End of Clear Cooperation Has Allowed Brokerages to Create More Brand Value

• First dibs: Compass is quietly gaining ground by exploiting a loophole in MLS rules—marketing listings to its own network before the public ever sees them.

• Suite surrender: Conversions and demolitions are finally shrinking America’s decades-old office glut.

• Door fee: Opendoor is settling a $39 million lawsuit over claims it misled investors about its AI pricing algorithm.

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Editor’s Pick

End of Clear Cooperation Has Allowed Brokerages to Create More Brand Value

Zillow bans pre-MLS listings and is building software to detect them

The cornerstone of the nation’s most powerful trade group, the National Association of Realtors, has been an agreement stating that any new listing must be put on a local listing service within 24 hours of it being marketed to the public. After a number of expensive lawsuits, NAR has changed the rule to allow for “delayed marketing exempt listings,” which is designed to give more options to sellers. Now brokerages are using this a loophole to push pocket listing through their own network of buyers before putting them on the open market.

One of the companies that has benefited from the “delayed marketing exemptions” is Compass. According to a recent article, around 48% of Compass’s clients agree to their “three phased marketing strategy” that includes first pushing the listing to its own agents, then marketing the property as “coming soon,” before then publishing on the local MLS.

The strategy helps Compass, which is now one of the largest residential brokerages by sales volume, leverage its size into brand strength. Buyers and sellers working with Compass now have access to deals before others will. The move has worked so far. Compass continues to gain market share of residential transactions and its stock price continues to bounce back from its lows in 2022 (albeit still a far cry from its $8.2 billion valuation it had when it IPOed).

With the MLSs standing down on their enforcement of the clear cooperation agreement, the fight has now been taken up by the online listings portals. Zillow has already banned listings that are marketed before being put on an MLS and is reportedly building software to help them find properties and agents that do so. There is immense value in being the first place that listings get published, now the fight for that value is playing out between the new real estate heavyweights, large brokerages and online listing portals.

Overheard

Office Glut Is Finally Shrinking Amid Conversions and Falling Values

After decades of relentless office construction, the U.S. market is finally seeing its office glut shrink. According to CBRE, office supply is on track to contract in 2025 for the first time in 25 years, as developers demolish outdated buildings and convert others into apartments. Conversions, which were once cost-prohibitive, are becoming economically feasible due to falling property values, revised zoning codes, and generous tax incentive programs.

In New York City, approximately 40 million square feet of office space is expected to be converted into residential space over the next five to ten years, a doubling of the estimate from two years ago. Projects like developer Scott Rechler’s 5 Times Square redevelopment—adding 1,250 apartment units—are emblematic of this shift. Rechler secured a 90% tax abatement and purchased the 1.1 million-square-foot office property at a 40% discount from its 2019 value.

Even with these conversions, the national vacancy rate remains high at 19%. But leasing activity is recovering as more tenants bring workers back to the office, and investor interest returns. Blackstone recently reentered the office market with a $1.4 billion deal in Midtown Manhattan, encouraged by falling vacancy rates on Sixth Avenue. Along with a deal in San Francisco earlier this year, it was Blackstone’s first major office transaction since 2022.

While the office market isn’t out of the woods yet, the long-avoided reckoning is finally underway. With demand stabilizing and obsolete buildings exiting the market, a leaner, more resilient office sector may be taking shape.

Opendoor Settles With Investors Over “Misleading” Claims About Its Pricing Tech

Opendoor has agreed to pay $39 million to settle a class action lawsuit brought by investors. According to the court motion for preliminary approval, "The Complaint alleged that Defendants made materially false and misleading statements and omissions with respect to Opendoor’s proprietary AI-powered pricing algorithm and its ability to dynamically adjust to changing market conditions in the Offering Documents issued in connection with the de-SPAC Merger."

The outcome was reached through a mediator, so Opendoor will not have to admit any wrongdoing. The motion explained that, due to the complicated nature of the technology, the plaintiffs would have had difficulty proving that statements were misleading.

"Defendants would likely argue that Plaintiffs could not prove that Opendoor’s algorithm could not 'dynamically adjust' to changing market conditions at the time of the statements and that prior to the Offerings, there is no evidence that the algorithms were not performing as expected," the motion said. "Similarly, Defendants would also likely argue that Opendoor expressly warned its investors that it could fail to appropriately price homes due to a wide range of factors, including changes in macro and micro-economic conditions. These facts, if accepted at trial, could significantly assist Defendants in establishing a knowledge defense."

Now Opendoor can put this case behind it and focus on what is likely a much larger issue, its falling revenue. The low real estate transaction volume has push Opendoors revenue down from $15 billion in 2022 to $5 billion in 2024. It hasn't been all bad news for Opendoor investors, there was an uptick in activity in the fourth quarter of 2024 and the company has been able to reduce losses by increasing operational efficiency. If transaction volumes increase and home prices rise, Opendoor will be poised to show exactly what its pricing algorithm is capable of.

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