On Thursday, Sen. Elizabeth Warren (ranking member of the Senate Banking Committee) and Sen. Cory Booker (ranking member of the Senate Judiciary Subcommittee on Antitrust) sent a letter to FTC Chair Andrew Ferguson asking the agency to investigate "anticompetitive and deceptive practices" in the online home-buying market. The letter builds on the FTC’s August 24 stipulated order in its case against Zillow and Redfin, which requires Redfin to reenter the online rental listings market after Zillow paid it to exit. The senators now want the FTC to take that scrutiny from rentals into home buying, and they flag three practices:
1. “Contact agent” routing. Buyers who click “contact agent” on a listing may be sent to platform-affiliated agents who pay the platform a cut of their commission, and that arrangement often isn’t disclosed, the letter writes. The letter points to Zillow’s Flex program, where referral fees have been reported as high as 40%.
2. Steering to affiliated lenders. The senators say platform-affiliated agents are often required to send buyers to in-house mortgage lenders without disclosing it. The letter cites reporting on Zillow Home Loans and agents’ concerns about RESPA.
3. Private listings. Large brokerages are increasingly keeping inventory off public platforms. The senators argue this shrinks buyer access and can hurt sellers’ price discovery. The footnotes cite the Compass v. Zillow lawsuit and the Compass-Anywhere merger.
With legal fights against Compass and other rivals piling up, and political pressure building in Washington, Zillow is entering a precarious stretch.