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The Hidden Listings: What You Need to Know About Private Real Estate Deals?

Marina Zaric
Mar 31
3 min read

Updated: Apr 6

It's important to address the practice of keeping listings "private" or "off-market" within real estate firms, particularly in the context of the Northwest Multiple Listing Service (NWMLS). Here's a breakdown of the situation:

Understanding the NWMLS:

Purpose:
- The NWMLS is designed to create a transparent and efficient marketplace for real estate transactions. Its primary function is to provide a comprehensive database of listings that are accessible to member real estate professionals.
- This system promotes fairness by ensuring that all participating agents have equal access to available properties.
Rules and Regulations:
- The NWMLS has strict rules and regulations that govern how listings are handled. These rules are intended to foster ethical conduct and prevent unfair practices.
- Specifically, the NWMLS has rules against "Pocket Listings", which are listings that are not entered into the MLS system. Once a listing agreement is signed, the listing is required to be entered into the NWMLS within a specified time frame.

The Issue of Private Listings:

What it involves:
- Some real estate firms, like Compass, may attempt to keep certain listings "in-house," meaning they are only shared with agents within their own firm and not entered into the broader NWMLS database.
- This practice can limit the exposure of a property to potential buyers.
Reasons for the practice:
- Perceived exclusivity: Some firms may believe that keeping listings private creates a sense of exclusivity, which could potentially drive up the selling price.
- Control: Firms may want to maintain greater control over the transaction.
- Dual agency: the firm may be trying to represent both buyer and seller, increasing the firms profit.

Pros and Cons:

Potential Pros (from the firm's perspective):
- Increased potential for "dual agency," where the firm represents both the buyer and seller, resulting in higher commissions.
- Potential for faster transactions within the firm.
- Creating an impression of exclusivity for certain clients.
Cons (for sellers and buyers):
- Limited exposure: Sellers may miss out on potential buyers who are not within the firm's network.
- Potential for lower selling prices: Reduced competition among buyers could result in lower offers.
- Lack of transparency: Buyers may not have access to all available properties, limiting their options.
- Ethical concerns: This practice can be seen as unfair and a violation of the principles of the MLS.
- Pros and Cons:
  - Potential Pros (from the firm's perspective):
    - Increased potential for "dual agency," where the firm represents both the buyer and seller, resulting in higher commissions.
    - Potential for faster transactions within the firm.
    - Creating an impression of exclusivity for certain clients.
  - Cons (for sellers and buyers):
    - Limited exposure: Sellers may miss out on potential buyers who are not within the firm's network.
    - Potential for lower selling prices: Reduced competition among buyers could result in lower offers.
    - Lack of transparency: Buyers may not have access to all available properties, limiting their options.
    - Ethical concerns: This practice can be seen as unfair and a violation of the principles of the MLS.

For more than 40 years, real estate brokerage firms in Washington state, as members of Northwest MLS, have agreed to cooperate and share all listings of all properties with the entire brokerage community and the public.

Recently, some brokerage firms have advocated for MLS rules that facilitate hiding property listings from consumers and lobbied the real estate industry to accommodate those exclusionary practices. Those efforts are not for the benefit of sellers or buyers, but are instead designed to benefit those brokerage firms by entrenching them as the gatekeepers of property listings. Northwest MLS has declined to adopt those misguided, exclusionary rules.

Northwest MLS strongly believes that consumers should have access to all property listings and that sellers are entitled to the benefit of exposure of their property to the full marketplace. An open, fair, transparent, and comprehensive marketplace benefits all market participants, including sellers, buyers, brokers, and appraisers.