Conflict over open access versus limited, private entries: The heated debate surrounding private sales
In the realm of real estate, the debate over private or off-market home listings has been a hot topic. On one side, the appeal of privacy and control for sellers is undeniable. On the other, the call for market transparency and fairness resonates strongly.
Recent research suggests that homes sold on the Multiple Listing Service (MLS) fetch higher prices than off-market properties. However, private listings, often referred to as pocket or exclusive listings, offer sellers the chance to keep their home sale discreet, showing it only to a select group of buyers. This can be particularly appealing to high-profile clients or those who value privacy [4].
Yet, the practice of keeping listings off the MLS is not without criticism. One of the main concerns is the limited exposure to potential buyers. By restricting the pool of potential buyers, fewer offers may be generated, potentially leading to a lower sale price. Most sellers aim for maximum exposure to secure the "highest and best price" [2].
Moreover, private listings can create an uneven playing field, preventing some buyers from accessing opportunities. This could foster unfair housing practices and contribute to market opacity [4]. Additionally, private sales are not public, making it difficult to use them as comparables for appraisals. This uncertainty can lead lenders to charge higher fees or limit loan options [2].
Industry standards and leading platforms are pushing back against off-MLS listings to promote fairness and liquidity in the housing market. Organizations like the National Association of Realtors (NAR) have policies requiring listings that are publicly marketed to be entered into the MLS within one business day. Large platforms such as Zillow also refuse to display homes that are not submitted to MLS quickly [2][4].
eXp CEO Leo Pareja voiced his opposition to the decision by Compass to forego sharing its listings with local MLSs, stating it is bad for consumers and will continue to stand against anything that hides listings or restricts access [4]. Hilary Saunders, co-founder and chief broker officer at Side, argues that the majority of sellers should market their property to the highest number of buyers possible to get the highest price [4].
Not promoting a home to every agent and every prospective buyer is seen as a dereliction of a brokerage's fiduciary duty to the home seller. Pareja is also concerned about the implications of private listings, including the inability to use them as comparables, which could make appraisals difficult or inaccurate, and cause lenders to charge higher fees or not offer low-down-payment loans [4].
In conclusion, while brokerages may keep listings exclusive to provide privacy and control, this practice is widely criticized for reducing buyer access, harming market transparency, and potentially lowering sale prices. The call for fairness and liquidity in the housing market is pushing for broader market access and transparency [2][4]. Today's homebuyers and sellers demand and deserve nothing less.
- Despite the appeal of private listings for sellers seeking control and privacy, concerns about limited exposure to potential buyers, contributing to an uneven playing field and market opacity, have led industry standards and leading platforms to urge against off-MLS listings.
- In the housing market, the practice of keeping listings off the Multiple Listing Service (MLS) can lead to higher fees or limited loan options from lenders due to the uncertainty caused by lack of public sale data, a concern for both industry leaders and advocates for fairness and market liquidity.
