‘Are you kidding me?’ Real estate industry reacts to Compass-NWMLS lawsuit

After weeks of buildup, it felt like only a matter of time before Compass would file a lawsuit against Northwest MLS (NWMLS) over the latter’s Clear Cooperation Policy (CCP).

On Friday, the wait ended as Compass filed an antitrust suit against NWMLS. The filing includes alleged violations of the Sherman Act and the Washington Consumer Protection Act, along with tortious interference with business expectancy.

The suit alleges that NWMLS’s policy — which, unlike the National Association of Realtors’ (NAR) policy, does not allow for private exclusive listings — is the “most restrictive homeowner marketing rule in the country.”

Compass goes on to claim that 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 wishing to buy or sell a home in the Seattle area with the help of a real estate professional to do so through its platform.” 

In a statement emailed to HousingWire, Compass CEO Robert Reffkin was understandably pleased about the lawsuit. 

“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?” Reffkin said in a statement.

“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.”

Industry hot takes

While NWMLS has yet to respond to the claims made by Compass, others in the real estate industry have had their fair share of thoughts about the suit and the contents of Compass’s complaint. 

One of the most verbose responses to the suit came from Robert Potashnick, the co-founder and owner of Real Estate Intelligence Agency. In a LinkedIn post, Potashnick, who has nearly three decades of industry experience, simply wrote, “Are you kidding me?”

In a separate post that contained his full reaction, Potashnick began by claiming that Reffkin “is 100% full of it.”

“I recently spoke directly with a Compass real estate agent — personally praised by Reffkin — who admitted Compass (and possibly Reffkin himself) told agents not to worry about violating NWMLS rules, because Compass would pay the fine,” he wrote.

“Instead of respecting the marketplace they voluntarily joined, Compass treated fines like parking tickets — knowingly breaking the rules. This wasn’t innovation. It was intentional violation. When NWMLS responded by cutting Compass’s data feed, Compass pivoted to what it knows best: Sue. Whine. Play victim.”

Potashnick went on to note that the NWMLS is a private business and does not owe “Reffkin, SoftBank, or New York investors anything.”

“Robert Reffkin thinks if he doesn’t get his way, he can sue into special treatment. That’s not leadership. That’s entitlement,” Potashnick wrote. “Compass broke the rules. Reffkin knew it. Now he’s trying to bully his way out of it.”

Tanya Monestier, a University of Buffalo law professor, was one of the first to share her thoughts on LinkedIn.

“Just read the Compass complaint. I hate to say it, but it reads like a cross between a press release for it’s 3-phase marketing plan and a whiny diatribe by a brokerage that didn’t get its way,” she wrote.

Monestier also wrote that she was “struck by the irony” of Compass’s claim that NWMLS has prevented any “meaningful threat” to itself by adopting its rules.

“Literally, the exact same thing can be said about brokerages: the very way they function prevents any meaningful competition,” she wrote.

Eric Johnson, the CEO of Mission Realty Advisors, a real estate team brokered at Compass, understandably had different thoughts. 

In a response to Monestier’s post, Johnson wrote that the lawsuit isn’t about Compass “not getting its way.” 

“It’s about the fact that no MLS, no platform, and no brokerage should have the power to strip sellers of choice or force every transaction through a single channel,” he wrote. “The irony you pointed out actually proves the point: Brokerages are voluntary. MLS participation is mandatory if you want to access the market. There’s a fundamental difference between a business offering services and a monopoly gatekeeping the market itself.”

Johnson also echoed the the complaint, writing that the NWMLS board is almost entirely composed of competing broker-owners, “the very competitors who benefit most from locking down market access.”

“That’s not consumer protection,” he added. “That’s competitors writing the rules to protect their own market share.”

Windermere weighs in

Windermere Real Estate Services was one of the firms called out by name in the suit as a co-conspirator. Several executives from Windermere franchises are currently on the NWMLS board. 

In an emailed statement, Windermere President OB Jacobi said the firm was confused about mentioned in the complaint since it is a franchisor, not a brokerage. 

“We certainly do not hold six board seats, as we are not even a member of the Northwest Multiple Listing Service because we are not a brokerage,” Jacobi wrote.

“That being said, we have the utmost respect for the individuals from Windermere franchise offices and other brokerage firms who generously volunteer their time to serve on the NWMLS board and we have no doubt that they, and the NWMLS as a whole, have, and will continue to operate with integrity, transparency, and in the best interests of consumers.”

Jacobi added that he and his firm “vehemently disagree” with Compass’s stance on the actions of NWMLS. They feel that “what would truly be anti-client is a lack of transparency brought on by a blanket policy that encourages private listings, creating what amounts to a secretive network that only benefits the privileged few, and the Wall Street-driven brokerage looking to double-side sales for the benefit of their stock price.”

“That type of environment benefits neither buyer nor seller and especially hurts those from marginalized communities,” Jacobi concluded. “No one should be allowed to bully our industry into undoing decades of progress towards a more fair and equitable housing environment for everyone.”

Although NWMLS has not issued a statement about the lawsuit, it has posted several times on LinkedIn over the past few weeks to highlight a related message: “With NWMLS, buyers can see all home listings in one place. Exclusionary Listings? Buyers don’t have access to all property listings.”

In the courtroom

While many industry experts opined on the claims in the suit, others sought to dive into how the case may play out in court. 

According to Paul Rogers, a law professor at Southern Methodist University’s Dedman School of Law, Compass will have to check several different boxes in order to win.

“First, they have to prove that NWMLS is a monopoly,” Rogers said. “Then the second question is, what kind of conduct are they engaging in? Are they engaging in conduct which harms consumers, and are they using their monopoly power to maintain their monopoly by what we call exclusionary conduct?”

By getting that far into the antitrust analysis, Rogers said Compass will have to prove that the rules harming consumers are also harming competition. 

“What the plaintiffs have to show is that the consumers are harmed, and because they’re harmed, so are competitors,” Rogers said.

James Dwiggins, the co-CEO of NextHome and a fierce supporter of CCP, shared his thoughts on how the analysis may play out. Regarding the monopoly allegations, Dwiggins pointed out that there are roughly 500 MLSs in the U.S.

“Nobody is stopping anyone from starting their own,” Dwiggins wrote on LinkedIn. “There used to be over 1,000 of them, and all I hear is how the industry wants more consolidation to make things easier and less expensive. Compass just doesn’t like one of the rules.”

When it comes to Compass’s argument that NWMLS rules restrict “seller choice,” Dwiggins warned industry professionals to pay attention to four things if they want to promote a private or exclusive listing strategy to clients — steering, incentive, fiduciary and fair housing.

“Good luck convincing a jury you weren’t violating all of those when your marketing materials promote private exclusives, your disclosures don’t list all the potential issues, you’re being incentivized to push them, your preventing access to all homebuyers, and there are countless studies showing they take longer to sell and make sellers less money,” he wrote.

Dwiggins also thinks the suit will end up at trial.

And when it comes to the outcome of a potential trial, industry veteran and San Diego MLS CEO Saul Klein wrote that it “could have significant implications for consumer choice, industry disruption, and regulatory precedent, potentially reshaping real estate market dynamics in Seattle and beyond.”

“The case highlights the tension between innovative business models and the established cooperative principles of the MLS system,” Klein wrote.