New York Latest State to Consider Law on Private Listings

The battle over private listings has entered New York’s state legislature.

State assembly member Michaelle Solages introduced a bill last month that would prohibit the use of private listings unless a seller signs specific written agreements acknowledging the risks of private marketing.

The bill comes as similar policies at the national level from the National Association of Realtors and Zillow have slowly been rolled back over the last year, and the battle over how listings are marketed has shifted to local statehouses.

The bill would require agents to display the listing on a broadly accessible website within one calendar day of signing a listing agreement, a tighter timeline than under NAR and Zillow policies that require listings be uploaded to the Multiple Listing Service within 24 hours of public marketing.

Sellers can opt out of publicly marketing by signing an agreement that specifies the seller has a need for privacy or safety, or a disclosure form that explains the “risks and tradeoffs” of private marketing, including reduced visibility to buyers, limited online exposure and fewer offers that might impact price and sale timing. The form also gives the seller the right to change their mind at any time.

Solages, who represents a swath of western Long Island, told The Real Deal she was looking at different levers to improve affordability and “private listings networks kept coming up” when talking to real estate agents.

“We want an open and competitive and fair process when buying a home,” she said.

The bill makes New York the latest in a series of states that have taken up the fight against private listing networks. In March, Washington Gov. Bob Ferguson signed into law the most stringent restriction on private listings, which only allows for sellers to opt out of public marketing for health or safety reasons. Wisconsin also enacted a law with similar provisions to the bill proposed in New York, and state legislatures in Illinois, Hawaii and Connecticut have also introduced similar bills.

At the same time, national organizations have taken a step back from policing private listings. Last year, NAR introduced an exception to its Clear Cooperation Policy, which required listings to be marketed through the MLS within 24 hours of public marketing. Zillow also scaled back a policy it introduced last year that closely mimicked CCP after partnering with dozens of brokerages to allow for listings to be displayed directly on its site without being entered into the MLS.

New York’s proposed law is agnostic to how listings are marketed, and would only require listings to be uploaded to “at least one publication, platform or website that is broadly accessible to the general public” and agents.

That distinction would leave the recent agreements made between brokerages and platforms to display listings that aren’t marketed through the MLS unaffected. Compass and Redfin announced the first of those partnerships in February, and were quickly followed by deals announced by Zillow and a number of brokerages, including Keller Williams and HomeServices of America.

Instead, the law strikes at listings marketed off any public-facing website, which is a relatively common practice in New York City’s luxury market. “This is not affordable housing,” said Compass’ Leonard Steinberg, pointing to the success the ultra-luxury new development at 80 Clarkson has had in selling homes for premium prices without putting anything on the public market.

But the law, which does not ban private listings but requires disclosures around them, also simply formalizes an industry-standard practice, according to Steinberg. “We have very clear disclosures with our sellers,” he said of introducing a private listing strategy. “We give them a vast menu of options. The key is they have a choice.”

Real Estate Board of New York President James Whelan also noted that the legislation is “consistent with industry standards” established for the Residential Listing Service in a statement.

“Policymakers are having to step up to do what brokerages should have been doing all along: telling sellers upfront that Private Listings Networks reduce competition and constrain price,” a spokesperson for Brown Harris Stevens said in a statement supporting the bill. “A fair and open marketplace is what’s best for our industry, buyers and sellers, and true price discovery.”

The bill still has a ways to go before it becomes law. It currently sits in the state assembly’s Judiciary Committee, and will need to be put forward for a vote by the committee chair before it can progress any further.

But Solages said the bill is one of her top priorities. “We are encouraged that we can get it done this session,” she said.