How NAR, MLSs and Zillow use market power to serve themselves
Hans & Steve Wydler
Hans & Steve Wydler
Read the original article published on Inman here.
May 19, 2025
“When it comes to selling or buying a home, what you don’t know can hurt you.” That was the opening sentence of our 2012 book, Inside the Sell: Top Agents Reveal Unspoken Secrets and Dangers of Buying and Selling Your Home.
Back then, our goal was to expose the conflicting incentives, institutional laziness and bad habits baked into residential real estate — and help level the playing field between real estate professionals and prospective buyers and sellers.
Fast forward 13 years, and it’s clear consumers in residential real estate are facing a new wave of bad practices, but this time, the questionable behavior isn’t coming from individual agents — it’s happening at the industry level. “Organized real estate” entities, including the National Association of Realtors (NAR), local Realtor associations, local Multiple Listing Services (MLSs) and powerful listing aggregators like Zillow are instituting rigid new policies to protect their market dominance and economic self-interest.
Under the guise of fairness, transparency and consumer protection, these entities are striving to tighten their grip on real estate data and undermine consumer choice in the process.
The organized real estate entities paint consumers with a broad brush, but in residential real estate transactions, there are two groups of consumers, buyers and sellers (or renters and landlords). What’s “good” for one group may not be, and often is not, “good” for the other and vice versa.
Generally speaking, sellers want the freedom to market their homes in the manner they think will achieve the best result. They want the flexibility to craft custom marketing strategies with their chosen agents, without being forced into a homogenized distribution system that could weaken their bargaining position and ultimately diminish the value of their property.
Buyers, on the other hand, want access to inventory, and the ability to connect with an agent knowledgeable about the particular property, not a random agent who paid Zillow or another portal an advertising fee to intercept the “buyer lead.”
To really understand what’s going on and what your risks are, it’s time we go back “inside the sell” — because once again, what you don’t know can hurt you.
In 2020, the NAR implemented a new listing policy called the Clear Cooperation Policy (CCP), mandating that if a listing is marketed publicly in any way, it must be entered into the MLS within one business day. If a listing agent fails to comply, he may be subject to fines by the MLS (as much as $5,000 per occurrence) and suspension or expulsion from the MLS/NAR.
Following ongoing scrutiny and a reopened investigation by the Department of Justice, NAR has made some modifications to the CCP, although these were not directly mandated by a court order or settlement. In March 2025, the NAR announced a modification to CCP in which it gave listing agents the option to market their listings as a “Delayed Marketing Exempt Listing.”
While the change nominally gave sellers more choice, in reality, the modification ensured that Zillow and other portal websites continued to receive their treasured listing data.
To maintain control of the listing inventory they rely on to profit, local Realtor associations and their affiliated MLS’s require listing agents and brokers to get prospective buyers to sign ridiculously one-sided forms in a blatant attempt to scare/intimidate sellers into using the MLS.
Here’s an example of the form that our local MLS (Bright MLS) requires sellers in our market to sign with the listing paperwork.
In April 2025, Zillow jumped on board, announcing a “CCP-like” policy stating that “when a listing is publicly marketed to consumers — whether through a sign in the yard, an Instagram post or on a brokerage website behind the lure of exclusive inventory behind a consumer login — it must be submitted to a Multiple Listing Service (MLS) within one day and published on Zillow and other sites that receive listing feeds.”
Zillow’s penalty for failure to comply is that the listing would not be published on Zillow. To support its new policy, Zillow cited a 2021 study suggesting that off-market listings sell for approximately 1.5 percent less on average, although the study’s methodology and applicability have been criticized.
Major brokerages, including our broker, Compass, are opposing CCP and Zillow’s policy change, arguing that the NAR, the MLS’s and Zillow are restricting consumer choice to maintain and grow their market dominant positions.
To fully understand what’s happening, let’s look at the players:
To become an agent, a person must obtain a state license and then affiliate with a principal broker (e.g. Compass, RE/MAX, Sotheby’s, Keller Williams, Coldwell Banker, etc.) to legally transact.
There are approximately 2 million real estate agents in the United States, and over 300,000 principal brokers. Approximately, 4 million to 6 million homes are sold every year in the United States.
Needless to say, residential real estate at both the broker and agent level is highly competitive and fragmented. As an example, our broker, Compass, is the largest brokerage by sales volume in the United States, and has about 6 percent market share.
Approximately 75 percent of all licensed real estate agents are “Realtors”. To become a Realtor, an agent must join the National Association of Realtors (NAR), pay membership fees and agree to abide by the NAR Code of Ethics.
In most markets, an agent must join and pay the NAR, the state association and the local Realtors association through something called The Three Way Agreement in order to have access to listing information from the respective local MLS data and associated lockbox technology.
Approximately 500 local and regional MLSs act as cooperation platforms among participating brokers to share listing information within a specified geographic area. The vast majority of MLSs require any agent who wants access to the MLS to join the NAR and the agent’s local Realtor association.
Because each MLS is formed by a group of cooperating brokers, they almost always have dominant market share in their respective geographic area. Most MLSs operate as nonprofit subsidiaries of Realtor associations, although some have adopted for-profit models or have commercial arms.
Zillow Group, Inc. (Zillow), founded in 2006, built a free, consumer search engine by aggregating and homogenizing licensed data from the 500 MLS’s across the country. Zillow and its sister brands, Trulia, Hotpads, StreatEasy and Dotloop, claim to have 66 percent audience market share of unique “real estate” visitors (as defined by Comscore), according to a February 2025 Investor Presentation.
There are three buckets of value in the residential real estate industry:
real estate commissions
fees/dues extracted from the approximately 2 million real estate agents in the United States
real estate data.
This bucket usually commands the headlines in residential real estate and was most recently front page news with the 2023 Sitzer | Burnett class action lawsuit decision in which the plaintiffs were awarded $1.8 billion in damages, followed by the NAR settlement with the DOJ in 2024.
Brokers are free to structure their fee schedule anyway they like so there are a range of options from“discount brokers’ such as Redfin, who offer listing and buyer broker services a la carte or for a flat fee, to “full service” brokers who offer a bundled full service in exchange for a commission upon purchase or sale of a property.
Because of the importance real estate transactions have in our society, every state has its own licensing requirements.
In addition to paying the application fees and annual dues to the agent’s state licensing board, a real estate agent who wants access to the listing data must also join (and pay membership fees to) the NAR, the agent’s local Realtors association and the local MLS. These organizations have all the power and therefore, set the rules and create the payment structures.
While commissions grab the headlines and fees/dues fall under the radar, the true battleground for the future of residential real estate lies in the data. Let us explain.
When a listing agent obtains a seller client, the listing agent typically invests hundreds or even thousands of dollars in marketing collateral, including professional photography, videos, floor plans, marketing copy, features lists, site plans, etc. As a reference point, if each listing agent spends on average $500 per listing to develop this content, then collectively, listing agents spend between $2 billion and $2.5 billion each year creating the content that fuels the industry.
Once the data is created, the listing agent then uploads that information to their local MLS. The MLS maintains a searchable database of listing data from all the listing agents who “cooperate” within the MLS. Each MLS requires all member agents to agree to a non-negotiable “Terms of Service” agreement, which allows the MLS to license the listing agents’ data to third parties, including other brokerages, consumer-based search engines (e.g., Zillow, Trulia, Realtor.com, Homes.com, etc.) and others.
Here is how the industry players are monetizing the listing agents’ data.
The NAR is one of the largest and wealthiest trade associations in the United States with over 1.5 million members. The NAR makes money from member dues and therefore has a built-in financial incentive to increase the membership pool. While the NAR does not profit directly from listing agent data, it profits tremendously from the organizational monopolistic structure it has created.
An agent who wants to earn a living helping clients buy/sell real estate will need access to the MLS listings. To join the MLS, the MLS requires membership in NAR, the state association and the local Realtors association through the Three Way Agreement. Effectively, agents have no choice but to join the NAR, state association and the local Realtors affiliate, as well as agree to the non-negotiable Terms of Service of its local MLS.
Because each MLS represents a group of brokers in a given geographic area cooperating to share listing data, each MLS is essentially a local monopoly in its respective market. Agents must pay a fee to join the MLS.
When an agent has a listing, he will upload his content to the MLS . The MLS makes additional revenue by licensing the agents’ listing data to third parties (including participating brokers, consumer search aggregators like Zillow, and other third parties).
That’s right, the MLS makes money both ways: the MLS gets paid to collect the data and they get paid to license the data to third parties in perpetuity. It’s an incredibly lucrative business model, and while some monopolies are non-profit consortia, others are highly profitable, for-profit private companies.
The listing agents, on the other hand, retain no residual value in the content they have created. The listing agents’ content is what the industry players are going after. The value of that data is enormous and will only grow with artificial intelligence and its need for data to train the AI models.
Zillow aggregates listing agents’ listing data from all the MLSs and consolidates them into one consumer-based search engine that is free to consumers. This begs the question: How does Zillow make money if it’s paying to license the data and then giving it to consumers for free? The answer is Zillow does something incredible – it sells real estate agent data back to real estate agents.
More specifically, Zillow disaggregates the listing information from the listing agent and sells “leads” to real estate agents looking to get clients. The vast majority of listings on Zillow have a large “contact agent” button next to the beautiful pictures of the house. The contact agent button goes to an agent who literally paid to have that affiliation with someone else’s listing.
If a listing agent wants to be exclusively associated with his own listing, Zillow requires the listing agent to pay hundreds to thousands of dollars per listing for that privilege. Zillow makes most of its revenue through advertising and lead-generation tools.
Another way to understand the value of the aggregated data is to consider the market caps of the top 3 publicly traded residential brokers in the United States. Compass, eXp Realty, and Anywhere Real Estate have a combined “market cap” of under $6 billion while Zillow’s “market cap” stands around $14 billion — highlighting the disproportionate value captured by the aggregators. That’s right, Zillow built a $14 billion business off the backs of listing agents’ data.
In defense of their new policies, the NAR and Zillow claim that they are a “win for consumers”.The NAR stated, “Brokers and MLSs from across the country asked the NAR to consider policy that will reinforce the consumer benefits of cooperation. The MLS creates an efficient marketplace and reinforces the pro-competitive, pro-consumer benefits that Realtors have long sought to support.”
The core premise under which the NAR, the MLS’s and aggregators like Zillow operate is that mass exposure always benefits the seller. The common refrain goes something like this: “Sellers sell faster and for more money by exposing their homes to the largest possible pool of buyers.” The organized real estate entities make statements like this one as though they are unassailable facts.
As anyone who ever took high school economics knows, the intersection of supply and demand determines price.That being said, the NAR, the MLS’s and Zillow want you to believe that exposure on their platforms is the equivalent of demand.We can tell you that it’s not.
So if a listing agent is not going to use the MLS to sell a home, the alternative is known as a “private exclusive” — a property marketed through “private channels” outside of the MLS.
Initially, we were critical of private exclusives because of the risk and temptation for agents/ brokerages to use them in order to increase their chances of double-ending deals (representing both buyer and seller and thereby increasing their compensation).
We outlined these dangers in our book Inside the Sell. Specifically, we highlighted the financial incentive for listing agents to engineer the release of information in a way to maximize the probability of the listing agent’s selling the listing without a cooperating buyer agent/broker or keeping the deal with their own brokerage.
However, over 20+ years, we’ve seen that, when done ethically and strategically, private exclusives can offer significant advantages for sellers:
The best brands in the world keep tight control of their brand and messaging. Every home is unique, and sellers want the ability to highlight the unique selling features of their home. In real estate, third-party aggregators undermine this control and often strip, reformat, and dilute a listing’s marketing materials.
Even worse, the aggregators often layer additional unverified information and ratings. Zillow, for example, displays unverified and subjective flood risks, climate risks, walk scores, bike scores and the worst of all, the “Zestimate” (Zillow’s algorithm for a property’s fair market value). Prospective buyers may be passing over properties due to inaccurate/misleading information on a listing that neither the homeowners nor the listing agent may even be aware of and do not have the control to update, correct or remove the data.
Similarly, the best brands tightly control their distribution channel(s) and also ensure that only trained professionals knowledgeable about the product speak to prospective buyers. The aggregators would have you believe differently.
There is a reason you can’t walk into a Target or Walmart to buy a new Rolex. New Rolex watches are exclusively sold by authorized retailers. These jewelers are the official distributors of Rolex watches, ensuring authenticity and quality standards. Selling outside of these channels would cheapen the brand irreparably.
On platforms like Zillow, prospective buyers are intentionally diverted away from the listing agent to other agents willing to pay for a buyer lead. These “pay to play” agents, more often than not, have never seen the home in question, may not be familiar with the home’s community and are certainly not the most qualified person to answer questions about the property.
The objective of these agents is not necessarily to sell the property inquired about but rather to acquire a new client. A common tactic of these agents is to make negative comments about the property in question in an effort to build credibility with the prospective client.
Not every seller wants their home publicized across hundreds of websites.
Private exclusives allow sellers to conduct price exploration and test positioning strategies before a home is listed on the open market. The top marketing companies in the world test products before a national launch (focus groups, beta tests, limited market rollouts, etc.). Private exclusives are the real estate equivalent.
Days on market (DOM) is one of, if not the most, important points of leverage between sellers and buyers. Long DOM is the enemy of the seller because buyers see a long DOM as an opportunity to make lower offers. Said differently, when DOM increases, buyers worry there is an inherent flaw with the property and become concerned about future liquidity when it is their turn to sell.
Why would a seller want to use a platform that displays such a potentially harmful statistic? There’s a reason why dating apps (like Tinder, Hinge, etc.) don’t have “days on market.” If a dating app included a DOM field, we suspect no one would use it.
The NAR, the MLS’s and Zillow often make a classic economic argument regarding supply and demand. They suggest that increased exposure of listing information across many websites equates to more demand for a property. Mass distribution doesn’t necessarily create demand.
Behavioral economics suggests that people value information higher when they believe it’s not public. Robert Cialdini, author of the groundbreaking book Influence: The Psychology of Persuasion, points out that people tend to want more of those things they can have less of.
In other words, not making a property available through the MLS (and the listing aggregators), in and of itself, can drive higher perceived value.
Intentional scarcity is one of the key reasons Hermès can command over $30,000 for its acclaimed Birkin bag.
If the industry players want consumers and agents to use their platform, they should earn it by delivering value — not by rigging the rules, using scare tactics and hiding behind false claims of consumer protectionism.
Because when it comes to buying or selling a home, what you don’t know still can hurt you.
Steve and Hans Wydler are Associate Brokers who lead Wydler Brothers of Compass in the greater Washington, D.C., metro area
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Wydler Brothers have been selling residential real estate for over 20 years in the DC metro area. Along the way, they’ve achieved numerous awards and recognitions, including being recognized as “The Most Innovative Real Estate Agent in America” (Inman, 2014), written several articles for The Washington Post, authored a book, “Inside the Sell”, co-founded a real estate tech company which sold to Move, Inc. in 2013, and built Wydler Brothers into a highly respected boutique brokerage with 70 agents and employees which they sold to Compass in 2019. Currently, Wydler Brothers is among the top 3 teams in the DMV and was the #1 Compass Team in 2022.