C
ompass, a real estate brokerage, has 1,187 agents in Massachusetts and had the second-largest sales volume in the state last year. The company's private listings allow agents to test prices, gain insights from other agents, and generate early demand without sharing commissions with another brokerage. However, critics argue that this practice is an effort to hog the entire commission and is not in the seller's best interest.

    Real estate attorney Robert L. Bell said coaching sellers to keep their listings private is at least an insult and possibly a violation of an agent's fiduciary duty to their clients. He added that agents have a responsibility to act in the interest of their customers, but the profession is rife with compromises of this principle.

    Compass responded by saying that 94% of homes pre-marketed as private exclusives or coming soon ended up on the MLS, showing that price discovery is the key consumer benefit. However, two major real estate portals, Zillow and Redfin, have come out against this practice and said they will not advertise any property that has been privately marketed.

    Zillow estimated that sellers whose homes were privately listed in the last two years lost out on over $1 billion, with home sellers of color being disproportionately affected. The company's senior economist, Orphe Divounguy, said that off-market listings harm sellers and limit exposure to potential buyers, possibly deepening inequities in real estate.

    Compass CEO Robert Refkin responded by saying that Zillow is abusing its market power and effectively telling homeowners what's best for them. He added that the company's 3-Phased Marketing plan allows homes to be showcased to all agents and consumers without the risk of exposure from MLS and portal sites.

    The Massachusetts MLS, MLSPIN, requires every agent who takes an off-market listing to submit a form stating that the decision not to list the property with the MLS is solely the owner's/seller's decision. However, it's unclear how they monitor these conversations.

    Some critics concede that listing a property off-market makes sense for a small percentage of buyers, such as celebrities or people with valuable art on their walls. However, recommending this practice can raise issues of fair housing and limit consumer trust in the market.

    Gibson Sotheby's International Realty CEO Colleen Barry said that sellers are generally happy when their homes sell quickly, but those who sell off-market can never know how much more money their home would have fetched if it were listed on the open market. She cited a study showing that median sale prices for homes marketed through the MLS were 16.98% higher overall.

    The executive director of Consumer Advocates for American Real Estate, Douglas R. Miller, said that Zillow's stance reflects a growing awareness that the traditional brokerage model prioritizes internal deal flow over client outcomes when inventory is withheld for the benefit of internal agents or affiliate relationships.