Housing Notes: Agents’ Fiduciary Risk Hiding in Private Listings
Preface
I’ve spent a lot of time discussing the systematic private-listing dog-and-pony show of the past couple of years that misleads sellers into restricted-market programs and openly hides critical information from buyers. In my opinion, the world’s largest real estate brokerage does this only to boost its stock price, since such a program offers no other upside at scale. Private listings done at scale by the world’s largest real estate brokerage directly conflict with serving its sellers and openly show disdain for buyers. Consumers take a backseat to shareholders, as we are seeing in national media today.
Why private listing incentives differ from a fiduciary to the seller
The real estate brokerage industry views each sale as a two-sided transaction: a buy-side and a sell-side. A private listing keeps both sides inside the firm. That is the large, built-in financial reason to keep the listing private, beyond what the seller actually wants. Firms describe private listings as a way to protect privacy, test pricing, or avoid looking “stale” on days-on-market. Compass openly brags in its marketing that it hides “bad information” from buyers to protect sellers. But most importantly, and in my view the only reason for the big push for private listings, it also makes double-ending more likely- 72 percent more likely, in fact.
Sellers often agree to dual agency when they sign the listing agreement. That’s before any buyer exists, so they probably can’t visualize the conflict until it appears when a buyer shows up.
Fewer buyers usually means less competition so the seller may get a lower price or worse terms. Meanwhile, the brokerage gets paid more because it collects from both sides. Can you see the problem here?
Compass says it’s anti-double-dipping (one agent on both sides) versus two agents and one brokerage, which is what the whole private listing push is trying to achieve. But like double-dipping, the firm in a double-ended deal still collects commissions from both sides and has access to confidential information from both agents during the negotiations.
“The seller signed a disclosure” is not an adequate defense
In May 2025, Compass announced that all sellers must review and sign its three-phase marketing disclosure form before premarketing begins (private listings). The disclosure describes reduced exposure and possible price effects, says sellers can direct an MLS launch at any time, and states they don’t need to accept an offer during the off-MLS phases. These all seem like meaningful safeguards. Compass’s lawyers, who likely drafted this listing agreement, did their job.
But the question is whether consent was genuinely informed, not whether a signature exists on the listing agreement. That’s where it gets gray. New York’s dual-agency guidance emphasizes full disclosure before consent. But remember who the seller is speaking to? A trusted advisor, often someone they were referred to by someone they know well, or an agent they worked with before they joined Compass, or with a company under Anywhere before Anywhere was acquired by Compass. Sellers will sign anything with fine print if their trusted advisor tells them to in an overwhelming and significant transaction; think of the last time you saw the legal fine print on a credit card disclosure. Did you read it all and agree with every aspect?
Private Listings Tend To Create Dual Agency
When a listing is kept off the open market (no MLS, no syndication, maybe only internal or “office exclusive” exposure), the buyers who see the private listing are mostly people the listing brokerage already has a relationship with. So the chance rises that the same firm, or even the same agent, represents both the buyer and the seller. That is known as dual agency. In other words, off-market sales were 72 percent more likely to be “double-ended” than publicly marketed sales, not that Compass double-ended 72 percent of its deals. An internal Compass analysis presented during its litigation with Zillow found that underlying rates were 31 percent for off-market sales versus 18 percent for public listings; that’s a 72 percent increase in the rate.
Private Listings Equal Restricted Marketing
Listing agents put themselves in a potentially vulnerable legal position to buyers and sellers when they promote privacy, price testing, and avoiding public days-on-market history without clearly explaining the tradeoff: reduced exposure can mean fewer competing buyers and a lost opportunity to get a higher price. Sellers may knowingly choose that tradeoff, but it comes at the cost of less exposure.
I wrote this past summer extensively about how embarrassing Compass’s analysis of private listing price premiums was in Compass Employees Made Their Own Report That Says Their Private Listings Sell For More. Many white papers over decades support the idea that more eyeballs on a property raise the probability of a high price. You can go down rabbit holes here, here, here, here, here, here, and here to read about it.
I’m deeply concerned that the listing agent minimizes the possibility of fewer competing buyers or presents phased marketing as the default or superior choice without a seller-specific explanation. But by far, an agent’s biggest litigation risk from buyers and sellers comes when they fail to explain a material conflict arising from an internally represented buyer. The private listing scenario gives that agent much more control and increases the likelihood of a double-ended deal (31 percent of private listings become double-ended deals versus 18 percent for public listings, a 72 percent higher chance.
The distinction is between explaining the available choices and steering the seller toward the brokerage’s preferred choice, since the only notable benefit of double-ending deals is to raise the Compass stock price (since there is no material benefit to the seller in most cases, unless their personal situation requires discretion at the cost of a potentially lower price or longer marketing time. This assumption rests on the process of elimination, since private listings are known to extend marketing time and don’t command a price premium because of their lower market exposure. Why else would Compass be fighting so hard for something so inherently false on its face? A marketing authorization (a signature on a listing agreement) also should not be confused with the separate informed consent required for dual agency in New York State.
“My listing agent represents me exclusively; the buyer just happens to have another Compass agent.”
Thus, there are two distinct questions in New York State:
- Did the seller knowingly authorize restricted marketing? (I’ll bet they didn’t)
- Did the seller and buyer knowingly consent to the agency relationship that developed? (I’ll bet they didn’t)
Confirmation of the first question does not automatically confirm the second. Compass’s disclosure expressly preserves the seller’s ability to instruct the agent to launch on the MLS at any time, which benefits the seller. In my view, the agent will be especially vulnerable if they recommend accepting an early offer without clearly explaining to the seller that broader market exposure has not occurred, or if they treat limited exposure feedback from a private listing as definitive evidence of what the entire market would pay.
Final Thoughts
Compass’s private-listing push serves shareholders more than sellers. Off-market sales are 72 percent more likely to be double-ended (31 percent vs. 18 percent), so the firm collects both commissions while sellers face fewer buyers. A signed marketing disclosure doesn’t prove the seller understood that tradeoff. And in New York, agreeing to restricted marketing is separate from the informed, written consent the state requires from both buyer and seller for dual agency. Since private listings show no price premium, agents face the most legal risk when they steer sellers away from full market exposure or treat a marketing signature as consent to the conflict that follows.
Let the consumer lawsuits begin.
The Actual Final Thought – Another history tidbit to love about NYC.
