1 hour ago
3
Secret home sales could be history.
Big Apple real estate professionals are hailing new state legislation that aims to ban exclusive, hush-hush property listings that leave sellers clueless and buyers locked out.
“Private listings primarily benefit brokers rather than consumers,” said Dolly Lenz Real Estate agent Jenny Lenz. “Our responsibility is to serve our clients’ best interests, whether they are buyers or sellers, and broader market exposure creates the strongest outcome.”
The New York state Senate passed the “Fair and Transparent Real Estate Listing Act” — sponsored by State Sen. Nathalia Fernandez — on Monday. It ends private home listings marketed to an exclusive audience, unless the seller or landlord signs an explicit disclosure form acknowledging the risks of withholding a listing from public marketing, which could be fewer offers and/or a lower sales price.
High-net-worth individuals and celebrities use quiet listings to avoid the Paparazzi or looky-loos. People involved in messy life events like a divorce, use them to prevent nosy neighbors and the media from meddling in their affairs.
Also, by keeping properties private, brokerages can double their commissions by using their own agents on both sides of a deal, and they can build a data monopoly.
“Some of the largest real estate brokerages have a strong business incentive to increase the number of off-market and private listings they control,” said David Schlamm, founder and CEO of City Connections. “Their objective is to position their own platforms as the primary destination for consumers seeking access to available inventory.”
The National Association of Realtors passed a policy in 2019 banning pocket listings nationally. But New York City doesn’t play by NAR’s rules and the Big Apple lacks a single, standardized multiple listing service.
“If consumers cannot see a listing, they may never know the property was available in the first place,” Lenz added, “which creates challenges for the market overall and raises broader fair housing concerns by potentially limiting access and opportunity for certain buyers.”
With a green light from Gov. Kathy Hochul — who will “review the legislation,” her spokesperson said — New York would be the fourth state to implement such a law this year. The other three are Washington, Wisconsin and Connecticut. Lawmakers in Illinois and Hawaii have also proposed similar legislation.
“I think the legislation is wonderful as it clearly identifies that sellers have a right to list privately as long as full disclosures around risks and rewards have been signed,” said Compass broker Leonard Steinberg. “We have been providing these disclosures, and sellers have been signing off on whether they want this or not — in writing — for many months already.”
He appreciates that the legislation includes the carve-out.
“Sellers should have a choice as to whether to list their homes more quietly or more publicly and when,” Steinberg said. “Sellers are consumers too and should have rights, just like buyer consumers have rights. Listing privately is not for everyone, and is often done for very specific and justifiable reasons.”
But this issue has come to a head, according to market analyst Jonathan Miller, in the wake of the Compass-Anywhere merger in January “made worse because the [Department of Justice] opted not to scrutinize the Compass-Anywhere merger in January.”
“It is important to note that after the merger, Compass’ market share in Manhattan has been reported as 80%, 50% above the FTC’s legal merger threshold,” he added, giving them the greatest private listing inventory to the detriment of other firms.
“The bigger related issue is that New York’s potential action against private listings adds to a wider regulatory investigation into Compass’ private-listing strategy. There is already an antitrust probe by the New York AG tied to its merger with Anywhere. That means the private-listing issue is no longer just a marketing debate.”
By listing privately, the seller can test the market, skip staging their home for open houses, limit disruption for tenants and only show their home to vetted potential buyers. Keeping a listing quiet also prevents the listing from ever getting stale with a public “days on market” tracker.
But sellers who don’t list publicly could lose money by avoiding a competitive bidding war and leave potential buyers out in the cold.
“I have mixed feelings about this proposed legislation,” Schlamm said. “At its core, homeowners should have the right to decide how their property is marketed.”
“While there are certainly circumstances in which a private or off-market strategy may be the right choice for a seller,” he added, “I believe those situations are the exception rather than the rule. For the vast majority of homeowners, publicly marketing a property provides the greatest opportunity to maximize competition, exposure and ultimately the final sale price.”
English (US)