Location, Location, Litigation: The Antitrust Fight Over Private Listings
In the late 1800s, real estate agents gathered at local associations to exchange information about the homes they were trying to sell. The intuitive logic was that the best way to make a sale was to spread the word.
The real estate market has evolved considerably since then, but buyers and sellers, typically through their agents, are still trying to solve the same information problem. Buyers look for homes with specific features, such as location, number of rooms, and lot size, while sellers look for buyers whose preferences match the home they are selling. Real estate agents play a central role in this matching process by building a network that raises the likelihood of a timely sale.
Today, the leading real estate listing database is the Multiple Listing Service (MLS). It traces its origins to San Diego in 1885, when the local real estate board would distribute daily listings to its members. The MLS is not a single entity; it is composed of roughly 500 local real estate organizations, which are owned or controlled by brokers and associations in their respective territories. Members create the listings, while the regional MLSs distribute them to other agents and to public-facing websites such as Zillow, Redfin, and Realtor.com.
There are clear efficiencies from having a single, comprehensive database to economize on search costs and to raise the odds of a timely match. The tradeoff, however, is that, within a given territory, a viable second source of listings is unlikely to emerge. This raises the concern that whoever controls the listings data controls the terms of competition involving those listings.
This is exactly the issue at the heart of the recent antitrust dispute between Zillow, on one side, and Midwest Real Estate Data (MRED), a regional MLS serving the Chicagoland area, and Compass, the nation’s largest real estate brokerage, on the other. Zillow depends on MRED for listings in the Chicagoland area, where, according to Zillow’s complaint, MRED holds a 98% share.