There is a fierce battle raging in the real estate industry over private/off-market listings, with two distinctly different opinions on consumer fairness.
Private/Off-Market Inventory is Back with Force
Between late 2019 and early 2020, MLS platforms (what is the MLS?) and the National Association of Realtors (NAR) introduced Clear Cooperation Policy (CCP) that required brokers to enter a property into the MLS within one business day of any public marketing (e.g. public-facing website, email blast, for sale sign, mailers, etc).
The idea behind CCP was to bring more fairness and strength to the market by eliminating numerous private and off-market channels so that buyers could rely on a single data source of homes for sale (from the MLS to consumer sites like Zillow and Homes.com) and sellers would receive top dollar by maximizing their exposure to buyers.
A by-product of last year’s class action settlements related to real estate commissions was the dismantling of CCP policy, leading to a rapid return to private/off-market inventory battles between agents, brokers, and online platforms. Buyers and agents can no longer get a full picture of the market by hoping on MLS, Zillow, Redfin, Homes.com, etc and must gather that information continuously from a more fragmented arrangement of public and private channels.
Consumer Fairness, For Sellers
CCP was eliminated from the weakening of “organized real estate” (rule creation and enforcement entities at the national and local level like NAR, local Associations, and MLSs) that resulted from recent class-action lawsuits and anti-trust pressure from the DOJ. In their eyes, CCP forced consumers and the brokers they hired through a single channel to sell a home and thus created an anti-competitive environment and anti-trust concerns.
Opponents of CCP (proponents of private marketplaces) believe that consumer fairness is about giving homeowners and the brokers they hire the freedom to market their homes in whatever way they believe will produce the best results. They argue that the best results are not always about price and sometimes about privacy, ease, and flexibility.
They also argue that private channels can produce better negotiation leverage and, sometimes, a better sale price than public markets, despite less exposure, because it creates demand through limited, VIP-like access and doesn’t burden sellers with days on market and price change tracking.
I have experienced first-hand, on multiple occasions, private/off-market listings create wins for sellers (and buyers) that were not possible through standard public MLS channels.
Consumer Fairness, For Buyers
CCP was established primarily as a standard of fairness for buyers. Home ownership plays such a critical role in the financial and emotional aspirations of Americans, one can reasonably argue that fair and organized access to for sale housing inventory is crucial to the American Dream.
Proponents of CCP (opponents of private marketplaces) believe that consumer fairness if about ensuring consumers can rely on a single source of data for all homes being offered for sale (MLSs are that source of record).
Proponents of CCP also argue that exposing listings to the full market via public channels will most often generate better results for homeowners and should not be diminished by infrequent use cases. They also argue that the aggregation of private listings is more beneficial to the broker/agent in the long-run than to the consumer and that private channels are too often recommended out of (brokerage) self-interest than consumer (seller) benefit.
The Fair Housing Component
There is an important conversation about fair housing (equal access to housing for those who meet equally applied financial requirements) in the CCP/private listing debate. When homes are listed on the MLS, everybody always has equal access to the listings, websites that receive MLS feeds are completely non-discriminatory.
When homes go through private channels, it is easy for those channels to be distributed to a homogenous group of people, even if the source (broker, agent, private platform) is not intentionally discriminating, it’s too easy for limited-access distribution channels to be unintentionally discriminatory which reduces equal access and brings about fair housing concerns.
Zillow Going to the Mat
The most significant escalation of this battle recently came from Zillow. Zillow has built a ~$17B business by publishing MLS listing feeds nationwide and repurposing them in a consumer-friendly, public format. A big part of Zillow’s success (it commands about half of real estate search traffic) is that buyers can trust they’re seeing close to 100% of the for sale market, but Zillow can’t capture private listing channels and the more those grow, the less buyers can rely on Zillow’s inventory, and the weaker its business gets.
The elimination of CCP and expansion of private listing channels presents a significant risk to Zillow’s business so they recently published their own standards for marketing homes for sale that are very similar to those of CCP – brokers must enter a listing into the MLS within one business day of public marketing. Zillow is threatening to ban a listing for the life of that listing if it determines pre-MLS marketing is in violation of these standards.
I have read/heard that Zillow has started issuing warnings and that they intend to enforce this new policy, setting of a potential knockdown battle between Zillow, anti-CCP brokers/agents, homeowners, and other industry players.
Is Consumer Fairness About Buyers or Sellers? My Opinion
When I think about issues like this, I try to look at them as an educated consumer, not as a self-interested Realtor. Like most issues, there are wide ranging trade-offs on this debate and there will always be strong arguments and use cases for both sides, but I prefer to form my positions based on which option produces the largest net benefit for everybody (most people will be buyers and sellers more than once in their lifetime).
While I feel strongly that sellers and their agent should have the flexibility to choose the marketing approach that works best for them, I think that the fragmentation of the for sale real estate market is a net negative for American consumers and the fundamental concept of CCP produces the highest net benefit. I think that the DOJ is anti-CCP for the right reasons (supports monopolistic brokerage and real estate industry structures), but the elimination of it produces the wrong results.
What do you think? Should consumer fairness in housing favor sellers or buyers? I’m not sure there’s a way to accomplish both.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
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