Compass touts ‘transparency’ of new seller disclosure form 

Compass is introducing a new version of its disclosure form for home sellers who participate in the company's 3-phased marketing strategy — the brokerage's listings approach that starts with a private exclusive and then a "coming soon" promotion before going fully public on the MLS. 

The form is being standardized nationwide across the Compass brokerage network, and sellers will be required to sign it before agents begin any pre-marketing activity, the company said, in an effort to provide more transparency. Critics of private listings have argued that sellers aren't fully aware of the risks of off-MLS listings — namely, a smaller buyer pool, fewer offers and lower sale prices — but Compass appears to highlight these very risks in its new disclosure that also promotes the benefits of its private exclusives effort. 

What's in the form

The single-page, 685-word form includes a brief overview of how the 3-phased marketing strategy works and a separate section for seller authorization of each phase. It also provides the option to opt out of the marketing strategy and list directly to the MLS. 

The new form formalizes a pre-marketing timeframe, which varies by region and market, as local MLSs are responsible for setting the delayed marketing window via the Multiple Listing Options for Sellers policy NAR announced in March. However, some MLSs have declined to participate in the delayed marketing policy, including CRMLS, which has set its timeframe to zero days. 

The disclosure highlights some of features of delayed marketing, such as not accruing days on market and no price history — data points that Compass leaders have referred to as "negative insights." Other benefits of the strategy, Compass argues, include having extra time to prepare a home for public viewing and maintaining privacy by limiting broad access to home details until the seller is ready to list on the open market.  

Caveats around exposure, sale price

The disclosure form also addresses the limited nature of private exclusives, notifying sellers of what to expect if they do not list their home on the MLS. 

Specifically, Compass notes that by opting into the 3-phased marketing strategy, the seller's "property is not distributed to other brokerage firms and other public sites" which could reduce "the number of potential buyers who can learn about the property," "the number of offers" and "the final sale price for the property."

However, sellers can "instruct Compass to submit" their property to the MLS at any time during the marketing process, and they are not obligated to accept an offer while their home is listed off the MLS. In the announcement shared with Real Estate News, Compass also expressed that the company "is fully committed to Fair Housing laws, and this disclosure reinforces the importance of marketing strategies that comply with all local, state, and federal requirements."

Compass highlights 'greater transparency and professionalism'

"We continue to advocate for homeowners' right to choose how, when, and where their home is marketed," Compass CEO Robert Reffkin said in the announcement. 

The "enhanced" form "represents another step we're taking to promote greater transparency and professionalism in our industry, while ensuring every one of our clients has a clear understanding of how the Compass 3-Phased Marketing Strategy works as well as intentional absence of public portal exposure during Phase 1 and Phase 2 as part of a strategic rollout," Reffkin added.

Compass first announced the 3-phased marketing strategy in November and then launched its client portal in February, with private exclusives being the center of much of the company's brokerage strategy this year. Compass leaders have repeatedly reiterated the brokerage's support for sellers' right to list off of the MLS and argued that homes that go through the 3-phased marketing strategy sell for 2.9% higher than those that list on the MLS on day one. 

Currently, Compass has 6,995 Compass Private Exclusives nationwide, a spokesperson confirmed to Real Estate News.

The naysayers

Compass' push for private inventory has not been without controversy, however. A growing number of industry leaders have argued that private listings harm both buyers and sellers, present a competitive disadvantage to smaller and independent brokerages, and can potentially lead to discrimination if certain buyers or groups are excluded from seeing all available homes in their community.

Zillow has shared data that homes listed off the MLS sell for less, and Bright MLS has reported that pre-marketing offers no cost benefits for sellers. As of May 28, Zillow is also barring listings that have been marketed publicly but not widely distributed via the MLS.

In April, eXp released its own seller disclosure form, but rather than simply informing sellers of the limitations of private listings, the brokerage — which has spoken out against off-MLS listings and endorsed Zillow's move to ban them — overtly discouraged the practice.