New York looks likely to become the latest state to create restrictions on private listings.
On June 1, the New York State Senate passed the Fair and Transparent Real Estate Listings Act, after amending the bill to include an opt-out option for sellers.
The act’s intention is to prevent properties from only being available on private listing channels. To combat the issue of housing availability within the state, the legislature would “require timely public advertising or marketing of listed residential properties on platforms accessible to the general public,” according to the most recent version of the bill. Violators can be fined up to $5,000.
Currently the bill is waiting to be delivered to New York Governor Kathy Hochul’s office, where she will have 30 days to sign the bill and allow it to become law. Once Hochul signs the bill, it will take effect after 180 days, or approximately six months.
Michael Kelly—the New York State Association of Realtors® (NYSAR) VP and chief lobbyist of Government Affairs—tells RISMedia that the association is “extremely supportive of the bill and have been working with the sponsors, both the senate and the assembly to make what we believe are some changes and improvements to the legislation.”
Kelly adds the bill will benefit New Yorkers no matter their income status.
“The legislation starts with the premise that the real estate licensee, the professional representative, seller or lessor is required to widely market their property,” he says. “But in cases where the lessor seller wants to enter into a private listing network or limited marketing, they can do so, but they can only do so by acknowledging and signing a state required disclosure form.”
The most recent amendment to the bill defines several terms such as buyer, multiple listing service and private or limited access channels.
More importantly, the section adds a disclosure form for sellers or landlords who wish to opt-out of public marketing. While the disclosure does allow properties to only be shown on select channels, it doesn’t allow for discriminatory practices based on the federal, state or local definitions of protected classes.
Other states, including neighboring Connecticut, created similar mechanisms that allow sellers to abstain from public marketing as long as they acknowledge—among other things—that a private listing could reduce their sales price or increase its time on the market.
Assemblywoman Michaelle C. Solages (D-NY)—representing New York’s District 22 in the state legislature—was one of the original sponsors of the bill, and tells RISMedia that the intention is “transparency.”
“It’s always been my goal as a state legislator to ensure that folks have access to the housing market,” she says. “So whether it’s finding discrimination, building more supply, or making sure that we have transparency with private listing networks, this is a goal to ensure that we are giving people access to the housing market. The legislation really is about transparency, fairness and access.”
Teamwork makes the dream work
Other states have enacted or attempted to implement similar legislation. Connecticut’s version of the law will be effective starting in October of this year, and Washington’s private listing law took effect on June 11. Generally, the states that managed to pass these bills have altered them to still allow the usage of PLNs (private listing networks), but they still highly encourage access to public listings.
State legislatures have so far played a somewhat minor role in the private listing debate. Compass CEO Robert Reffkin—the chief proponent of these practices—has said that his company’s private listings adhere to these laws.
Washington, where Compass is locked in a legal battle with the state’s largest MLS, Northwest Multiple Listing Services (NWMLS), now boasts what appears to be a more restrictive ban on private listings with no opt-out mechanism. Compass lobbied against that bill when it was being considered and debated.
In New York, however, there was very little opposition to the bill. By the time it reached the assembly, there were only two “nays.” Moving on to the state senate, it was unanimously passed with the exception of three absent votes.
According to Solages, the New York bill experienced little turbulence because the New York version is not a ban on private listing networks.
“We actually had a wide coalition of individuals who were supportive of the initiative and supportive of our thoughts on transparency. They want people to understand that if they use a PLN, they might not have as much competition seeing their listing, or they might not get the most competitive price. We wanted people to be cognizant that there are negative impacts,” she says.
Several policymakers were involved in the New York bill’s creation, but Solages says that many agents she’s spoken to have supported the bill. “I think I got an email or a call from about 50 real estate agents in a matter of two months; they were unsolicited,” she says. “It was just people calling and saying that this is just a great piece of legislation and it’s needed in New York.”
Since the bill was drafted earlier this year, several sections were amended to specify terms clearly outline the opting-out disclosure. Kelly says that the changes made to the bill have been for the better.
“I think even Assemblywoman Solages recognized that this was the beginning of a conversation about the issue itself,” Kelly says. “The bill in its current form that passed both houses is a dramatic improvement over the original.”
Back in April, Kelly told RISMedia that NYSAR had not taken a position on the bill but was “supportive” of its “principal goals.”
Opting out option
The current version of the bill permits sellers to opt-out of listing their properties in the public marketplace. Solages says the only concern was the privacy issue.
“A sensitive individual such as a celebrity or someone of a sensitive matter may want to use a PLN to protect themselves,” she said. “There was a large agreement that people should know that there might be disadvantages to using a PLN, but they could use it if they want to.”
Sensitive individuals do not always refer to celebrities. Kelly mentions that divorcees may seek out a PLN to sell their homes to ensure their privacy and names are not released to the public.
From an agent’s standpoint, the disclosure actually gives sellers peace of mind and keeps the process transparent. NYSAR Treasurer Anthony Domathoti claims that the disclosures benefit sellers in an interview with RISMedia.
“This disclosure makes sure that we have these conversations upfront. To me, it’s not about taking choices away from the sellers. It is about making sure that they are making an informed choice based on what’s best for them,” he says. “For me, a signed disclosure creates transparency, protects consumer choice, the seller’s choice and also gives brokers like me a clearer path for documenting that the decision truly came from the client and not from the brokerage’s business model.”
While the bill allows for PLNs to be used in some capacity, Solages focuses on the ways in which the act ensures both buyers and sellers remain informed throughout the process. She recounts that a home in her neighborhood was purchased through a PLN.
“I know many people who were interested in the house and then they never saw a sign go up. They couldn’t access where they could get that home, and that’s unfortunate because there are a lot of families who are looking to buy homes. We want to make it fair and competitive,” she said.
Critics of private listing practices have noted that agents play an outsized role in “steering” sellers toward one marketing strategy or another, while industry heavyweights have presented often conflicting studies on whether or not private listings really do impact price or sales.
The bill has yet to be delivered to Hochul’s office, meaning there is not a set date in which New York agents can expect to start implementing the law at their businesses. Although there is no deadline for the bill to be delivered to the governor’s office, Domathoti says “the sooner the better” in regard to when the bill will become law.
