In yet another legal development within the residential real estate industry, Compass on April 25 filed a federal antitrust lawsuit in U.S. District Court in Seattle over Northwest MLS’s (NWMLS) Clear Cooperation Policy (CCP), claiming that the brokerage-owned trade group has the most restrictive homeowner marketing rules in the country.
The lawsuit was telegraphed previously when Compass solicited homesellers who were ostensibly harmed by the NWMLS policy, with NWMLS subsequently cutting off the brokerage’s IDX feed.
Compass explained its position in a press release.
“In every other state, and with every other MLS, homeowners have the freedom to choose to pre-market their home before it goes public,” the statement read. “Outside of Washington, homeowners can choose to list their home as a Compass Private Exclusive or Compass Coming Soon and receive the benefits of pre-marketing: they can test price, gain critical positioning insights, retain their privacy and confidentiality, and generate early demand without public price drops or accumulating days on the market.
“The NWMLS is not a neutral player. It’s a monopolist—nearly 100% of the residential real estate transactions facilitated by Seattle area real estate brokers were listed on the NWMLS. NWMLS has successfully prevented any meaningful threat to itself and its owner-brokerages by adopting and enforcing a series of rules designed to force anyone buying or selling a home in Washington to do so through the NWMLS. Unless stopped, the NWMLS will continue depriving homeowners in Washington of choice, competition, and the benefits of pre-marketing.”
In the lawsuit, Compass claims that it tried to work with NWMLS to allow its “Private Exclusives” and other brokerage-specific offerings, using workarounds within NWMLS’s rules including non-exclusive listing agreements and through sellers “reserving discretion” on whether to pay buyer agents, which the company alleged should have allowed it to operate its private listing network in the area. Compass also claimed it lobbied NWMLS to change the rules that disallow these private listings.
According to Compass, NWMLS changed rules quickly to close these loopholes, and eventually retaliated by temporarily cutting off the brokerage’s IDX feed, which resulted in some sellers cancelling their listing agreements with Compass agents.
Representatives from NWMLS did not immediately respond to a request for comment. Notably, NWMLS is independent of the National Association of REALTORS®, and is not required to adopt mandatory policies like CCP. In a blog post last month, the MLS described its choice to continue enforcing its own version of mandatory submission rules.
“For more than 40 years, real estate brokerage firms in Washington state, as members of Northwest MLS, have agreed to cooperate and share all listings of all properties with the entire brokerage community and the public,” the post reads. “Northwest MLS strongly believes that consumers should have access to all property listings and that sellers are entitled to the benefit of exposure of their property to the full marketplace. An open, fair, transparent, and comprehensive marketplace benefits all market participants, including sellers, buyers, brokers, and appraisers.”
In that post, NWMLS also pushed back directly against “some brokerage firms” who have advocated for “rules that facilitate hiding property listings from consumers.”
“Proponents of hiding listings masquerade their self-dealing as offering ‘seller choice.’ They argue that sellers somehow benefit from not making their listing available to all potential buyers. They don’t,” NWMLS wrote.
In its lawsuit, Compass argues that private listings have a long history of use in the real estate industry, and that Compass’s private networks were in in high demand in NWMLS’s footprint. The brokerage also suggested that pushback from NWMLS is more about competition than fairness, pointing out that local independent Windermere is heavily represented on NWMLS’s board.
“NWMLS’s anticompetitive and tortious conduct also has deprived, and continues to deprive, homeowners of the competition brought by innovative real estate brokerages, like Compass, to traditional brokerages, like Windermere,” the lawsuit reads.
At the same time, Compass founder and CEO Robert Reffkin has framed the issue, as he has previously, around the choices and freedom of consumers to market their properties however they want.
“Compass is proud to support Washington homeowners who are asking the right question: Why are we the only homeowners in America without a choice in how we sell our homes?” he said. “The NWMLS system wasn’t built to serve homeowners—it was built to preserve the monopolistic power of the NWMLS. We’re proud to stand with homeowners who want the freedom to choose how their homes are sold.”
Editor’s note: this story was updated on April 26 at 10:33 a.m. eastern time with additional information, and again on April 28 at 12:29 p.m. eastern time.
