Exclusive Inventory Update And Zillow’s Catch-22

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Over the past several months there have been big moves in the battle over exclusive inventory, including enforcement, a lawsuit, and listing bans – plus a surprising change in the number of exclusive listings.

Why it matters: The battle over exclusive inventory, led by Compass and Zillow, is a major POWER MOVE that has the potential to shape industry strategies and power dynamics for years to come.

Zillow responded by announcing new listing access standards which could lead to a possible ban.

  • In short, if a home is publicly listed for sale in a private network, it will never appear on Zillow.
     

  • The assumed goal is to reduce the amount of exclusive listings not appearing on Zillow, and to do that, Zillow needs to change agent behavior (with the threat of a listing ban).

 
 

Assuming the goal is to change agent behavior and reduce exclusive inventory in the market, the metric to watch is the number of Compass exclusive listings.

  • And here’s where it gets interesting: the number of Compass exclusive listings since Zillow began enforcing its policy is UP – by over 1,300.

 
 

This raises a number of questions: is Zillow’s threat of a ban working? Is it still too early to tell? Is this not the metric to watch?

  • Furthermore, Zillow faces an interesting dilemma related to Compass’s lawsuit, which alleges Zillow’s actions are actively harming its business.
     

  • Zillow’s catch-22: aggressively enforce its listing ban which validates Compass’s lawsuit, or go light and risk a rising tide of exclusive inventory.
     

  • In the 30 days before Compass’s lawsuit, its exclusive inventory was declining an average of 0.3 percent per day, and in the 30 days after the lawsuit it rose an average of 0.1 percent per day (it is now rising an average of 0.4 percent per day).

 
 

The bottom line: Zillow may be willing to lose today’s battle in order to win the war.

  • There’s some intense strategic jiu-jitsu at play here, with big stakes, and the real insights and intelligence lie well beyond the headlines.
     

  • For the time being, the exclusive inventory battle resembles WWII’s phoney war as the rhetoric from both sides far eclipses any actual changes.