The Compass Move May Seem Harmless on the Surface. Be Sure to Look Deeper.  

Yesterday, a segment of the active sales listings quietly disappeared from the usual search sites that consumers access to search for homes. Most consumers wouldn’t have noticed the change unless they were following one of those listings. Members of the New York residential real estate community likely noticed first through the press that the move generated. For those unaware, Compass and their related companies pulled many of their listings from the visible market. The move was presented as a swipe at Zillow. A move intended to show the company the power that the newly expanded company can have when they flex their muscle.  

Compass certainly showed their hand, but in ways far beyond a swipe at a publishing and advertising site with which they have a beef.  

Even on the surface, the move is a childish action taken by a company with new market share to wield. I’m sure the concept of pulling such a stunt felt great in the initial presentation. The thought of sticking it to a company who had made things uncomfortable to them likely felt like a great move. But a company with a longer view, with clearer vision, and with a concern for how their decisions affect not just their competition, but how they affect the industry and how they affect consumers, would have left this idea on the pile of ideas that sound fun but would be imprudent to implement. Compass chose to ignore this and move forward. They lacked the moral integrity and the maturity needed to ignore this impulse.  

The result is more than a minor tremble. It’s created a fissure that is much more significant than it would seem on the surface. Let’s look at this closely. 

Yesterday, around 375 listings came off of the Streeteasy site from the Compass companies. That’s roughly 7.5% of the active listings. That doesn’t seem to be a significant number, but that is only from a percentage of Compass agents being “asked” to participate in this program. But even at this level, that’s 375 homes that are no longer available for buyers who need a place to live, who want to buy in a fair and open market, to find on their own.  

But if we peel back a layer. We see that these homes haven’t actually been taken off the market. They are still being marketed. Just not in sight of the consumers who need housing. They have been moved into a status called “Participant Only”. This is a status in New York City’s RLS which allows sellers who have privacy issues to list with the brokerage community so that they can get visibility for their property, without exposing themselves or their home to the general market. This is a sort of backup plan for a tiny portion of sellers who value privacy more than profit because of a life situation. It is not intended as a marketing plan. It’s a sort of plan B to accommodate these sellers.  

Why does this matter? It matters because, at its most harmless level, if these homes had been merely taken off the market, that would reflect a choice by sellers to not market their homes for a while. It’s deferred marketing.  

It gets more complicated when we take into account Compass’s heavy promotion of their Private Listing Network, in which they encourage sellers to market for some time, not on the open market within sight of interested consumers, but within the dark confines of their own private-access website that can only be accessed by consumers if they agree to work with a Compass agent.  

So let’s peel back another layer. It would seem that Compass and companies have made a better choice here. At least they didn’t move these 375 listings into the Private Listings Network. They’re moved to Participant Only status. So the brokerage community can see them, even if the average consumer no longer can. That’s good, right? 

It’s bad. On so many levels. First for consumers. It would be bad enough for buyers to have listings pulled from the system to limit their choice further in an already tight market. That would be frustrating enough. But these listings aren’t removed from market. They’re just moved to an internal industry database that only professionals have access to. So now, only consumers who are connected with an agent have access to these listings. Other buyers searching alone have no idea there is more out there. And other buyers, who may want to search on their own find that they now must work with a broker in order to see the entire inventory. All of us in the industry hope that buyers will want to work with a broker, but most of us, hopefully, wouldn’t want that choice forced on them.  

Let’s peel this back even further. Before yesterday’s move, Compass had been acting alone (or at least leading the attempt at a movement) in forcing listings into Private Listing Networks. But with this strategy, they have opened up the entire brokerage community in NYC to being complicit. They’re no longer manipulating the market to force buyers to their website to see inventory. They’re now also manipulating RLS rules to pull listings from the open market and place them only in the hands of RLS member firms. In the eyes of consumers, the NYC brokerage community has taken away their right to an open market and have begun to bring access to these properties in-house. We are now all gate keepers that are requiring tolls to enter. A move we never asked for and a position that I’m sure most of us do not want to be in. 

As an industry, we are now all complicit. And this strategy will work an any MLS market in the country. So we’re seeing just the beginning of this strategy.  

On its surface, this move by Compass is a harmless shot across the bow to a company they see as a rival. But if you scratch that surface, you’ll see that the implications affect us all as real estate professionals, as an industry and as consumers. 

 I’m confident that clearer heads will push back on this move, and that we will al gladly give up this position of gate keeper and hand the access back to the consumers who deserve it.