The Private Listing Controversy In Real Estate

It’s been a rough year for home sales. In its June report, the National Association of Realtors (NAR) noted that existing-home-sales dipped by just under 3 percent from the prior month, to an annualized rate of 3.93 million sales — the lowest total since 1995, it says. In addition, home prices rose nationally by just 2 percent from June 2024 (and are actually declining in a number of regions).

But even that modest increase has further worsened affordability and stifled demand from homebuyers. This, in turn, has shifted the market from favoring sellers to a more neutral position. In this difficult market, homes are taking longer to sell, with the median number of days on market up by 14 percent from a year ago to 58 days in July, according to Realtor.com. And sellers are increasingly finding it necessary to bargain with buyers in order to complete the sale, with more than 20 percent of properties taking a price reduction before selling. That’s the highest percentage since October 2022, when the market was adjusting to mortgage rates that had recently doubled. 

Given all this, one would think that real estate professionals would be doing everything possible to help their clients effectively price, market and sell their homes, executing transactions as quickly as possible and securing the highest price for their sellers. One would think that…but it’s not necessarily the case.

The controversy over private listings

A class action lawsuit regarding commissions was settled in late 2024, which fundamentally changed how real estate agents were compensated. Prior to the lawsuit, sellers typically paid a percentage of the home’s sale price — usually 5 or 6 percent altogether — to their agent, who then split the commission with the buyer’s agent. This process was laid out per what was known as the “cooperative compensation rule.”

The court ruling eliminated this rule, requiring buyers to negotiate compensation with their agent, and pay them directly (unless the seller explicitly agreed to pay the buyer’s agent’s portion). This, the plaintiffs argued, would ultimately lower commissions and benefit both buyers and sellers. So far, that hasn’t been the case.

Previously, agents listed the properties they were selling on the local MLS right away to ensure that commissions were shared, and it served as a sort of payment-coordination system. The MLS also served as an advertising vehicle, showcasing these “for sale” properties to other agents and to prospective homebuyers on their websites and social media channels, and via syndication on bigger national websites such as Zillow, Realtor.com and Homes.com. This provided each listing massive exposure to millions of monthly viewers.

But one of the unintended consequences of eliminating cooperative compensation has been that some brokerages — most notably Compass, which also happens to be one of the biggest — have decided that they’d be better served by not putting properties on the MLS. Instead, they’re keeping them as their own exclusive, private listings, and marketing them only to their own agent network and their contacts, thus keeping the whole transaction neatly in-house.

So now, while some want for-sale listings to be shared far and wide to reach the widest audience possible, others are going out of their way to do the opposite. Both think their way is best. But who is right?

The positive view: Exclusive appeal

Why would a brokerage restrict who can see its listings?

The strategy has clear benefits for them: For starters, it enables the brokerage to collect commissions from both the buyer and the seller (referred to as “double ending” in the industry). If they are successful at accumulating enough private listings, they attract buyers, since those properties aren’t listed anywhere else. And having a large number of homes to sell in their private stock can also be a way to attract agents to the brokerage.

There are precedents for these kinds of private listings. In Europe, for example, brokerages tend not to share listings, which means that homebuyers routinely need to work with multiple agents to find a home. Private listings are also the de facto standard in the commercial real estate market, where most brokerages do exactly what Compass is attempting to do in the residential housing market. 

Compass says that this strategy is good for home sellers, too. Its website details that sellers using their “3-phased marketing strategy” will enjoy multiple benefits, including:

• Pre-marketing the home before investing time or money preparing it for more public view
• Generating early interest without accumulating too many days on market
• Quietly testing the list price and making adjustments if needed 
• Maintaining their privacy

But many believe that limiting the pool of possible buyers is never really good for the seller. 

The negative view: ‘Dereliction of duty’

As someone who spent the first 20 years of his career doing marketing for companies ranging from start-ups to the Fortune 500, I’m a strong believer in the laws of supply and demand — and an equally strong believer that the best way to build demand is to expose a product to the widest possible audience of prospective buyers. This is why advertisers pay millions of dollars for a 30-second commercial during the Super Bowl. And why Meta and Google generate hundreds of billions of dollars in advertising revenue every year.

To me, not promoting a home to every agent and every prospective buyer possible makes zero sense from a marketing perspective. Zillow, which gets many of its listings from local MLS organizations across the country, has nearly 230 million visitors each month, virtually guaranteeing exposure to interested buyers for any property listed on an MLS. Not taking advantage of this kind of exposure — knowingly restricting the amount of buyers who can see, and thus potentially make offers on, the home — seems like a dereliction of a brokerage’s fiduciary duty to the home seller.

I’m not the only one in the industry who feels this way. 

Hilary Saunders, co-founder and chief broker officer at the brokerage Side, acknowledges that private listings have their purpose, albeit a narrow one: for example, cases of domestic violence, if a celebrity or public official wants total privacy, if a company doesn’t want the market to know that their CEO is selling because it might tank the stock price. 

But the vast majority of sellers, Saunders says, “want and need to get the highest and best price for their home. Agents should be counseling them to market the property to the highest number of buyers possible — scream it from the rooftops, hang a hot air balloon on the roof, throw a block party, market it like you’re bringing the circus to town — to get as many offers on your house as you can.”

Hang a hot air balloon on the roof, throw a block party, market it like you’re bringing the circus to town.

— Hilary Saunders
Chief Broker Officer, Side

In a July op-ed published in Inman News, eXp CEO Leo Pareja shared his perspective, declaring, “We do believe that the decision by Compass to forego sharing its listings with local MLSs is bad for consumers, and we will continue to stand against anything that hides listings, limits access or restricts opportunity.”  

The larger implications of private listings are also something Pareja is concerned about. He points out that homes sold off the MLS can’t be used as comps, and that this could make appraisals in some markets difficult at best, or inaccurate at worst. In large enough numbers, private listings could result in uncertainty about actual property values — a common problem in commercial real estate — and cause lenders to offset the risk this uncertainty poses by charging higher fees or not offering low-down-payment loans. 

Zillow has also come out forcefully against private listings, essentially giving brokers an all or nothing choice: Make the property visible to everyone at once, or forego the chance to ever market it to its hundreds of millions of users. The company implemented a policy in April that doesn’t allow properties to appear on Zillow unless the brokerage posts it on their local MLS within one business day after it appears on its own site.

Bottom line: Lack of transparency is bad for consumers

Research shows that homes sold on the MLS sell for more than off-market properties, and both Pareja and Saunders mentioned that private listings present the possibility of potential lawsuits for breach of fiduciary duties. In addition, whether intentional or not, marketing within a private network could create fair housing problems by inadvertently excluding buyers from certain segments of the population. 

Today’s homebuyers and sellers demand — and deserve — the market transparency they’ve come to expect in this age of instantaneous and ubiquitous information. Private listings set the real estate industry back 50 years, to the days of printed MLS books that were only available at brokerage offices, with information securely hidden from consumers. They benefit no one but the brokerages that implement them.