The discourse around private listing policies has become a headline controversy over the past year, and with recent massive consolidation, the debate over limited marketing strategies is only going to become more important.
But as brokerages seek an advantage in the post commission-lawsuit landscape, simply being in favor of or against private listings doesn’t take into account the reality and nuance of how real estate is practiced.
Should MLSs be able to run their own private networks, as long as all brokerages have access? Is it appropriate to tease the existence of office exclusive-type listings to consumers as a marketing strategy? And will the portals be able to dictate broader industry policy, or will market forces supersede these efforts?
These and other questions have become critical as the industry charts a path forward, with real estate professionals confronting what is functional, transparent and fair as they run their businesses. With these thoughts in mind, RISMedia asked brokers to tell us what the real issues are in the private listings debate in this month’s Broker Confidence Index (BCI) survey.
Brokers have increased confidence in the market
Overall brokers rang in the New Year with the same slightly more positive outlook for the housing market this year as we’ve heard from many real estate economists, with the RISMedia index coming in at 7.2, a meaningful increase from 6.5 in December.
“The economic conditions lead to a lot of uncertainty which does impact big decisions like buying or selling real estate, however, I think there is pent-up demand where some are looking to move over the last several years and have been waiting for the right time,” said one BCI respondent who requested anonymity. “Hopefully, lower interest rates will be a motivating factor for them.”
When asked to list their top concerns about the current market, many brokers also listed the now-familiar hurdles of housing affordability, lack of inventory and economic uncertainty, and in one case, also from an anonymous respondent, “buyers at a standstill not buying.”
Andy Smith, broker/owner of Badger, Peabody & Smith Realty said, “Buyers are still hesitant to jump. Inventory also remains tight. Traffic is driven by new inventory, which is missing right now,” in his region covering New Hampshire’s Mt. Washington Valley and the North Country.
Broker Scott Myers of CENTURY 21 Scott Myers, however, said the market his company serves in San Antonio, Texas is more balanced with a, “Good local economy. People moving here. Interest rates are stable. More available inventory.”
Defining private listings
While the concept and practice of private listings has been around for a long time, the way in which brokerages execute them may vary. To level set before diving into the nuances and complexities of private listings, we first asked respondents to define private listings as one of the following:
1. Any listing not on the MLS
2. Any listing not available on a publicly accessible website/platform
3. Any listing not available on ALL publicly accessible websites/platforms (i.e. syndicated through IDX)
4. Any listing marketed only within a single brokerage
5. Any listing where identifying details (address, photos, etc.) are withheld
The majority of respondents defined a private listing as ‘Any listing marketed only within a single brokerage’ (45%), followed by ‘Any listing not on the MLS (25%) and ‘Any listing not available on ALL publicly accessible websites/platforms (i.e. syndicated through IDX) (20%). Zero to 5% of respondents selected ‘Any listing where identifying details are withheld’ and ‘Any listing not available on a publicly accessible website/platform.’
A clear stance on office exclusives
The majority of respondents were clear on the question of whether or not brokers should advertise that they have exclusive listings available only to buyers who work with their company. 35% said this practice should be categorically illegal while 30% said it’s ok only in very limited circumstances and/or with significant oversight and regulation.
While a handful of respondents (15%) said the practice is appropriate, the majority of respondents’ views reflect those put forth by major portals like Zillow, which introduced new listing standards last year banning private listings and sparking much debate in the industry as well as a major court battle with Compass, which opposes the ban, currently ongoing.
Said one BCI respondent who requested anonymity, “I’m concerned that buyers and sellers are not afforded services that benefit them primarily by all Realtors®; private listings do not provide buyers and sellers the best and impartial service and benefits.”
MLSs and private listing networks
Turning to multiple listing services, we asked survey takers their views on whether MLSs should create their own private listing networks but not share them with portals or consumers. The majority (40%) were in favor of this concept, with 30% saying the exact opposite–that these networks should not exist.
At issue are many of the same concerns on either side of the brokerage debate, which is to say that private listings could create fair housing issues, limit exposure and create “an uneven playing field” in most circumstances.
An MLS on the supporting side was quickly thrown into the spotlight earlier last year after Zillow announced its new policy—Midwest Real Estate Data, or MRED, in the Chicago region, which has hosted an internal private listing service—properties shared within the MLS, but not necessarily to anyone else. MRED came out forcefully defending its private listing network in a letter to members late last year.
On the other side, organizations such as Northwest MLS (NWMLS) in Washington state actively opposes private listing networks and, like with Zillow, is in litigation with Compass, with Compass claiming that NWMLS leveraged its rules to undermine Compass’s private listing-focused strategy. NWMLS has denied this, saying its policies—analogous but not identical to Clear Cooperation (NAR’s policy that a property must be submitted to the MLS within one day of marketing it publicly)—are meant to promote transparency.
The issues are complex and have vocal proponents and opponents on both sides, and the responses in this month’s BCI, while not split evenly, are clearly reflective of these differing positions.
What about John Q. Homeowner?
Finally we wanted to know how brokers think consumers may respond to the new rules around private listings recently implemented (or proposed) by portals. Will they force consumers to work with agents/companies that adhere to those rules?
In a word, brokers said, no.
Whether the argument is for or against private listing networks, of which there are many complex and nuanced opinions, ultimately, it’s the consumer who holds all the cards, the BCI results show.
The majority of respondents (30%) think that consumers will either largely ignore these rules and pursue their own strategy or even if they don’t, 25% think there are still many circumstances or regions where sellers will still work outside of these portals. 20% said the rules will not dictate the choices of a majority of sellers, while 10% said the portals do have enough influence with consumers to essentially dictate policy to the industry.
Ultimately as these policies evolve, so does the industry, as we’re seeing new clauses, policies, exceptions and certainly litigation over private listings. In our survey this month Brown Harris Stevens CEO Bess Freedman, a vocal opponent of private listing networks and who posted her confidence level in the market this past month at the midpoint, 5, said most affecting her confidence in the market right now is, “Brokerages that are hoarding listings and betraying consumer confidence”–one of the biggest arguments against the private listings policy.
In an op-ed for RISMedia on the subject in March of last year, Freedman wrote, “Let’s be clear: Sellers always have the choice to market their home off the MLS. There is no forced commitment to transact on the open market…Creating a closed marketplace in the shadows is antithetical to everything that real estate brokerage stands for.”
Conversely, more recently in November at an evidentiary trial in the Southern District of New York between Zillow and Compass on the matter, an attorney for Compass, the most prominent industry proponent of private listings, claimed that Zillow’s private listing rules are an “attack” on innovation, citing documents where Zillow internally described private listings as a “contagion” that could upend real estate practices—and Zillow’s business model.
In that case, Compass’s “Three-Phased Marketing (3-PM) Strategy,” which allows homesellers to market properties privately before listing them publicly on the Multiple Listing Service (MLS) and other platforms, is at the heart of the matter.
The evidentiary hearing in November was not to decide the merits of that case, but rather, it was for the judge to decide whether to block Zillow’s rules from going into effect while the larger lawsuit plays out.
As of this writing, the industry awaits the judge’s decision determining whether or not Zillow’s listing standards will be on hold for the remainder of the lawsuit.
Have an opinion? Let us know your thoughts in the comments below or email us at online@rismedia.com.
