There’s a growing movement in the real estate industry that is changing the way properties are sold, marketed, and managed: private listing networks. Also known as “pocket listings,” these networks allow select real estate agents and brokers (usually from the same brokerage) to share property listings exclusively rather than with the general public and other agents.
In New York City’s competitive real estate market, having an agent with access to private listings might sound like a great idea. However, a study suggests that private listing networks are doing more harm than good, and having an increasingly negative impact on the real estate industry as a whole.
Zillow research found that virtually all prospective buyers (91%) agree they should be able to see and access all available for-sale home listings for free, regardless of who lists them. Read on to learn more about Private Listing Networks and why they’re controversial.
What Are Private Listing Networks?
A private listing network is a system in which homes are marketed outside of the public platforms, and are only accessible to a select group of agents and brokers within the network. Most homes in the U.S. are listed on the Multiple Listings Service (MLS), a database shared by the real estate industry. The MLS database is also what feeds listings to consumer platforms, allowing you to see for sale homes on places like Zillow or Realtor.com. In New York City, there is no MLS, but most listings can be found publicly online – like on StreetEasy. Private listing networks, on the other hand, operate behind the scenes, offering promises of a more exclusive and tailored marketplace with less competition.
Homes can be listed as off-market, pre-market, or with limited visibility for buyers (for example: homes are not listed on StreetEasy, social media, or any public websites, but can be found on the brokerage’s website).
Private listing networks come in many forms. Some are invitation-only networks, while others are exclusive agent networks where only agents from a specific firm or region can access and share listings. Some consist of off-market listings that are shared privately with a select group of buyers, as a way to “test” a price on the market before being publicly listed.
Why Are Private Listing Networks Controversial?
Private listing networks thwart two key components to a fair and honest real estate market: transparency and equal access for all. This harms sellers by limiting the visibility of their listings, and narrows buyers’ home search options. It also harms agents by denying them access to the listings they need to adequately represent potential buyers.
Reduced Exposure, Reduced Price
“With more companies trying to push these private exclusives and off-market properties, it’s arguably going backwards from a centralization of readily available data to a bifurcated system,” says Jared Antin, Managing Director and Associate Real Estate Broker at Elegran Real Estate. “And anytime that an agent is limiting exposure, it comes with risks to the seller.”
A 2023 multi-state study by BrightMLS and Drexel University found that homes listed on the MLS sold for 17.5% more than comparable off-MLS listings between 2019 and early 2023, representing more than $53,000 for the typical seller in 2022. These homes also sold faster. Listings with maximum exposure get the maximum price, so by limiting exposure, it potentially reduces the return on the property’s sale.
Private Listing Networks Limit Buyers’ Choices
Private listing networks can also create disadvantages for buyers. They prohibit buyers from seeing all the available inventory, so they’re potentially missing out on homes that could be their best option.
Buyers may also be compelled to work with an agent solely for access to listings on a private network, rather than hiring an agent who’s the right match to advise and guide them through the transaction. A skilled buyer’s agent can save home shoppers time and stress, helping them buy with confidence and ensuring they get the best possible deal.
The Risk of Dual Agency
Choosing an agent solely for their listing access could also increase the risk of dual agency, where the same agent or brokerage represents both the buyer and seller in a transaction. When this happens, the agent or brokerage usually earns commissions on both sides of the transaction, creating a conflict of interest that can lead to a buyer or seller not getting the best possible deal. Imagine if the same attorney were to represent both the plaintiff and defendant in a legal case — could they really prioritize the interests of both clients?
By engaging in dual agency, agents may also expose themselves to potential legal and regulatory risk. They’ll need to demonstrate they acted in the best interests of both the buyer and seller, rather than acting in such capacity for personal gain or motives.
Hidden Information Harms Consumers and Agents
“Private listings create a bit more opaqueness in pinpointing the exact value of a property, because they hide the listing and price history,” notes Antin. “This information is important for agents when assessing prices that move quickly, required price cuts, and homes that ultimately come off the market because they weren’t priced appropriately. If nothing is listed publicly, it makes it harder to understand how much negotiability there was in a transaction and any sort of price sensitivity.” In essence, it creates an uneven playing field for agents, since they now have to work with fragmented information when analyzing real estate trends.
Private Listing Networks Create Fair Housing Risks
Private listing networks also have the potential to increase violations of the Fair Housing Act, which prohibits discrimination in housing based on race, color, national origin, religion, sex, disability, or familial status. The National Fair Housing Alliance has specifically called out pocket listings — off-market listings that can make up private listing networks — for this reason.
National Fair Housing Alliance President and CEO Lisa Rice shared that restricting visibility to a select group can “perpetuate inequities that have long plagued our housing system. Transparency in real estate transactions is essential for fostering a fair and competitive marketplace.”
Limiting access to all listings effectively eliminates access to housing opportunities for many individuals, particularly those from marginalized communities, Rice adds.
What About Sellers Who Want Privacy?
Sometimes a seller values maximum discretion over maximum price. To safeguard their privacy, these sellers may direct their agent to withhold their listing from public exposure.
“There’s only one scenario where I see private listing networks as acceptable, and that is when the client has requested that the listing be kept private,” said Oxford Property Group real estate agent Jules Borbely. “We see this with celebrity clients, who don’t want articles about their home sale or don’t want pictures of their living room and bathroom on the internet.”
Even in these rare cases, it’s important for the client to understand they might be selling their home for less than its full price potential due to limited exposure. Despite the increased privacy, these sellers should be aware of the clear tradeoffs they’re likely making in price and selling speed.
As a seller hiring an agent, it’s important to get a clear understanding of their plans to market your property, and to ensure everything is outlined for you in a signed agreement. If you’re a buyer, don’t choose an agent solely for their listing access. Instead, choose one based on their relevant experience and the excellent service you believe you’ll receive from them. You deserve to see the full picture of the market and all it has to offer before potentially making one of the biggest purchases of your life.
