Compass CEO Defends Private Listings Amid Congressional Probe

Compass CEO Robert Reffkin staunchly defended the brokerage firm's strategy of utilizing private listings, referred to as Private Exclusives, during the company's earnings call on Tuesday night. This defense comes as a congressional subcommittee has initiated an investigation into Compass's collaboration with Midwest Real Estate Data (MRED), a Chicago-based multiple listings service, to establish a national network for private property listings. Reffkin highlighted the demand for these exclusive listings, stating, “How many tens of millions of people do you need to see your property? That’s why we’re getting so much traction, and we’re seeing a lot of demand for the Private Exclusives as well.”

Compass, which positions itself as the world's largest residential real estate broker, has made private listings a cornerstone of its business model. These Private Exclusives are properties marketed primarily within Compass's internal network of agents and clients before being broadly advertised to the public online. The congressional inquiry gained momentum in April when Compass and MRED announced a partnership to distribute Compass's Private Exclusives listings across the United States via the MRED database. Historically, MRED has functioned as a regional service, making this national expansion a significant development.

Congressional leaders, including Rep. Scott Fitzgerald (R-WI), chair of the House Judiciary Subcommittee on the Administrative State, Regulatory Reform, and Antitrust, formally requested a briefing from both Compass and MRED regarding their business practices. The deadline for this briefing was set for 10 a.m. on August 5. MRED had previously indicated its intention to cooperate with the inquiry, stating in a late-month statement to Realtor.com, "MRED has received the House Judiciary Committee's request for a briefing. We look forward to responding and helping the committee understand our business practices." However, MRED did not respond to requests for further comment after the August 5 deadline passed.

The congressional probe focuses on the implications of private listing networks, which critics argue can limit market transparency and competition by restricting access to property information. Compass's strategy of prioritizing its internal network for initial marketing of these properties has drawn scrutiny from lawmakers concerned about potential anti-competitive effects. The company's emphasis on Private Exclusives suggests a belief that this approach better serves sellers by targeting a more qualified pool of buyers and potentially achieving better sale terms, while also fostering loyalty within its agent and client base. The outcome of the congressional investigation could influence future regulations or industry practices concerning how real estate listings are shared and accessed.