America’s largest real estate brokerages are fighting over private listings

When a deal to buy Caitlin Bigelow’s San Francisco condo fell through last month, she felt relief, rather than disappointment. Bigelow was working with a Realtor she trusted from Compass who had suggested she first list her home as a “Compass Private Exclusive.” That meant her home wouldn’t immediately be publicly advertised on home-search websites like Zillow or Redfin. Instead, the listing would be announced internally at Compass, one of America’s largest real estate brokerages, meaning only buyers represented by other Compass agents knew the home was for sale. Bigelow had received two offers from this method — including one for $2.1 million, which was $95,000 over her list price. It was the “magic number” she had in mind, and she quickly accepted. At first, she was thrilled. But after having time to think, she began to feel a sense of unease. “Only two people had seen (the home) and we seemed to be hitting our magic number already,” Bigelow told CNN. “The longer I sat with that, the more I felt like, well, if two people saw it and we hit the number, what if 50 people saw it?” Bigelow’s question gets at the heart of a dispute roiling the residential real estate industry. After a landmark settlement last year by the industry’s powerful trade association, the National Association of Realtors, the battle over private and exclusive listings has become the latest fight about the way homes are bought and sold in America. What is a private listing? There are legitimate reasons why someone might list their home out of the public eye, Summer Goralik, a real estate compliance consultant, told CNN. For example, celebrities and other public figures may not want to advertise their home’s address or photos. But with US homebuyer demand significantly outstripping supply over the last few years, private listings across the market could mean only select buyers get first dibs on in-demand homes. Although Compass is not the only brokerage that lists homes off-market, the practice has become a signature part of how its agents market home listings. And it has prompted backlash: Other leaders in the residential real estate industry argue the practice is exclusionary and threatens to further chip away at consumer trust in real estate agents. “If a portion of inventory is removed and only shown to a small group of people, by definition, that’s an exclusionary behavior that’s going to hurt others,” said Leo Pareja, the CEO of eXp Realty, another one of America’s largest real estate brokerages. He said his company only handles private transactions when it’s required in special situations: “Fewer than 1,000 transactions for us last year were private exclusives out of 350,000.” Critics also say the private listing strategy unfairly pushes home sellers to make deals with buyers represented by other Compass agents, resulting in the brokerage collecting a commission from both sides of the transaction. Compass has denied the accusation that it pushes sellers into private transactions. Instead, the company said many sellers choose to list their homes privately before sharing their homes more widely on the multiple listing service (MLS), which is a database that agents from all companies use to share home listings with each other. Most MLS listings are automatically picked up by homebuying websites like Zillow and Redfin. “Home sellers deserve choice in how their home is marketed,” a Compass spokesperson wrote to CNN in a statement. “They should be able to choose the best strategy for selling their homes, whether that means starting with marketing privately or publicly before listing in the MLS or listing on the MLS from day one.” Compass often employs its “3-phased marketing strategy” for home sellers. It begins with a private listing to “test” a home’s sales price. Then, during the “coming soon” phase, listings are showcased on Compass’ website to generate buyer interest before they “officially” hit the market. The final phase is to “go live on all platforms,” meaning sellers list their home online for all real estate agents and home shoppers. As of mid-February, approximately 35% of all Compass’ listings were listed as “Compass Private Exclusive” or “Compass Coming Soon,” CEO Robert Reffkin said on Compass’ most recent earnings call. Compass said 94% of its private listings last year ultimately sold on the public market. “If this plan to market off the MLS is literally driven by client need, then 100% that should be the journey,” Goralik said. “But on the flip side, if it’s not driven by the seller, and the listing pitch is about why your property needs to be off the MLS before that discussion even comes up… that just dirties the water all the way through.” An increasingly fragmented housing market where buyers can only find certain homes for sale depending on their agent hurts both buyers and sellers, Goralik told CNN. “Then that wasn’t the seller’s choice. That wasn’t even directed by the seller,” she added. “I just think that’s going backwards. That’s not moving toward the future.” CEOs trade barbs Last week, Ryan Schneider, CEO of Anywhere Real Estate, which includes real estate companies such as Coldwell Banker, Century 21 and Sotheby’s International Realty, weighed in on the dispute on his company’s earnings call last week. “Anywhere Real Estate is aggressively advocating for transparency and the broad and public distribution of nearly all listings because we believe it is best for buyers to see all the inventory, and most critically, it helps sellers get the highest price for their home,” he said on Tuesday. In April, though, Corcoran, another subsidiary of Anywhere Real Estate, rolled out Corcoran Reserve, a private listing network for sellers who want to prioritize “greater privacy and discretion.” “We are advocating for the broad distribution of listings in almost all cases, and we don’t believe that this self-serving debate has the best interests of the consumer at heart,” Anywhere Real Estate said in a statement to CNN a few weeks after Corcoran Reserve was launched. Douglas Elliman, a separate brokerage, plans to roll out its own private listing network, though the company told CNN that it is just one of multiple selling strategies for home sellers. Pareja has been vocal in his opposition of private listings. “If I were being a pure capitalist, I would be on the other side of the argument, because I would be able to hoard inventory…. But I’m not. Instead, I’m saying, ‘Hey guys, this is not good for the consumer,’” he told CNN. Compass pushes back Last month, Zillow and Redfin — two of the most popular platforms for home sale searches — announced new rules that complicate Compass’ strategy. While it doesn’t directly prohibit private listings, Zillow said that a home listing that is marketed to consumers must be published to Zillow within one day, or it won’t be published at all. Beginning in late May, “coming soon” listings that are advertised on other real estate websites will need to be published on Zillow within 24 hours. Redfin announced a similar policy shortly afterward. Reffkin has defended the strategy of keeping listings off platforms like Zillow and Redfin to start. Both sites publicly show price cut history and how many days homes sit on the market — two data points the Compass CEO has argued hurt a home’s sales price. “Compass has achieved everything it has without banning homeowners who don’t give us their listings,” one of Reffkin’s recent social media posts read. “Why can’t Zillow and Redfin do that same?” Compass has pushed back on the notion that its private listings are designed to increase the chance that the brokerage would collect the commission on both sides of a home transaction; rather, they say they are following the rules set by NAR. In 2020, NAR implemented a rule for its 1.5 million members that requires agents to put a listing on the MLS within one day after marketing it, meaning that Compass agents had not been allowed to broadcast private listings to other brokerages without triggering the one-day rule. In March, NAR amended its rule, now allowing sellers to list their homes in more private ways, including the option to delay the public marketing of homes on the MLS. “This new listing option is simply another choice for consumers who want greater control over how and where their property is marketed,” a statement from NAR said. On Thursday, Reffkin announced a new plan to share Compass’ private listings with other brokerages while still following NAR’s rules: Agents from all brokerages can now come into any Compass office and view the brokerage’s private listings on a one-on-one basis in a physical book, Reffkin said. Bigelow, the seller in San Francisco, said she didn’t feel pushed by her Compass Realtor into the decision to privately list her home. Her Realtor told her it would be a good way to test out listing her home above $2 million, since there were very few comparable homes in the area that had sold at that price. She agreed with the strategy. Plus, her agent told her that Compass private listings are blasted out to all Compass agents, which could improve her home’s visibility. But, in hindsight, she now believes accepting an offer before her home’s listing was available to the public was a mistake. After her condo’s initial “private” buyer fell through, Bigelow worked with the same Compass Realtor to list her home on the MLS and Zillow. Six days and around 60 showings later, Bigelow had multiple offers and ultimately netted $100,000 more than she would have received had the initial private offer gone through. “I think that the off-market exclusive ultimately is bad for people and good for Compass,” Bigelow said. However, if she could do it all again, Bigelow said she would still begin her home sales process by listing privately. “I would still publish off-market, because then all the Compass agents get notified about it. I just wouldn’t accept any offers during that period,” she said.