In May, Zillow filed a lawsuit against real estate brokerage Compass Inc. and a large multiple listing services (MLS) firm in Chicago, claiming the two firms violated antitrust law by colluding to hide home listings from buyers. No matter the outcome in this dispute, the interests of American homebuyers and sellers likely will not be served, as the market has been effectively rigged.
To understand why, a brief history of real estate listings is in order. Two years ago, the National Association of Realtors (NAR) settled the Sitzer-Burnett class action and dropped the rule that forced listing brokers to publish a buyer-broker commission offer through the MLS. The 2024 NAR settlement was supposed to inject price competition into a market that had behaved, for decades, like a cartel. Buyer brokers would now have to negotiate their pay directly with buyers, exposing a commission pool of roughly $100 billion a year to ordinary market discipline. Zillow’s legal maneuvering against Compass and Midwest Real Estate Data LLC (MRED) is what you get when the platforms sitting on top of residential listings try to rebuild around the contours of the settlement instead of competing under it.
Start with Compass. A substantial share of its inventory now moves through “private exclusives” that circulate inside the Compass network first and reach the broader MLS only later, if at all. Sellers do not learn what an open market would have paid them. Buyers do not learn that competing inventory exists. Search costs rise on both sides, and the price-discovery function—what George Stigler called the whole point of intermediated markets—is degraded. The spread that opens up between what buyers pay and what sellers receive is where the platform takes its margin.
Turning to Zillow, the dominant online real estate and rental platform has built a more aggressive version of the same model. Zillow Preview launched in May with exclusive deals covering more than 60 of the largest brokerages in the country, including RE/MAX, Keller Williams, and HomeServices of America. A separate carriage agreement with Realtor.com gives the two platforms combined reach across roughly three-quarters of major portal visitors. Listings submitted through these deals appear only on Zillow and Trulia during an open-ended “Preview” period, and they may never reach an MLS or a competing site. Strip the pleadings away and Zillow’s lawsuit is one massive platform accusing the other of doing what both are actually doing now at scale.
Now look at how Zillow gets paid. When a buyer clicks “Contact Agent” or “Request a Tour” on a Zillow listing, they are not connected to the listing agent. Instead, they are routed to a buyer’s broker who pays Zillow up to 40 percent of the resulting commission. That 40 percent is not a competitive price for matching. It is economic rent, extracted from a buyer who does not know it is being extracted, and it lands precisely in the part of the transaction the NAR settlement was supposed to make competitive. Buyers overwhelmingly do not realize they are paying it. In a survey of more than 850 consumers, Wharton’s Jerry Wind found that fewer than one percent correctly identified who would be calling them after the click on Zillow’s website. Zillow Preview expands this extraction by capturing consumers earlier, before a listing ever reaches the MLS. Once inside the Zillow ecosystem, buyers face pressure toward Zillow Home Loans, which antitrust scholar Steven Salop has found to be significantly more expensive than market alternatives, with the steepest markups falling on veterans, low-income borrowers, and Black borrowers.
Economists recognize that when a critical input is foreclosed from rivals, anticompetitive effects can occur. Listings are the critical input here. Whoever controls them controls the buyer flow that monetizes through referral fees, mortgage cross-sells, and advertising. Network effects do the rest: brokerages list where the buyers are, buyers go where the listings are, and the platform’s take rate climbs without competitive constraint. Zillow’s own complaint conceded the point on its first page, calling listings “the most important information” in the market. That is a fair description of why the inventory is valuable. It is also a fair description of why Zillow and Compass are both racing to lock it up.
The welfare math is not abstract. Every percentage point of commission re-captured through referral fees, mortgage steering, or pre-market opacity is a percentage point of consumer savings the NAR settlement never delivers. The Wind survey on buyer routing and the Salop analysis on Zillow Home Loans are early evidence that the re-capture is already happening. And it is hitting hardest on the borrowers least equipped to detect it. That is what economic theory predicts when a platform with market power on one side of a transaction is allowed to lock up listings and tie in ancillary services.
And higher commissions are not the only anticompetitive effects. Third-party appraisal companies need access to all comparable home listings to make accurate valuations. If an appraisal company has access to the (public) MLS database but not to the other (private) set of potentially competing homes, the resulting appraisals could go haywire, leading to downstream frictions. For example, shoddy appraisals flowing from this information gap could give homeowners a false impression of their home’s value.
None of this requires policymakers to pick a winner in the Illinois fight. The real question is whether the platform layer of residential real estate, having watched the NAR settlement weaken its single largest source of opaque pricing power, is now being allowed to rebuild that power through exclusive listing deals, hidden referral fees, and tying arrangements with adjacent services. On the evidence so far, the answer looks like yes. The cost falls on consumers who never had a seat at either company’s table.