After 25 years in real estate, with a decade prior as a consumer fraud attorney, I adamantly believe every home for sale belongs in one shared system that every buyer can see, with a narrow exception for sellers who truly need privacy and truly understand the implications of limited exposure. For decades that system has been local MLSs. And local MLSs are why one app on your phone can show you nearly every home on the market.
On Thursday the largest real estate brokerage in the country sued 15 local MLSs to end the rule that keeps that app in your hand complete. Compass says it’s fighting for a seller’s right to market a home outside the public eye. A week earlier, its CEO told investors the same program “helps our agents win more business” and is driving recruiting. More business means more commissions.
I’ve been watching Compass and its private listings program with growing concern. These latest actions are a clear escalation in the company’s assault on the only system we currently have for listings transparency, and I want buyers to be aware of what I see coming.
Today’s Intel Drop is written for buyers. It’s a cautionary tale for sellers too.
🟦🟦🟦 Strong signal
Compass sued 15 local MLSs. Here’s who benefits if it wins
An MLS (multiple listing service) is the local system where brokers share every listing with each other. It’s where Zillow, Redfin, Realtor.com and nearly all agent websites get most of what they show you, and its rules generally require that a home marketed to the public be entered within a day or so, so every buyer and agent has access.
On Nov. 12, Compass International Holdings filed 15 federal antitrust lawsuits against MLSs in eight states, adding to the one it filed against California’s CRMLS in October.1 Compass alleges the MLSs illegally fine agents for publicly marketing homes the seller chose to keep off the MLS. Eight of those MLSs were already suing Compass to have their rules declared lawful.
A week before the lawsuits, Compass CEO Robert Reffkin explained the company’s private listings program to investors. In his words:
It “provides a differentiated listing strategy that helps our agents win more business.”
It is “such an incredible pitch to win listings.”
“We are now seeing strong momentum on the recruiting front as well.”
Those are benefits to Compass and its agents. For sellers, Compass’ own marketing says the program lets them test a price without racking up days on market or public price drops. And by Compass’ own count, about 94% of these homes end up on the MLS anyway.
Other than winning more sellers, there’s another reason the program helps recruiting, and it’s one I feel strongly about. When a home is shown inside one brokerage before the public sees it, that brokerage’s agents get the first chance to bring the buyer. When they do, the same company represents both sides of the sale. That’s called dual agency.
Whatever your state calls it, the result is the same: Compass gets paid on both sides, and that is good for Compass’ bottom line. I fiercely believe that dual agency is bad for consumers — both buyers and sellers. Even different agents within the same brokerage have potential conflicts playing out in the background.
The rule Compass is suing to break is the one that puts every home for sale in front of every buyer, through every agent, at the same time. That rule is the transparency buyers rely on, whether they know it or not.
Bright MLS studied about 100,000 transactions and found no price benefit from private pre-marketing and a median 17 extra days to go under contract, and Zillow has reported that homes sold off the MLS tend to sell for less.
We’ll see how Compass argues around this in court, but if the company prevails, it will continue to hold listings off the MLS.
💡 What these developments mean for buyers
Compass has answered its critics with a policy announced the day before the lawsuits: Compass agents will share Private Exclusives with any broker who asks (with some exceptions), but read the mechanics. Other agents can get the details by request. You can’t. Your agent has to know the listing exists, know to ask and know who to ask.
Days on market and price-drop history are two big numbers buyers use to decide what to offer. Properties languishing on the market and subject to price drops are often overpriced. Listings hiding in private inventory arrive later on the MLS with that history erased.
Which brokerage your agent works for now says something about which listing rules they operate under. That’s a question for the interview, before you commit to an agent.
🎯 Bottom line: Compass is fighting for Compass. The MLS is the transparency that lets you see every home. The agent you hire decides whether you get it, so hire for that.
Ask any agent: “If a home I want is being marketed off the MLS, how do you find it, how do you reconstruct its price history and how do you get paid on it?”
🟦🟦⬜ Medium signal
It isn’t only Compass. Pre-market inventory is moving into agents’ tools
Inman reported Nov. 12 that Zillow Preview listings, homes Zillow shows before they hit the open market, are now live inside RealScout, a search tool agents use to send listings to clients. Separately, Compass said this month it’s open to joining Open Real Estate, a brokerage-backed effort to build a national “enter once, distribute everywhere” listing layer that would feed the MLS and the portals.2 It requires members to enter every listing within a day of signing with the seller, but it also lets a broker keep a listing visible to member brokerages only. That option hides homes from buyers the same way Compass' program does.
Put those together and the direction is clear. More of what’s for sale is reaching agents’ screens before, or instead of, yours. All of it widens the gap between a buyer with a plugged-in agent and a buyer refreshing an app.
💡 What this actually means for buyers
Searching on your own is table stakes, and it’s no longer the whole market. In many metros, a share of inventory now shows up first in tools only agents have.
“Coming soon” and “preview” are marketing phases. Ask what the price was when it first appeared and whether it’s changed.
A good agent treats these channels as a sourcing job, with a routine for checking them, and can describe that routine to you in a sentence.
🎯 Bottom line: The number of places a home can be listed is going up. Your agent’s job is to cover all of them.
Ask any agent: “Walk me through where you look for homes that aren’t on Zillow yet, and how often.”
Thinking about hiring an agent a friend called “fantastic”?
Join me live Saturday, Dec 5, for Great Agent. Great for This Market? — how to test that referral before you sign anything.
🟦🟦⬜ Medium signal
The seller who benefits from a hidden price cut today is the buyer who can’t see one next spring
Compass’ pitch to sellers is privacy and control. The evidence that it gets sellers a better price is thin (see the Bright MLS and Zillow findings above). And the buyer pool a private listing shrinks is already small: NAR reported Nov. 12 that October home sales fell to their lowest pace since 2010, with national figures that vary a lot by local market.
💡 What this actually means for buyers
If you’re a buyer now, hidden price history is what you’re negotiating against.
💡 What this actually means for sellers
Where are you going after you sell? Odds are you are going to be a buyer. Don’t support this idea of holding listings out of circulation if you plan on trying to buy later. Lack of transparency will bite you then.
🎯 Bottom line: Keeping a home off the shared system is a sales strategy someone else designed. Make sure the person advising you on it works for you, whichever side of the table you’re on.
Ask any agent: “How often do you represent both sides of a sale, and what do you earn when you do?”
📋 FROM THE HIRE:FORWARD™ DESK
I’ve been an agent and a broker for a very long time. I fully understand the urge to control listings to benefit my bottom line. But that’s not good for consumers, and not how I personally roll.
I’m not saying all agents are bad or greedy. I’m saying that the incentives in the system are not particularly pro-consumer and consumers need to understand what’s happening in the industry in this moment and how to protect themselves.
The shared listing system is good for buyers (transparency) and it’s good for sellers (wide exposure to bring competition and higher prices).
That shared listing system is also the reason you can open one app and see nearly every home for sale, and the reason a buyer with a small-brokerage agent competes on equal footing with a buyer at the largest firm in the country.
There are plenty of criticisms you can throw at the existing MLS system, but it’s still the best thing buyers and sellers have.
You can’t fix the industry before you buy a house. You can interview three agents and hire the one who can answer this week’s featured interview question without flinching — “If a home I want is being marketed off the MLS, how do you find it, how do you reconstruct its price history and how do you get paid on it?”
Join me in a few short weeks for a special workshop.
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How to test that referral you were handed. (No referral? This works for you, too.)
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Disclosure: I am a member of California Regional Multiple Listing Service (CRMLS).
Disclosure: I hang my real estate license with eXp (AGNT), a founding member of Open Real Estate.
This is an important warning for buyers. When a listing is kept private, buyers lose the price history and days on market that help them make a fair offer. A shared system where every home is visible really is what keeps the process honest for everyone.