Overview of the MLS System

The Multiple Listing Service (MLS) plays a crucial role in today’s home-selling landscape. Recent analysis from Zillow highlights that sellers opting to bypass MLS listings often face a significant drop in final sale prices, with communities of color being particularly affected.

Financial Implications of Not Using the MLS

Statistics reveal that homesellers who list their properties off-platform collectively lost over $1 billion during 2023 and 2024. On average, these sellers encountered a median reduction of 1.5% in sale price, translating to an approximate loss of $4,975.

When examining the impact on communities of color, the figures are striking: off-MLS listings in these areas experience a median sale price difference of 3.2%, equating to a loss of about $9,851.

The Clear Cooperation Policy and Its Implications

The conversation around MLS usage has intensified due to the National Association of REALTORS® (NAR) and its Clear Cooperation Policy. This policy requires that properties be listed on an MLS within 24 hours of public marketing, leading to debates over transparency versus competition restrictions.

Supporters advocate for the enhanced market clarity it provides, while critics argue it limits competition for private listings. The Department of Justice (DOJ) has shown interest in this policy, suggesting a potential for antitrust scrutiny.

Compass’ Alternative Approach

As a noted opponent of the Clear Cooperation Policy, Compass CEO Robert Reffkin has championed a private-listing network that circumvents traditional MLS frameworks. This proposal has sparked a mixed reaction within the industry.

Bess Freedman, CEO of Brown Harris Stevens, referred to such private listing networks as a “Trojan horse,” arguing that they hinder sellers by delaying market exposure, ultimately affecting inventory levels negatively.

Racial Disparities in Listing Strategies

In studies analyzing private listings, Zillow noted distinct differences among racial groups. In predominantly Black neighborhoods, homeowners experienced a 3.1% lower sale price from off-MLS listings, resulting in a loss of approximately $5,576. Majority Hispanic neighborhoods showed an even greater disparity of 4%, translating to a $13,728 loss, while majority white (non-Hispanic) neighborhoods reported a smaller drop of 1.2%, equating to about $3,964.

These findings suggest that agents are more inclined to recommend private listing networks to Black and Hispanic sellers, with 74% of Hispanic and 73% of Black sellers indicating they were advised to pursue this option. Contrastingly, only 24% of white sellers received similar recommendations.

Methodology of Zillow’s Study

Zillow’s report, based on an analysis of 10 million transactions, identified 3.79 million relevant cases for evaluating the impact of private listings. The criteria focused on sales that appeared to be listed on the MLS only once a contract was secured, excluding other types of transactions such as new constructions, foreclosures, and those below $10,000 or above $10 million.

The disparities highlighted in the report emphasize the importance of comprehensive market access—especially in a climate where housing inventory has decreased by 26% since the pandemic.