Key facts
- US House Judiciary Committee and Senator Elizabeth Warren are investigating real estate private listing networks.
- Compass claims its private listings result in 4.6% higher sale prices and 34% faster sales.
- Zillow research suggests homes kept off the MLS sell for 1.3% less, with lower-priced homes and those in communities of color experiencing greater losses.
- When one agent represents both sides of a transaction, sellers reportedly lose $1.49 billion.
- Independent analysis indicates MLS-listed homes sell for approximately 17.5% more than comparable off-MLS homes.
The debate over off-MLS (Multiple Listing Service) private listing networks has reached Washington, with lawmakers scrutinizing the practice for potential anti-competitive behavior and consumer harm. The House Judiciary Committee's antitrust subcommittee and Senator Elizabeth Warren have sent letters to Compass CEO Robert Reffkin and MRED CEO Rebecca Jensen, seeking information on their private listing network partnership and its national expansion.
Lawmakers are concerned that these private arrangements may incentivize agents to steer sellers toward private listings, allowing brokerages to represent both sides of a transaction. This practice could lead to hidden inventory, weaker pricing data, fair housing risks, and market consolidation.
Compass argues that its private listings, marketed through phased strategies before appearing on the MLS, sell for 4.6% more and 34% faster than homes listed directly on the open market. This data is based on a study of over 70,000 of its own closed transactions.
Conversely, Zillow's research, analyzing over 15 million sales, found that homes kept off the MLS typically sold for 1.3% less, totaling an estimated $1.36 billion in lost value for sellers. This effect was more pronounced for lower-priced homes and homes in communities of color. Zillow also noted that when a single agent represented both parties in a sale, sellers lost an estimated $1.49 billion.
Independent analysis from Bright MLS and Drexel University, covering over a million sales, indicated that MLS-listed homes sold for approximately 17.5% more than comparable off-MLS homes. Experts suggest that the incentive structures for companies like Compass (building deals in-house) and Zillow (relying on listing visibility for advertising revenue) may influence their respective research findings.
Real estate agents are advised to clearly explain the differences between 'Coming Soon' statuses and permanently off-market listings, highlighting the potential trade-offs for sellers. Documenting seller decisions is emphasized as crucial, especially given congressional scrutiny into agent steering practices. The advice suggests agents should prioritize serving the seller's best interest over internal brokerage incentives.