Do Private Listings Distort Mortgage Risk Data?

History doesn’t repeat itself, but it frequently rhymes. In the years before the 2008 mortgage crisis, financial “innovations” promised to unlock homeownership for millions. Each new product was marketed as pro-consumer and pro-efficiency, yet each gradually eroded the information needed by the people downstream who were pricing risk. The crisis produced a generation of regulatory reform premised on one simple lesson: when the information underlying credit decisions is distorted, manipulated or concealed, the consequences don’t stay contained to the transaction where the distortion occurred.

Today’s innovation is seller choice in the form of private listings: homes that are marketed extensively before they ever appear on a Multiple Listing Service (MLS), and seemingly with the express purpose of hiding days on market and price drop information. Much of the debate has centered on market fairness and fair housing concerns. But there’s a more systemic problem: what private listings do to the mortgage data infrastructure that sits underneath every transaction.

The landscape is shifting

For generations, MLSs were the central repository of residential market activity, built on mandatory participation and standardized data. While its compulsory nature often rankled agents, the result has been a reliable record used by appraisers, Fannie Mae, Freddie Mac, FHA, the FHFA, and every automated valuation model (AVM) feeding the mortgage origination process. Antitrust law accommodates this arrangement because the cooperative produced something no single firm could produce alone: a standardized, honest market record with data integrity.

The landscape shifted following Sitzer/Burnett and NAR’s subsequent retreat from MLS policy enforcement, which collectively accelerated the breakdown of longstanding cooperation norms. Private listings, once a marginal slice of transactions, have quickly become more prominent. By Q1 2025, Compass – the SoftBank-backed, NYSE-listed brokerage that became the largest in the country following its recent merger with Anywhere – reported that 48.2% of its listings nationally started as private exclusives, nearly 19,400 homes in a single quarter.

No one has championed this model more aggressively than Compass CEO Robert Reffkin. Compass has argued in op-eds, court filings and marketing copy that days on market and price reduction history are “negative insights” and “killers of value.” Lead paint might be considered a killer of home value too, but manipulating the fact of its existence isn’t a marketing choice – it’s concealment. It’s a naturally attractive strategy to sellers, but it deprives everyone else downstream of crucial data.

Price drops and time on market are vital for accurate appraisals

These aren’t arbitrary concepts invented by MLSs. FHFA’s Uniform Appraisal Dataset requires that days on market be considered for every GSE-backed appraisal. GSE standards require appraisers to reconcile a property’s full listing and price-drop trajectory against the broader market’s exposure time, treating these metrics as key evidence of what a home is truly worth.

Days on market and price reduction history are the market’s observable record of exposure: how long a property took to find a buyer at a given price. A home marketed privately for 60 days with multiple price reductions, then placed on the MLS and sold immediately, appears to have sold in one day at full list price. The selling price provides a comparable number, but exposure time provides the context needed to interpret it. The data isn’t just missing from the system, it’s replaced by a signal that suggests the opposite. That laundered sale record becomes a comparable that appraisers are required to draw from, influencing valuations that feed directly into lending decisions and the pricing of mortgage credit.

A niche model now goes mainstream

Until recently, there was reason to think the private listing regime might just be an outlier. There was initial resistance to most listings marketed outside the MLS, but that resistance collapsed quickly. Major portals and large brokerages are now converging on pre‑market products where de facto public listings are paired with suppression of market exposure data during the preview window, with that suppression explicitly marketed as a benefit to sellers. Within the space of a few months, what was once a niche model is quickly becoming mainstream.

Private listings have always had a legitimate place for those who need privacy or discretion, such as domestic violence survivors or executives and public officials with security concerns. “Coming Soon” listings with a reasonable time restriction, or legitimate in-office exclusives, can serve the seller that truly needs extra time. Most MLS policies accommodate those scenarios.

What’s now being sold is intentional suppression of pre-marketing data. This is not merely a disclosure issue at the transaction level; it’s a mortgage integrity issue at the system level.

We have already learned what happens when the information underlying mortgage credit decisions is compromised at scale. The question is whether regulators and industry leaders act before the data is degraded enough to matter, or whether the “liar loans” of the 2000s give way to a more sophisticated and invisible form of data corruption that’s only noticed once it’s too late.

Anthony V. Mannino, Esq. is the CEO of Dual Mind Strategies.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the editor responsible for this piece: tracey@hwmedia.com