Greed is not good, despite what Gordon Gekko said in the movie Wall Street. In fact, Warren Buffett and Charlie Munger built their immense success and reputations on doing the right thing versus purely trying to enrich themselves.
Their wealth was a byproduct of their principled business dealings, and they worked with people they respected and did deals accordingly. The importance of a fair market structure and transparency was core to their success. Believing in a company and its underlying mission attracts customers and, more importantly, builds paramount invisible metrics like goodwill and trust.
It’s not about consumer choice
A brand is a promise to the consumer, and in real estate, it is the consumer voice that is so obviously missing from this entire private listing network battle. Compass frames its three-phased marketing strategy, portal war and MLS lawsuit threats as fighting for seller choice. But we all know sellers have always had a choice in how they bring their homes to market.
If they were suffering from lack of choice or information, where has this collective outrage been? Where is it now? So far, it’s just brokerages, agents and portals duking it out in a way that makes the entire industry look bad.
Owning a home is the American dream realized because a home is so much more than four walls and a roof. It provides people with a sense of safety, love, stability and freedom, and it is one of the biggest paths to economic wealth.
Right now, the American homebuying process is under siege. Not only are we faced with higher interest rates and less inventory, but the largest real estate brokerage in the country has chosen to block access to housing inventory through private listing networks.
Compass advertises that people can see thousands of homes on its website before anywhere else. What message is that sending? Is that seller choice or a proclamation of data control?
Unpacking private listings
Just recently, Compass announced it was going to sue MLSs across the country if they didn’t bend to its demands, one of which was allowing agents to publicly market office exclusives without getting fined.
Let’s unpack that. Office exclusives are typically done when a seller is very private, and agents share this listing within their own brokerage. It doesn’t happen often, but it happens.
Compass now wants to be able to publicly market those listings, which completely contradicts the reason office exclusives came to be in the first place. Would these publicly marketed office exclusives end up on Compass.com behind a registration wall?
Why regulators should be concerned
Every single politician in America should be outraged and call out Compass’ private listing networks as a threat to the growing home affordability crisis because it limits access to inventory.
We are in a housing deficit of nearly 5 million homes, yet Compass wants to play hide-and-seek with consumers. Why is Corcoran, now part of Compass, offering financial incentives to agents to get their listings off certain portals if sellers are so eager for less exposure?
Buyers and sellers deserve better and should be able to see all of the homes available along with how many days they’ve been on the market. Homes rarely sit if they’re priced right, and good agents who know their markets don’t need to secretly test the price by a private committee before launching the property.
Compass’ push to make private listings mainstream is concerning because a study from the Consumer Policy Center shows the company has dominant market share in many locations, which limits choice for consumers and increases Compass’ ability to double end deals. Moreover, private listings sell for less money than they would on the MLS, according to a study by ARELLO. Is this really what sellers are asking for?
The bigger picture
Zoom out and look at the big picture: This is an all-or-nothing battle where Compass is using cease-and-desist letters, threatening publications, filing ethics complaints and offering money to agents who follow their instructions. It is a twisted tale where one real estate brokerage is willing to sacrifice the agent, the consumer and real estate market transparency for a system that benefits its bottom line.
I hope politicians wake up, as private listing networks are a bipartisan issue that echoes the dark pools of Wall Street. No company should wield so much power that it is able to bully its way through an entire industry in the name of the consumer who never asked for it.
The views and opinions expressed here are those of the contributor and separate from the Inman newsroom.
Bess Freedman is the CEO of Brown Harris Stevens in New York City.
