In the latest twist in the real estate listing saga, Washington Realtors said that it is supporting a piece of legislation that would restrict the use of private listing networks in the state.
The bill is expected to be filed publicly this week in the Washington State Legislature, which began its 60-day legislative session on Monday. A draft of the bill was obtained by Inman on Monday.
The bill would amend existing state law related to licensing law and unfair practices, and it would require brokers to market properties to the broader public, rather than “a limited or exclusive group of prospective buyers.”
In a video update late last week, leaders from Washington Realtors said they would support the change as part of what they said was the organization’s goal of making the state the most consumer-friendly place to buy and sell real estate.
“Ultimately, we feel like the use of private listing networks is at odds with our goal of being the most consumer-friendly state in the nation to buy and sell real property,” Ryan Beckett, president of the association, said in the video.
“We believe that the potential growth of private listing networks poses a threat to the transparent marketplace that ultimately benefits both consumers and Realtors,” he added, “and it could move us backwards in fair housing practices.”
Given that the bill isn’t yet public, it’s still unclear how exactly the state would regulate private listing networks, which are popular in some markets and have been a source of intense debate within the real estate industry for the past year.
Annie Fitzsimmons, an attorney with the organization, added in the video that “it’s important to note the bill will not prohibit private listing networks.”
“Those brokers who currently use private listing networks can continue to do so, so long as the property is also marketed publicly,” Fitzsimmons said.
More on the bill
A draft of the bill was shared with Inman on Monday afternoon ahead of its expected public release later this week.
“It is an unfair practice for a real estate licensee to market the sale or lease of residential real estate to a limited or exclusive group of prospective buyers, prospective tenants, or real estate licensees, or any combination thereof, unless the real estate is concurrently marketed to the general public and all other real estate licensees, except as reasonably necessary to protect the health or safety of the owner or occupant,” the draft language says.
Another section explicitly requires brokers to market a seller’s property publicly “unless the health or safety of the owner or occupant requires” a different approach.
“Brokers who represent a seller must market residential property to all members of the public and all other brokers and may not market the property to an exclusive group of buyers or brokers only, unless the health or safety of the owner or occupant requires,” the language reads.
The draft did not identify the bill’s legislative sponsors.
Compass responds
Robert Reffkin speaking at the 2023 Compass RETREAT | Credit: Compass
In response to news of the bill, a Compass spokesperson called the legislation a “veiled attempt” to limit consumer choice.
“This bill is a veiled attempt by NWMLS and Zillow to preserve their market dominance by restricting homeowner choice and limiting competition, to the detriment of sellers and agents alike,” the spokesperson said.
“Compass believes Washington homeowners deserve the same flexibility to choose when and where to market their homes as homeowners in every other state. Every other state offers flexibility that allows homeowners to test pricing, gain critical positioning insights, retain their privacy and confidentiality, and generate early demand without public price reductions or days on the market.”
Compass, which closed on its acquisition of Anywhere Real Estate on Friday, has leaned into a marketing strategy that includes a period of time where listings are available only via the brokerage and its agents.
The listings, which the brokerage calls Compass Private Exclusives, allow sellers to test pricing and otherwise prepare homes in an off-MLS period. They can receive offers and sell in that stage, though most eventually end up on the MLS.
“Compass fully supports and complies with fair housing laws,” the spokesperson added.
Listing access roils an industry
The debate over private listing networks flared up in Washington last year when the Northwest MLS briefly cut off Compass’ license to the MLS’ IDX data feed in April.
Compass sued Northwest MLS in response, saying the MLS was acting as a “monopolist” in Washington and Oregon.
“NWMLS is a monopolist and a combination of competing real estate brokers,” Compass said its complaint, filed in the Western District of Washington. “Nearly 100 [percent] of the residential real estate transactions by Seattle area real estate brokers are listed on NWMLS, and NWMLS has no meaningful competitors,” meaning no rival MLSs.
A jury trial is scheduled for October.
Northwest MLS is the sole named defendant in the lawsuit, but Windermere Real Estate Services was also mentioned in the complaint as the “largest real estate brokerage in Washington State.”
Windermere, which has previously clashed with Compass on the topic of listings, is also apparently lining up to support the bill in the Washington legislature.
“With very few exceptions, sellers want and deserve transparency, broad exposure, and confidence that they’re receiving the strongest possible offers for their homes. Only open markets can deliver that,” Windermere Real Estate President OB Jacobi said Monday in a statement to Inman.
“Far from a step backward, [the bill] reinforces and safeguards the standards already in place, which are more important than ever,” Jacobi added. “Our industry should be built on service to consumers, not their exploitation, and we should all be supportive of consumer protection measures like this.”
The lawsuit between Compass and NWMLS is also playing out in the backyard of Zillow, which is similarly engaged in a legal battle with the mega-brokerage. That battle stems from Zillow’s policy banning certain listings from its platform if they’ve been marketed publicly without being put on Zillow.
In addition to clashing with Compass, Zillow’s rule has also become a point of debate — and, in some cases, conflict — in markets such as Chicago and San Antonio, where private listing networks are broadly used and allowed by the MLS but don’t comply with the portal’s policy.
