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Although there are sellers who benefit by listing their properties privately, they represent only a small percentage of all homesellers. A large majority benefits the most by immediately listing their property on their local multiple listing service (MLS) so that the four major portals can quickly make the listing available to all potential buyers.
Moreover, there are effective measures these sellers can take if they are particularly concerned about privacy issues.
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If a significant number of sellers agree to private listings, most are likely to have been encouraged by agents who their brokerages are urging to push private listings. There is some evidence, for example, that some Compass agents are being pressed to do so.
Consumers, who typically lack experience dealing with a complex and opaque industry, are susceptible to a sales pitch that may well promise a higher sale price and a faster sale, both of which are claimed by Compass.
Opposite truths?
However, most of the available evidence on this issue suggests that the opposite is true. Separate research by both Zillow and Bright MLS on large numbers of listings found that homes listed on MLSs sold for higher prices than those privately listed.
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Research by Compass challenged this finding, but it was limited to the company’s listings and did not provide a satisfactory explanation of the methods, including sample sizes. All other factors being equal, why would a limited listing sell for a higher price than a broad listing?
On the buyer side, there is no debate. It is clearly in the interest of buyers to have access to full information about the largest number of properties available for sale, and not just because they would have more choices of properties. Some private listers are telling sellers that they do not have to provide information to buyers about sale price history and time on the market.
Let’s not forget this …
Furthermore, to the extent that large brokerages successfully list privately, buyers will feel that to obtain access to a large number of listings, they must work with these companies. A decision by many buyers to do so would disadvantage small and local brokerages.
There is a real possibility that determined private listing efforts by a few major companies could shrink meaningful consumer choice of brokers.
The new Zillow and Redfin policy of not listing publicly marketed properties to which they did not have initial access, may not weaken the determination of big private listers. However, it is likely to curb the enthusiasm of their agents who must explain to clients that a private listing may prevent a listing on the two portals.
I do not agree with some of the policies of the two portals, and I also recognize that their decision on private listings addresses a highly complex issue involving industry rules. Nevertheless, I still believe that their new policy will benefit consumers both individually and collectively.
Stephen Brobeck is a senior fellow at the Consumer Policy Center (CPC), a new consumer think tank. Since 1975, he has served as a board member then executive director and then senior fellow at the Consumer Federation of America (CFA). Since 1990, he has researched and commented on residential real estate brokerage issues.
