Midwest Real Estate Data (MRED) has fired back against allegations made by Zillow that the MLS’s private listing network (PLN) could expand “digital redlining.”
According to MRED, the MLS takes fair housing “very seriously,” as it noted that it has “rules and processes in place to scan all private and active listings for violations.”
“MRED launched the PLN in 2016 to make all properties available to all agents and brokerages across the market. We want to prevent the use of shadow networks off the MLS that could lead to discrimination and exclusion,” the statement reads.
The response comes after Zillow published an analysis in which it found that homes in majority-white neighborhoods in Chicago are more than twice as likely to be listed privately than homes in majority-non-white neighborhoods. The analysis was based on an examination of over 40,000 residential listings active on Oct. 21, in the MRED platform and distributed via MLS GRID.
Zillow’s internal planning and strategy documents
MRED’s response cites some of Zillow’s internal planning and strategy documents, which were made public on Friday by Compass CEO Robert Reffkin. Compass obtained these “highly confidential” documents during discovery in its lawsuit against Zillow, and it presented them as evidence during a hearing last week for Compass’s preliminary injunction motion in the suit.
Zillow’s “Strategy Synthesis” documents, which Reffkin posted on social media on Friday, includes statements such as “everything about the hardline plan assumes we can be successful at using a hammer to keep sellers and agents on our site,” and “we want to punish the agent for choosing to put their listing on alternate networks.”
According to the planning documents, the goal of Zillow’s “hardline strategy” was to get sellers to switch agents or agents to switch brokerages to ones in favor of putting listings on Zillow. One of the tactics Zillow listed to help facilitate this plan was to “mobilize local and national organizations to publicly warn brokers and agents on the fair housing risks of reduced access to real estate information.”
Given this context, MRED wrote in its statement that it is “not surprising” that Zillow conducted a one-day study in the Chicagoland market that attacked MRED’s PLN.”
“Notably, Zillow’s strategy document does not explicitly mention protecting Fair Housing principles, outside of using it as a tactic in its ‘Model Market Playbook’,” MRED wrote.
MRED: ‘All members have access to the PLN’
Although MRED feels these strategy documents show that Zillow wants to punish agents for choosing to put their listings on platforms like MRED’s PLN, the MLS said it is “proud of the steps we have taken to support all business models in our MLS to work together.”
MRED noted that all members have access to the PLN, meaning that no matter which neighborhood or area an agent works in, they can see all of the private listings throughout MRED’s service area.
The MLS said it has reached out to Zillow for specifics about its methodology, but it noted that there are three times as many active listings in majority white zip codes as non-white zip codes and that it felt the analysis did not seem to account for other factors, such as rentals and off MLS transactions (including their own For Sale By Owner properties).
Additionally, MRED noted that iBuyers and institutional investors heavily target non-white majority neighborhoods, who ultimately turn those properties into rentals. MRED cited an MIT study about iBuying, which claimed that “seller vulnerability could play a role, as homeowners in these communities may be more likely to accept below-market offers due to financial strain, lack of savings for repairs, or the need for immediate liquidity.”
“In our opinion, Zillow’s approach in Illinois and its recent criticism of MRED’s PLN appears to be driven less by data and more by a cynical strategic objective: securing control over listing distribution to protect its revenue,” the statement read. “Their criticism of MRED’s PLN does not seem to be about protecting consumers or advancing fair housing. It appears to be part of a broader strategy to secure complete control of listing distribution and undermine the cooperative foundation of MRED.”
