It’s time to call out the narrative around private listings networks. The media seems to regurgitate press release talking points without delving into what the growing presence of private listing networks actually mean for buyers, sellers and agents across the country. It seems fiction has become fact — and we need to set the record straight.
The latest news about a Chicago MLS creating a national MLS for private listings and active listings makes me wonder: Why are facts like days on market and price corrections optional? To me, this is another attempt to control how inventory is disseminated to the public that’s disguised as innovation, but it does nothing but add another layer of confusion for consumers and agents.
Some say sellers deserve a choice when it comes to marketing their home. But sellers have always had choices. The argument is that days on market hurts value for the seller. Well, so does the odometer on your car when selling it, but you can’t hide it and claim a level playing field.
Those who want to “premarket” say they want to test the price. Test the price against what, exactly — a small, closed audience instead of the entire market? Doesn’t it hurt the price and the seller when a deal gets done internally and is not exposed to the public?
Many private exclusives are not shared. And what’s worse, we’ve had agents bringing willing buyers into the very same buildings where these private listings exist, and they are never made aware. How exactly does this help the seller?
Here are the facts
When you are selling your home, you want the most exposure possible to get the highest price. The simplicity of our market works brilliantly if you let it. Price it right, market it to everyone and share information transparently. True price discovery cannot be gauged without the full participation of the market.
When there are multiple bidders on a property, oftentimes the price gets driven up. When you see a packed open house, it tells you the home is very much in demand. Private listings fracture the real estate market at a time when we are in an inventory drought in this country. How long will brokerages, regulators and the Department of Justice sit idle and let this happen?
We are at a tipping point as consolidation allows companies grow immense market share. These players are able to use influence to create a tiered system while trying to defeat the aggregators. The Consumer Policy Center has issued stark warnings about these practices, while another report from the Consumer Federation of America acknowledged that private listings are a growing concern for people of color and first-time homebuyers. Tell me again how helpful this program is?
Most consumers start their search on Zillow, Homes.com or Realtor.com. Why? Because that is where most of the information lives. Consumers want to see it all, and they do not want to go to five different websites to find it. Real estate agents also want to get all the information so that they can service their buyers.
Real estate agents are fiduciaries and must put their clients first. The day of reckoning is coming as sellers who settled for prices marketed under a private listing network begin recognizing that they were duped. Even if they signed a disclosure, as many states are in the process of requiring, the standard that we hold real estate professionals to is higher than the consumer because agents understand how detrimental limited exposure can be.
About eight years ago, we were selling a townhouse and had gotten multiple offers from all the big firms. As the seller was sorting out all the offers, an agent from a firm I had never heard of appeared with his buyer, who blew everyone out of the water. The seller got 27% over asking price from this unknown brokerage, which had a buyer that was willing to pay more and beat the competition.
This story is the only story every agent should consider as they pitch a private listing network. By ignoring facts, you are hurting everyone.
Bess Freedman is CEO of Brown Harris Stevens in New York.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: tracey@hwmedia.com.
