Today’s housing market mostly operates out in the open — in one place, buyers surfing Zillow or Redfin can see nearly every home listed for sale.
But in recent months, one of the industry’s largest brokerages, Compass, has been pushing for more sellers to list their homes “privately” — meaning they can only be viewed by buyers represented by a Compass agent. The company is also seeking changes to industry rules to allow them to expand their network of private listings.
Should other brokerages follow Compass’s lead, it could become more difficult for consumers to know what homes are on the market and effectively force them to work with an in-house agent.
“Compass is trying to gain market share… by gating listings,” said Brian Boero, a chief executive of 1000watt, a marketing agency for residential real estate companies, and a vocal critic of private listings. “In the midst of this historic affordability crisis, you have the nation’s largest broker trying to make it even harder for people to access homes.”
The change comes as home sales nationwide sank to a 30-year low, creating a financial crunch in an industry that raked in record profits during the pandemic housing boom.
“Real estate brokerages are all hungry and trying to figure out how to get a bigger slice of a really contracted market,” Boero said.
Private listings, also known as pocket listings, aren’t new — many of the most expensive homes in the Bay Area last year sold “off-market.” Still, they represent a small fraction of total sales in the region, around 3%, Redfin estimates.
Last year, though, Compass started a campaign that advises sellers broadly — not just high-net-worth ones — to start with a private listing. Compass tells its sellers that this strategy allows them to offer their home to a smaller audience while they stage and prep it for the broader market, generating “early demand.” It also keeps photos and pricing off databases known as multiple listing services, or the MLS, which syndicate the listing to sites like Zillow and Redfin. Private listings don’t show price drops or days on market, which can signal a seller may be willing to negotiate.
As of mid-January, 384 homes in the five-county Bay Area were only available to buyers working with a Compass agent — that’s 8% of all listings by any brokerage, according to an analysis of listings on Compass.com by the Bay Area News Group. Other brokerages, including Coldwell Banker and eXp Realty, also have their own exclusive listing networks, though they have a smaller Bay Area presence.
New York-based Compass, which has 38 offices in Northern California, declined repeated requests for an interview.
While Compass advertises private listings as beneficial to sellers, small brokerages and fair housing advocates say the real benefit accrues to the brokerage, which earns a commission on both sides of the transaction.
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Agents are also divided on whether private sales harm or hurt a home’s value.
James Dwiggins, co-founder and CEO of the Pleasanton-based brokerage NextHome, said the only way sellers can know their home’s true value is by putting it on the open market. He points to a study by Bright MLS found that homes sold privately in five states and Washington, D.C., between 2019 and 2022 sold for 17.5% less than similar homes on the MLS.
But agents who regularly sell off-market, like Judy Citron, a Redwood City-based Compass agent, say their sellers don’t make less than others. Some buyers, she said, even pay a premium to avoid going up against extra competition.
“Sellers are smart,” she said. “We look at the comps to understand what they should expect to get for their home, and they’re not going to take anything less.”
Growing their private listings would mark a victory for Compass in its war against industry disruptors like Zillow and Redfin, which are free for buyers, but charge agencies like Compass for leads that they generate.
“By growing our listing inventory, we believe more and more buyers will search Compass.com and use Compass agents, as it will be known that Compass has more inventory than any other website or brokerage,” CEO Robert Reffkin said in an October earnings call.
In concert with its efforts to grow its private listing network, Compass has also advocated for the National Association of Realtors to repeal its Clear Cooperation Policy — a rule adopted in 2020 that requires agents to post their listings to a multiple listing service within a day of marketing it to the public.
Reffkin has stepped up his public attacks on Clear Cooperation and the MLS as the long-struggling company comes under pressure from its venture capital funders to turn a profit after burning through cash since it went public in 2021.
Created in 2012, Compass raised $450 million from SoftBank, the same company that backed another infamous real estate startup, WeWork. The company employed WeWork’s “blitzscaling” strategy — buying up competitors to increase its market share. In the Bay Area, Compass scooped up Pacific Union International, Alain Pinel Realtors, and the Paragon Real Estate Group, a shopping spree that gave them control of nearly a third of the local market.
That rapid expansion, paired with the pandemic-era boom in home sales, fueled record revenues of $6.4 billion for Compass in 2021. But since then, interest rates have caused home sales to drag, and with them, Compass’s revenues, which dropped to $4.89 billion in 2023.
Should Compass succeed in bringing the majority of its listings in-house, every other major brokerage would follow suit, resulting in “the most fragmented market you’ve seen in our lifetime,” Dwiggins, the Pleasanton broker, warns.
Fair housing groups say they’re concerned by the shift, too.
“When listings are confined to private channels, it becomes increasingly challenging to ensure compliance with fair housing laws designed to protect individuals from discrimination,” said Lisa Rice, president of the National Fair Housing Alliance, an advocacy organization in Washington, D.C.
