OneKey MLS sues Compass to uphold listings policy
OneKey MLS joined a lawsuit against mega brokerage Compass and is seeking a court ruling that would uphold its policy prohibiting public marketing of private listings. Credit: Newsday/Morgan Campbell
Long Island's real estate marketplace OneKey MLS has sued mega brokerage Compass, seeking a judgment that would uphold its policies related to how brokers list homes for sale.
OneKey MLS joined a lawsuit Tuesday filed by the California Regional MLS earlier this month after both listing services received letters from Compass that threatened litigation over their policies.
The case has consequences for Long Island homeowners selling what may be their largest asset. For homebuyers, the outcome could affect their ability to find homes to buy online, one legal expert said. Properties posted to the MLS are typically syndicated widely on real estate websites like Zillow, Redfin and Realtor.com.
The lawsuit, filed in U.S. District Court in Manhattan, is one of several between Compass and listing services around the country. The brokerage has alleged the listing services have engaged in anticompetitive behavior by limiting how sellers can market their homes.
WHAT NEWSDAY FOUND
- OneKey MLS, Long Island's multiple listing service, joined a lawsuit against real estate brokerage Compass this week, seeking a judgment to uphold its policy barring public marketing of private listings.
- Compass had threatened to sue OneKey MLS over the policy, which it alleges is anticompetitive and limits sellers' choices for marketing their homes.
- The case, along with similar lawsuits around the country, has ramifications for how Long Islanders search for and sell their homes.
The fight stems from Compass' introduction of a new marketing strategy two years ago. The strategy involves first offering listings exclusively through Compass' website while retaining the option to later list publicly on the MLS and other real estate websites.
Compass shows its exclusive listings on its own website and agreed to a partnership with Redfin earlier this year to syndicate its listings there.
The strategy allows sellers to test a price without starting the clock on days on market, and avoid the unflattering information that some real estate websites display, such as price changes and flood risk.
However, OneKey MLS said Compass' push to circumvent broker cooperation policies is unfair to other brokerages who share their listings widely.
"They want to benefit from the system without playing by the rules," Richard Haggerty, CEO of OneKey MLS, told Newsday. "They want to use everybody else's listing data but not submit their listing data."
That policy has opened Compass up to fines from OneKey MLS for violating a rule, created by the National Association of Realtors, that requires cooperation between brokers. The rule says brokers must list properties within one business day of publicly marketing a property through yard signs, email blasts or social media posts.
Farmingdale-based OneKey MLS, the state's largest listing service, is owned by the Long Island Board of Realtors and Hudson Gateway Association of Realtors. It serves about 40,200 real estate professionals who listed about 125,000 properties on its platform last year.
The Long Island Board of Realtors supports the MLS's position in the lawsuit and shares "OneKey MLS’s commitment to an open, fair and competitive real estate marketplace," Doreen Spagnuolo, LIBOR's CEO said in a statement to Newsday.
Compass, the world's largest brokerage, has bristled at those rules around the country, arguing sellers should be able to decide how their property is marketed.
"Only the law and the homeowner should determine how a home is marketed. MLSs are neither the law nor the homeowner," a Compass spokesperson said in a statement to Newsday. "Agents should be free to compete on the marketing strategies they offer."
Compass had battled Zillow last year in court over that company's restrictions on publicly marketing private listings without posting them to Zillow. Compass dropped the case in March after Zillow changed its policies to allow for a preview phase in which listings are displayed before they're posted to multiple listing services.
The company's influence over the industry grew this year as it closed on its $1.6 billion acquisition of Anywhere Real Estate, bringing the Century 21, Sotheby's Coldwell Banker and Corcoran brands under its umbrella, which now includes about 340,000 real estate agents.
Homebuyers benefit from broad sharing of information about houses on the market, while an individual seller might want the flexibility to test the market before posting to the multiple listing service, said Hofstra University law professor Ronald J. Colombo.
"If I'm in the market to buy a home, I want OneKey MLS to win this because I want every possible house that I may want to purchase in the system," he said.
In deciding the case, the court must weigh whether OneKey MLS and the California Regional MLS are using their market power to harm competition in the real estate industry, Colombo said.
He said it appears the listing services are restricting how Compass and other real estate companies go about marketing houses to serve their clients.
However, the listing services can make the case their policies help consumers in the housing market make decisions by promoting the sharing of property details.
"That type of information is the lifeblood of a properly functioning, competitive market," Colombo said.
Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.
