Zillow just dealt a big blow to Compass — but it may be too little too late

Search for a home on Compass.com, the website of America's largest real estate brokerage, and you'll find a familiar layout: a map of available homes, a bunch of price tags, a lineup of shimmering kitchens and golden-hour facades. It all looks a lot like Zillow, the near-ubiquitous home search site.

There is one key difference between Compass' site and Zillow, though: a prominently displayed black box.

Behind the black box sits a heap of listings beyond Zillow's reach, so-called "Private Exclusives" that can only be seen with the help of a Compass agent. The intrigue is undeniable: "Unlock 347 (8%) more homes you won't find anywhere else," the box urges when I search in the Austin area. In Los Angeles, there are apparently 366 homes that can only be unearthed by contacting Compass. New York City boasts nearly 450 homes you can't find on Zillow, Realtor.com, or any other home-search portal.

Each of these homes is technically in violation of Zillow's hotly debated "Listing Access Standards," rules the search giant unveiled last April to crack down on agents — many of them at Compass — sharing homes in some places but not others. The country's most popular home-search portal has gone so far as to ban some listings from its vaunted website, which Zillow says is necessary to stem the rising tide of exclusive listings and preserve a fair and open marketplace: "If a listing is online, it should be online everywhere," begins one of the company's blog posts.

The ban prompted a swift legal response from Compass, which sued Zillow in federal court, claiming the search site was using its monopoly power to quash competition. Compass may not want its listings on Zillow right away, but it does want them there eventually: CEO Robert Reffkin has likened the "private exclusive" phase to a movie trailer that drums up hype before a wider release. If Zillow bans listings, that wide release loses its luster.

On Friday, Zillow scored an early victory in the legal battle: A judge denied Compass's request for a preliminary injunction, which would have forced Zillow to stop enforcing its new rules. Compass' lawyers failed to show that Zillow is actually a monopoly, the judge concluded, so the so-called "Zillow Ban" lives — for now.

The judge's ruling is a big step in the real estate listing war, but the future of home search still looks murky.

For one thing, it's not even clear that Zillow really wants to enforce its own rules. Under the company's Listing Access Standards, agents who market a home publicly — posting a sign in the front yard, advertising the listing on their brokerage's website, or merely teasing its existence via Compass' black box — have one business day to share the home with everyone or risk having it blacklisted from Zillow. During the injunction hearing, though, the company revealed that it had sent about 1,200 warnings and banned just 50 homes from its site over a roughly four-month period last year. Internal documents also showed executives fretting over the risks of turning away agents and their listings. It's not a great look for the biggest name in home search to openly admit that it can't — or won't — show you every home for sale. Zillow may keep up its tepid enforcement of the ban, and it may very well deter some agents, especially those reliant on Zillow's reach, from following Compass' lead. But it won't stop these "exclusive listings" from proliferating.

"Zillow's not going to go out and ban thousands of listings," says Mike DelPrete, a tech strategist and scholar-in-residence at the University of Colorado Boulder. "They'd be shooting themselves in the foot."

In the meantime, Compass just keeps getting more powerful. Since the courtroom proceedings in November, the company has sidestepped regulatory scrutiny (thanks to some savvy politicking) to close on its acquisition of the second-largest brokerage in the US, Anywhere Real Estate, which owns household names like Corcoran, Century 21, and Coldwell Banker, among others. The combined company, including franchisees, would account for almost a quarter of nationwide home sales volume based on last year's figures, according to an analysis by T3 Sixty, a real estate management consulting firm. More agents mean more listings, which makes Compass' stockpile of exclusive homes all the more valuable. If Compass continues to advertise listings only on its own platforms — in internal databases or simply on the public-facing side of its website — it could attract even more agents and clients by promising them an edge in home search. "Come here," the pitch goes, "and you'll get access to a VIP room filled with the area's hottest listings." As one longtime real estate executive told me last year, "Listings are fuel."

The legal setback doesn't amount to a total loss for Compass. Its antitrust case against Zillow will continue to wind its way through the courts, and the company could still prevail in a jury trial. Or Compass could simply decide to pursue its vision regardless of the courtroom result. "We'll never give up," Reffkin, Compass' CEO, told me at company headquarters late last year, when I pressed him on the possibility that the legal battle doesn't go his way. Even if Zillow blocks some listings from its platform, Compass may plow ahead under the assumption that buyers and their agents will gravitate toward any place that offers them a leg up in their home search. And while Zillow may come out on top in the courtroom, the underlying state of play probably won't change. Compass still maintains thousands of home listings that are unavailable on other search portals. Other big brokerages are following suit, building up their own stockpiles of exclusive inventory in preparation for a world in which listings are more closely guarded rather than shared broadly from the get-go.

If you're looking to buy a house, this reality could make choosing an agent all the more fraught. Not only will you have to gauge their grasp on the local market or their negotiating chops, but you'll also have to consider how many listings you could gain early access to by choosing their brokerage. Some agents have always been able to unlock more inventory than others, via "private listing networks" or chummy relationships with potential sellers in the area. But if brokerages encourage more of their agents to share homes internally before making their broader debut, bigger companies like Compass could gain a decisive advantage, particularly in markets where they control a significant share of listings. This shift could make it more difficult to shrug off an agent and go it alone, or weaken your negotiating position if you want to bargain down your agent's fees. It also raises the real possibility of house-hunting FOMO: Even if the vast majority of these listings are eventually shared everywhere, you may have already missed the chance to be first in line for your dream home.

For now, these are still mostly hypothetical — the judge's ruling on a Friday morning didn't alter the status quo. It did, however, offer a preview of the messiness to come: more legal barbs, more blog posts, and, most importantly, more listings squirreled away in private databases or posted beyond Zillow's reach. Homebuyers, take note: The old way of searching for homes is fading fast.

James Rodriguez is a correspondent on Business Insider's Discourse team.

Business Insider's Discourse stories provide perspectives on the day's most pressing issues, informed by analysis, reporting, and expertise.