': An agent's primary responsibility is to their client, the letter begins, and they must be able to "faithfully execute" a seller's chosen marketing strategy "without fear of fines, discipline or professional retaliation."

But some MLSs "have chosen to double down on their unwillingness to change, threatening and imposing fines and disciplinary action, and retaliating against real estate professionals who would faithfully execute seller-directed marketing plans."

The letter specifically called out Arizona Regional MLS, California Regional MLS, First MLS, Georgia MLS, Northwest MLS, OneKey MLS and Stellar MLS, adding that the organizations "represent a clear minority in an industry that is rapidly moving toward seller choice."

A shifting industry? Private listings and the concept of "seller choice" have been key to the marketing strategy at Compass, which became the world's largest residential brokerage earlier this year through its acquisition of Anywhere Real Estate.

Now, Compass and Redfin said they "are committed to defending our agents who are unfairly disciplined or penalized by an MLS for executing a seller-directed marketing plan," adding, "We have your back."

The letter went on to suggest that the industry's adoption of the Clear Cooperation Policy in 2019 did not achieve its goal of broadening exposure for home listings but instead created "rigid rules" that handcuffed both agents and consumers.

What happens now? Compass and Rocket said they "will not accept rules that dictate where a seller and their real estate professional can and cannot market their listings," a message that echoed the statements Compass Chairman and CEO Robert Reffkin shared in an email to MLS and NAR leaders last year.

The letter also applauded state legislatures that have begun leaning toward the use of seller disclosure letters when a pre-marketing listing strategy is chosen.

Compass and Rocket urged agents to "tell us immediately" if they are penalized by an MLS "for executing a seller-directed marketing plan."

"We will fight to change rules that punish you for honoring seller choice," the letter vowed. "Compass International Holdings and Redfin have your back. We will support you, defend you, and stand behind our agents who put their client first."

The letter did not specify what that fight would look like or how support would be provided to agents facing repercussions for violating MLS rules. Spokespeople for Compass and Rocket declined to provide additional details at this time.

How we got here: The letter came on the heels of two major announcements on the pre-marketing listings front.

On March 17, Zillow unveiled Zillow Preview, a product that allows brokerages to display pre-market listings on Zillow and Trulia before they go live on the MLS. Five major industry players have already signed on: Keller Williams, HomeServices of America, REMAX, Side and United Real Estate.

A day later, eXp Realty announced a pre-market deal of its own, enabling its "Coming Soon" listings to be displayed on Realtor.com, Homes.com and ComeHome.com.

The letter from Compass and Rocket mentioned Zillow's shift in its approach to pre-marketing listings, which Reffkin has referred to as a policy "reversal."

"The MLS is now one path to public marketing, but not the only one," the letter said.

An 'aggressive' stance? During a Mar. 18 webinar hosted by T3 Sixty, Zillow Chief Industry Development Officer Errol Samuelson noted that Zillow's position on MLS rulemaking is "very different from some entities out there." While he did not mention Compass by name, he said he'd seen a letter that morning "saying, 'we're not going to obey the MLS rules. If you fine our agents, we're going to defend them.'" 

His reaction? "I think that's aggressive. I think it undermines what the MLSs stand for, which is liquidity, transparency, right? Fair, equal access. And so we're trying to make sure that our product works with the MLS rules versus us fighting the MLSs." (Note: Real Estate News is an editorially independent division of T3 Sixty.)

Real Estate News has reached out to Zillow for additional comments.

An evolving conversation: Now that Zillow has shifted its approach to pre-marketing, the debate over private listings has changed, according to Keller Williams Co-founder and Executive Chairman Gary Keller.

"If listings marketed as 'off-market' are now being displayed on one of the largest home-search platforms in the country, the idea of private listings at scale becomes harder to sustain," Keller wrote for Inman this week.

"Once listings are widely visible to the public, they are, in essence, no longer truly private," he noted. "At that point, the conversation's no longer about private listings. It's about how listings are distributed."

Though Keller described MLSs as "an imperfect vehicle," he said they do "provide sellers enormous flexibility in shaping how their homes are introduced to the market."