It’s the Real Estate Industry’s Latest Debate — Pocket Listings

Our regular readers know about recent changes in real estate practices. The big changes came out of settlements by the National Association of REALTORS® (NAR) and large brokerage firms in response to class-action court cases. NAR had to give up its long-running practice of having sellers pay standard agent commissions when submitting listings through the Multiple Listing Services (MLS).

Now, there’s another controversy dividing the industry. The outcome will impact most people who sell and buy homes, because it could limit the information available to hopeful buyers.

Transparent Listings: What’s Not to Like?

The National Association of REALTORS® established a transparency rule through its Clear Cooperation policy. NAR believes transparency at the listing phase was crucial. The concern? Informal networks, keeping knowledge for their limited audiences. Brokers outside of these circles couldn’t find these homes or tell their clients about them.

To have listings available to all members of NAR was a benefit to the market, and a benefit for agents who joined NAR.

Under the policy, brokers and agents must get a home listed on the MLS within one business day of any form of public marketing — be it a for-sale sign, a post on Facebook, or any other method. Brokers can always fill in more details later, but a for-sale home must be publicly listed without delay.

Once a home is on the MLS, the world knows. Anyone can see that the home is for sale when they visit popular real estate sites like Zillow, Trulia, Realtor.com, and Redfin. That’s a good thing for buyers. It’s good for most sellers, too.

Yes, there are a few sellers who are extremely concerned with privacy. But they already have a way to list privately. Most of the listing services let home sellers select that option. Again, very few do. And the reason is obvious. After all, to attract top dollar, sellers want to announce their homes’ availability to as many potential buyers as possible. According to a survey cited in Axios, homes listed in an MLS database fetched their sellers more than 17% more than comparable but unlisted homes. 

Small brokerage firms also benefit from keeping listings openly available.

But some industry heavyweights want the practice retired.

They say open listings attract sightseers. They say sellers don’t want any past price cuts to show up in the public domain. They say some sellers want to keep their listings available only for a small circle of agents.

Compass CEO Robert Reffkin would like to dump the public listing rule. Reffkin is one of the influential voices insisting sellers should be able to market homes privately.

If Transparency Is Lost, Who Stands to Gain?

For buyers, any loss of listing transparency is a bad thing.

For sellers who hope their homes will fetch the highest possible prices, private listings aren’t helpful.

That leaves the brokers. Some might want the ability to advertise a home through their brokerages only.

Brokerages, after all, have been shaken up by several years of economic and legal upheaval. They’re not sure what will happen in 2025. Some might believe they can get an edge in the market through private listings. They might prefer to place for-sale homes into private listing networks –– sending the information to a certain, exclusive circle of agents.

Indeed, changing to a system of pocket listings could enable a brokerage to match private sellers with home seekers from their own networks. This could mean receiving commissions from both seller and buyer.

If buyers start picking agents with access to exclusive audiences, dual agency is likely to crop up much more often. As a rule, sellers and buyers should have their own agents – who loyally represent just one specific client in the deal. Learn more about your agent’s fiduciary duties.

An Elephant in the Room: Zillow’s Data Dominance

And could it be that some industry players think Zillow has too much of a hold over the real estate market? It’s ranked as the most popular real estate website in the world.

The Compass CEO points to Zillow’s dominance, describing it this way:

They were able to get access to all the listings and then charge referral fees on all the listings. It’s a great business model and those are rules that you’ve created, so they’re the winner.

OK. Information from the multiple listing services populates Zillow’s website. And Zillow benefits financially from listings. But in this case what’s good for Zillow is good for home buyers. They crave each and every latest and smallest detail that’s published on the Zillow website.

But there’s another major reason to keep things transparent. Susan Daimler, the Zillow® Group’s (now former) president, says getting rid of Clear Cooperation would encourage the use of private networking to carry out discriminatory practices.

Pocket listings, Daimler said, make real estate undemocratic. And they “also perpetuate inequities that have long plagued our housing system.”

Groups representing Black real estate professionals as well as the Consumer Federation of America oppose private listing networks for these same reasons. The CEOs of Redfin and eXp have sided with those campaigning to uphold the MLS listing rule.

When Will the Next Shoe Drop?

We’ll keep our readers posted. The National Association of REALTORS® has, so far, wavered over its next steps. The public should know what’s going on here, and play an active role in the policy debate.

We at Deeds.com are not affiliated with listing companies. We have no vested interest in the outcome of this debate. But we know our readers do.

People in the market to sell or buy a home should expect the industry to show them the data. They should expect fair play. They should expect to find all the listings of the homes in a neighborhood, without for-profit brokerages acting as gatekeepers.

Private listing networks will make buyers less informed, and offer them fewer options. In the current market, with housing availability at a low ebb, there’s a lot to be said for an open information system.