Private listings just got real: State regulators have entered the chat

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Right now, the real estate industry is duking it out — in courtrooms, in op-eds, in comment sections and behind closed doors. Everyone seems to be talking about market access, control and consumer choice.

But there’s another group in the room. One that isn’t yelling or scrambling to win the argument. They’re listening. They’re observing. And they’re preparing.

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I just returned from the Arello mid-year meeting, where I had the opportunity to deliver a keynote to state regulators from across the country. It was a wonderful departure for me because I am usually teaching an audience full of agents about the value of compliance and how to execute it.

By contrast, these distinguished state regulators didn’t just receive the memo — they wrote it, lived it and enforced it.

Notably, these officials aren’t caught up in the drama of residential real estate. They’re focused on the fundamentals: compliance, consumer protection and how to evolve their oversight in a fast-changing industry landscape.

They sat in sessions about the Clear Cooperation Policy (CCP), Private Listing Networks (PLNs), seller discretion, and potential buyer disadvantage. They explored the National Association of Realtors’ (NAR) new Delayed Marketing Exempt Listing status, as well as Zillow’s recent policy: a listing available to any consumer should be available to all consumers.

In fact, these regulators even heard arguments on both sides, some invoking “seller choice,” others advocating for complete transparency and access. But regulators don’t need to get bogged down in the fight. Their role is quite different.

They’re here to protect the public. They don’t just say their north star is the consumer, they have laws to enforce that mandate it. And listen: They’re paying close attention to how these issues are unfolding.

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In my talk, I urged regulators to focus on what I refer to as the common denominators that still govern this business, regardless of policy shifts and new practice rules: fiduciary duty, disclosure and broker supervision.

These aren’t just buzzwords. They are the legal pillars that support every licensee’s practice and bestow upon it a badge of requisite duty and care that must be worn throughout every client engagement. And if brokers lose or misplace that badge, or if their agents do, that’s when liability enters the picture.

Who’s behind door No. 3?

Here’s the deal: All this time, we’ve been focused on Door No. 1, where the NAR sits, hoping they’ll solve the industry’s transparency problem by either strengthening or repealing the Clear Cooperation Policy. Then there’s Door No. 2, the Department of Justice, with its sweeping statements and antitrust scrutiny, capturing headlines and rattling cages.

But almost no one’s been looking behind Door No. 3: the state regulators.

Quietly and methodically, they’ve been watching. And unlike the others, they don’t need a new lawsuit or a policy overhaul to take action. They’re already empowered by statute. They have the authority, the access, and in many cases, the will to act. To hold bad actors accountable. To educate the public. Not through lobbying, but through enforcement.

Sometimes, it only takes one investigation to spark a fire. One that spotlights unlawful conduct, consumer harm, fair housing concerns, or breaches of fiduciary duty. In other words, the moments when an agent’s or broker’s financial incentives were put ahead of their clients’ best interests.

Imagine a DRE investigation

I have written a piece about the line of questioning that might arise during a regulatory review of an off–multiple listing service listing, commonly referred to as an off-MLS listing. I even curated an imaginary courtroom scene to make a point.

But after having spent some valuable time with regulators, I was reminded that their enforcement teams are the ones on the street, learning in real-time how this is all playing out — or where agents are failing.

Here’s a potential scenario to consider: An investigator walks into a broker’s office, without warning, and speaks to the Broker of Record or office manager.

Even simple questions like these could cause a light sweat from whoever’s being asked:

1. Office policies and business strategy

• Do you have any policy covering off-MLS listings? If so, please provide a copy.
• Can you explain your brokerage’s off-MLS policies in detail?
• Please provide all advertising materials, scripts, and listing presentations used by your agents that reference or promote off-MLS listing strategies.
• The Department is informed that you recommend sellers engage in a pre-marketing strategy that may not result in the property being listed on the MLS at all. Is that accurate? Please explain.
• What is the rationale behind your pre-marketing strategies?
• Do your seller clients request or direct that their listings be kept off the broader market, or are your off-MLS listings the result of a broader brokerage strategy? Please explain.
• How does your brokerage supervise off-MLS listings and sales? Please provide a copy of any established policies, procedures, rules, and systems used to oversee and manage the firm’s real estate activities and overall brokerage compliance.

2. File review and listing data

• How many listings have been marketed off the MLS so far this year? Please provide a copy of all listing files where properties were initially marketed off the MLS, along with contact information for all parties involved.
• Do your off-MLS listings include listing data such as days on market (DOM) or price change history?
• Do you represent buyers in connection with off-MLS listings held by your brokerage?
• Do you disclose to these buyers that DOM and price change history are not available?
• Do the buyers you work with understand that key listing data has been withheld?

3. Disclosures and dual agency practices

• Please provide a copy of the disclosures you provide to sellers regarding off-MLS listings.
• How many off-MLS listing sales have resulted in dual agency this year? Please provide a copy of all completed sales files where your brokerage acted as a dual agent.
• Do you have any written policy on dual agency? If so, please provide a copy.
• Do you train your agents on dual agency practices? If so, please provide a copy of your training materials.
• When the brokerage acts as a dual agent, can you explain, in compliance terms, how disclosure was provided and informed consent obtained? What was done for both sides?

These aren’t abstract hypotheticals. These are the kinds of questions that surface when regulators start looking closely.

Of course, not every off-MLS listing is problematic.

If the strategy was truly driven by a seller’s individual preference or need, not pushed or packaged as a default, then the evidence will set the brokerage free. The disclosures will reflect informed decision-making. The file will speak for itself.

And when that happens, regulators can see that the brokerage upheld its fiduciary duty, prioritized the client’s best interest and did not sacrifice transparency for the sake of convenience, control or financial self-interest.

But when that narrative doesn’t hold, when the rationale for avoiding the MLS looks more like a business strategy than a client-specific need, that’s when real trouble begins.

Brokers and agents, don’t mistake business creativity for legal immunity. The strategies you adopt now may look sharp on a listing pitch deck or boost your company’s bottom line, but they can just as easily look suspect in a regulatory file.

A good rule of thumb in the regulatory world is this: One consumer complaint might be a “one-off,” a hiccup or a random fly in the ointment (something that can be explained away or defended). But when those complaints start to multiply and full-scale marketing plans clearly show that off-MLS listings have become the company norm rather than the client exception, patterns of unlawful conduct begin to emerge.

Regulators love a good pattern. It makes their job much easier and significantly weakens any brokerage’s ability to mount a credible defense.

And here’s the thing: Consumers don’t know what they’re not being told. But regulators do. And maybe — just maybe — they’ll be the ones who ultimately decide this debate about the CCP and PLNs.

Let’s be clear. It’s state regulators who can educate the public en masse on how these off-MLS tactics undermine trust, reduce access and favor the few over the many. More importantly, they have the power to act — not through noise, but through enforcement.

And that kind of action speaks louder than any industry talking point ever could.

Step back and see the whole board

It’s easy for some to get swept up in one side of the argument, to wave the flag of seller empowerment or champion transparency and consumer choice. But state regulators aren’t interested in which side you choose; they’re not caught up in the chaos. They care about whether both sides of a transaction are properly represented by licensees who understand and uphold their fiduciary duties.

So step away from the brokerage strategy for a moment. Put down the marketing plans, compensation models, policy debates and form revisions. Go back to the basics, back to what you learned when you first entered this profession. What does it really mean to be a fiduciary? (And no, reading about it in a LinkedIn thread doesn’t count.)

Brokers and agents must have a full command of the facts, the law and their obligations — not just for their own protection, but to truly serve the clients who’ve entrusted them as advocates and advisors.

That’s the big picture. Don’t lose sight of it.

The tell at the table

This industry feels more and more like a high-stakes poker game. The second one player lays down their hand, another is “calling it,” then revealing a monster.

Brokers, agents, tech platforms, portals, advocacy groups — everyone’s at the table. But there’s a new presence pulling up a chair: state regulators. Truthfully, they’ve been there the whole time, quietly observing, studying the players and their moves. Now, they’re learning the new game that is the evolving real estate landscape.

There’s a line in the film Rounders (a must-watch, if you haven’t seen it) that fits this moment perfectly. In a voiceover, Matt Damon’s character, Mike McDermott, narrates the rhythm of high-stakes poker:

“Listen, here’s the thing. If you can’t spot the sucker in your first half hour at the table, then you are the sucker.”

It’s not just a clever line. It’s a brutal truth that cuts across industries. And in real estate, the “sucker” could easily be the misguided agent or broker who doesn’t realize they’re holding a losing hand, the one who misreads the room, doubles down on a risky strategy or underestimates the role of the regulator.

Because the stakes aren’t just money. The stakes are consumer protection, public trust and the reputations — even the licenses — of those involved.

Some may think they’re too slick to get caught. They hedge. They dodge. They bet big on words like “choice” and “freedom.” They build models that rely on consumers not knowing what they’re missing, not seeing the full picture — which, by the way, is the textbook definition of non-disclosure. And all the while, perhaps they’re betting on regulators not asking the right questions, not exposing what’s really happening behind off-MLS listings.

But here’s the reality: Regulators are asking the right questions. They’re spotting the tells. They’re not here to play, they’re here to protect. Just as easily as licenses are issued by the state, they can be taken away.

It’s worth noting that for brokerages licensed in multiple states, a single enforcement action in one jurisdiction can trigger a cascade of consequences across others. In short, the power of enforcement has a snowball effect. What begins as a local issue can quickly escalate into a multistate liability.

So before you go all in on that off-MLS listing pitch or commit to a dual agency arrangement involving an office exclusive, ask yourself:

• Are you truly acting as a fiduciary?
• Is this brokerage strategy or the consumer’s best interest?

Or put another way:

• Are you just hoping no one calls your bluff?

The next round is underway, and it’s become increasingly clear to me that agents must do more than just play smart and play honest — they must play the fiduciary, always, and especially in times of industry change.

The DOJ may have a dog in the fight, but don’t underestimate state regulators. They’ve been in it all along, and the industry seems to have forgotten that they’re closer to the action than anyone.

These are the officials tasked with overseeing licensees, upholding the law and protecting consumers in every transaction. Investigators are on the ground right now, watching how all of this is playing out. They’re interacting with consumers and learning how the push to stay off the MLS was driven, whether by client need or brokerage strategy.

Don’t believe it? That’s your bet, but the odds may not be in your favor. Last week, I had a front-row seat to the regulator perspective, and I can tell you — the writing is already on the wall. Why? Because that writing isn’t just a warning. It’s the law. And state regulators are ready to hold the line.

NOTE: The opinions, suggestions, and recommendations contained in this discussion are based on Summer Goralik’s experience working for the California Department of Real Estate and as a real estate compliance consultant. They should not be considered legal advice or relied upon as such. You should consult with your brokerage and/or appropriate legal counsel in your jurisdiction for further clarification.