The real estate landscape in New York and Connecticut is undergoing significant changes with the passage of new legislation aimed at increasing transparency in home listings. These laws target private listingsoften referred to as pocket listingswhich have been a contentious issue in the industry. The new regulations require agents to publicly market homes within a specific timeframe, potentially altering how real estate professionals conduct business.
In New York, the Fair and Transparent Real Estate Listings Act was passed by both the Assembly and the Senate and is now awaiting the signature of Governor Kathy Hochul. This legislation mandates that within one calendar day of signing a listing agreement, the home must be publicly marketed on an MLS or a public site accessible to anyone without requiring contact with the agent. Additionally, the listing must be shared with buyer agents who inquire, allowing them to show the property.
Impact on Private Listings
The new laws directly challenge the practice of keeping listings private to test the price or build buzz before officially hitting the market. This approach, often used by companies like Compass, involves a three-phase marketing strategy: private exclusive first, then a Coming Soon phase, and finally a public launch. However, the New York bill requires concurrent public marketing, eliminating the advantage of the quiet phase.
Critics of private listings argue that they often do not result in a sale during the exclusive phase. Data from a court case involving Compass and Northwest MLS suggested that roughly 95% of listings fail to sell during the private phase before being pushed to the MLS. This raises questions about the effectiveness of the soft launch strategy.
Disclosure Requirements for Sellers
The legislation does not outright ban private listings but requires sellers to sign a disclosure form if they choose to opt out of public marketing. This form, written by the state, outlines the potential risks of going private, such as fewer buyers seeing the home, fewer offers coming in, and a possible lower selling price. Agents must explain these risks to their clients, potentially altering the conversation around private listings.
In Connecticut, a similar law was signed by Governor Ned Lamont at the end of May. This law requires agents to provide a consent form to sellers who opt out of making their listings available on public platforms like Zillow and. The form highlights the financial risks associated with private listings, aiming to protect sellers from potentially leaving money on the table.
Broader Implications
The passage of these laws in New York and Connecticut is part of a broader trend across the United States. Other states, including Connecticut, Hawaii, and Washington, are also considering or have already enacted similar legislation to limit private listings. This shift reflects a growing concern about the fairness and transparency of the real estate market.
For real estate professionals, these changes mean adapting to new rules and potentially rethinking their marketing strategies. The focus may shift from controlling access to listings to demonstrating value through pricing, judgment, and negotiation skills. As the market evolves, agents who can navigate these changes will be better positioned to serve their clients effectively.
