Washington State Could Soon Ban Private Listings Over Growing Industry Scrutiny

Washington could become the second state to sign into law a ban on private listings, as more lawmakers scrutinize the practice.

The state's Legislature passed SB 6091, which prohibits real estate brokers from marketing properties to an exclusive group of brokers or prospective buyers unless the property is concurrently marketed to the general public and all other brokers. It arrived at the desk of Gov. Bob Ferguson for his signature on Tuesday. 

SB 6091 also carries other disclosure requirements for short sales and dual agents. Violations are governed under state professional conduct guidelines. That means a fine of up to $500 per violation, up to a license revocation, according to a bill report.

Democratic state Sen. Marko Liias, who introduced the measure, said the measure is "fundamentally about fair housing" and preventing people from being excluded from the market.

Ferguson has put forth a few other policies this year aimed at housing affordability.

Competitiveness

Fair-housing advocates say private listings raise discrimination concerns. One study from Bright MLS found that they take longer to sell and don't guarantee more money. Another study found that public competition is good for sellers in hot markets where homes command better prices.

It's hard to tell exactly how many listings the ban affects, because the practice varies by market. But private listings are probably aimed toward the higher end of the market, says Realtor.com® senior economist Joel Berner.

But the state probably won't be the last to pass limitations on the practice. Making more listings public allows buyers access to more information on the housing market. That helps agents, buyers, sellers, and industry leaders to make better-informed decisions, Berner says.

"If all the private listings in Washington suddenly became public, there would obviously be an uptick in available inventory, which would give buyers more options and potentially more time to shop for the right home in the public channels," Berner says. "It would diminish the perceived scarcity of homes for sale, as the general public would now have access to the entirety of the for-sale inventory."

Industry attention on private listings

Washington isn't the only state scrutinizing listings. Wisconsin signed restrictions on private listings late last year. Its provision is more limited, because it carries no penalties and allows sellers to opt out. So, Washington's ban will move the needle on housing information where Wisconsin's likely will not, Berner says.

In the past few months, lawmakers have proposed similar bans in Illinois, Hawaii, and Connecticut.

The National Association of Realtors® said in a March 9 statement it won't take a position on specific brokerage practices. But, it reminded agents and brokers to follow the rules of the multiple listing service they participate in.

“NAR values the pro-competitive and pro-consumer benefits of MLS, including broad market exposure, access to available properties for sale in a marketplace, and equal access to the public,” an NAR spokesperson said. “We will continue to protect and advance the rights of Americans to own real estate and to support consumers throughout the home buying and selling process.”

The Washington Realtors supported SB 6091.

The Realtor.com state-by-state housing affordability report card graded Washington a C-.