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If large brokerages go all-in on private listings, they would dominate the market, putting smaller firms “right out of business,” a consumer advocate warns.
Key points:Stephen Brobeck of the Consumer Policy Center suggests that the private listings push would further “concentrate and institutionalize” power among big brokerages.If a company the size of Anywhere followed Compass’ lead on private listings, it could “represent a very serious threat to a free market and a transparent market,” he explained.But Zillow, though likely acting in its own best interest to maintain the open market, could alter the trajectory.
Could a handful of big brokerages soon control the residential brokerage industry? It’s a real possibility, warns Stephen Brobeck, senior fellow with the Consumer Policy Center.
Brobeck, a consumer advocate who has authored reports on low-fee brokerages and buyer agreements, believes an industry-wide push for private listings combined with the current consolidation moment could vastly change the future of real estate sales, impacting agents and consumers alike.
An uncertain future for small brokerages
Small, independent teams and firms have reason to worry about the direction of the industry, Brobeck suggests, particularly as large brokerages like Compass, Howard Hanna and others seek to maintain control over their listings and inventory via office exclusives and brokerage-specific websites.
As far as small brokerages go, a large-scale shift to private listings would “put them right out of business,” Brobeck told Real Estate News.
“I mean, who’s going to go to a Realtor who has access to only a third of the market? That’s where this could go, and it could go pretty quickly,” he explained.
If the dominoes start to fall, ‘it’s like World War I’
While Compass has been the most outspoken — and has focused much of its brokerage strategy around “private exclusives” — others have quietly followed suit or said they’re prepared to pivot in the same direction.
Anywhere CEO Ryan Schneider has repeatedly said the company is ready to flip the switch on private listings, and eXp CEO Leo Pareja told Real Estate News he’ll “do what’s best” for the brokerage and its agents if the tide moves in that direction — though Schneider and Pareja have both been consistent in their support of the MLS and open access to listings.
But should a company the size and scale of Anywhere or eXp signal a sudden shift in position, it could “represent a very serious threat to a free market and a transparent market” and to consumers, Brobeck believes.
“Once this starts, it’s like World War I — you’ve got to line up and then all of a sudden, you’ve got six big brokers who are doing it,” he said, adding that once the top handful of brokerages all rush to capture inventory, they would likely control a majority of the listings, “disadvantaging everybody else.”
A weakened NAR holds less sway over brokerages
Even if the market shifts back in a big way to buyers, that doesn’t mean those brokerages would suddenly change course. “Power gets concentrated and institutionalized,” Brobeck explained, meaning that it would be difficult to revert to a more open and transparent market.
And while the National Association of Realtors once “disciplined the marketplace” through its rules and MLS system, its influence has waned in recent years. Brobeck believes that could also enable big brokerages to gain — and retain — dominance of the industry and inventory.
Self-interest plays a role, but ‘so what?’
Brobeck agrees with some critics of the private listings effort who argue that pressure from investors has pushed publicly-traded brokerages to grow at any cost. “I think that’s a good portion of it, because Wall Street tends to have a short-term orientation, and that’s a problem,” he said.
But Zillow is also a publicly-traded company, and it strongly opposes private listings, going so far as to bar some types of off-MLS listings from appearing on its websites. The home search giant has positioned itself as an industry leader fighting for the consumer and the integrity of the marketplace. However, some argue that Zillow — like other major corporations — is just looking out for its own best interest since it relies on listings coming from the MLSs.
“So what?” Brobeck argued. “Forget about motive. Look at impact. Look at the results.”
“It’s just so facile and easy to say, ‘Oh, they’re looking out for their own interest.’ Take a look at the issue and the impacts that their intervention will have.”