The MLS system has long been the backbone for listings, providing a level playing field for buyers and agents.
However, private or “off-market” listings are becoming more common, especially among luxury brokerages and tech-enabled firms like Compass in the US.
NextHome co-CEO James Dwiggins has outlined three possible scenarios to Inman for the US real estate industry amid ongoing controversy surrounding Compass’s “three-phase marketing strategy”, which initially keeps listings off multiple listing services (MLSs).
“It’s going to go one of two paths. No. 1 is there will be massive litigation from this coming in time,” Mr Dwiggins said.
“The only reason why it hasn’t started yet is there’s not a big enough class.
“I’ve spoken to class-action lawyers who are like ‘this is easier to win than Burnett.’“
He predicts litigation will emerge within 24 to 36 months as attorneys compile evidence from marketing materials, sales data, and comparative market analyses to build cases against brokerages employing private listing strategies.
The second potential outcome would see the industry return to traditional practices where private listings are used selectively for clients with legitimate privacy concerns rather than as a standard marketing approach.
“Path No. 2 is Compass doesn’t get its way, and this whole game slows down, and it’s used selectively for sellers that legitimately need to do that, and we get back towards serving buyers and sellers correctly without manipulation of the market,” Mr Dwiggins said.
However, it’s the third scenario that most concerns the NextHome executive, describing it as “Armageddon” for the industry.
This path would see multiple brokerages creating their own private listing networks in response to Compass’s strategy.
“If everybody went down the road of building private listing networks because that’s what they had to do based upon what this one company is pushing, then what happens? It’s absolutely catastrophic,” he said.
“You have the worst consumer experience ever created, where all this inventory is held back, trying to be sold internally, which is what this game is about. You don’t have access to it unless you’re working with one of the agents at that firm.”
Mr Dwiggins outlined several consequences of this scenario, including reduced market transparency, compromised appraisal data, lending complications, and industry consolidation that could leave just 12 to 15 brokerages controlling 70 per cent of inventory nationwide.
Perhaps most significantly, he believes this path would ultimately benefit Zillow above all others, potentially transforming the portal into the nation’s largest brokerage almost overnight.
“Zillow becomes the largest real estate brokerage in 30 days in the US with massive market share and massive eyeballs and they push all that business to their agents now. That’s the game that gets played,” he said.
The NextHome co-CEO said that proper representation means presenting sellers with transparent options based on their specific needs rather than steering them toward strategies that primarily benefit the brokerage.
“Our jobs are to sit down, ask questions: What are the goals of the seller? Ninety-nine per cent of sellers are going to say two things: highest price possible, least amount of time,” Mr Dwiggins said.
He believes the industry’s future hinges on whether Zillow’s listing ban remains in place, as this policy currently limits the appeal of private listing strategies.
“If Zillow’s listing ban stays in place, this three-phase marketing plan that Compass has becomes very little used because there’s not a scenario where you want to explain to a seller that if we do X, Y and Z, your listing will never be shown on Zillow,” he said.
