Why Large Brokerages in Chicago Are Pushing for Off-MLS Private Listings — And Why It Doesn't Benefit Sellers

Why Large Brokerages Are Pushing for Off-MLS Private Listings — And Why It Doesn't Benefit Sellers

In recent years, the Chicago real estate market has seen a notable rise in the practice of "off-market" or "private" listings. While it may sound like a clever way to maintain privacy and avoid the chaos of public showings, this trend is less about benefiting sellers and more about boosting the profits of large brokerages.

But what’s really happening behind the scenes, and why should sellers be wary of this trend? Let's break it down.

What Are Off-MLS Listings?

An off-market listing is a property that’s available for sale but not publicly listed on the MLS (Multiple Listing Service). Instead, these listings are often shared privately among a select group of agents, investors, or potential buyers. In some cases, properties might be marketed to a small network of high-net-worth individuals or pre-selected buyers, bypassing traditional MLS platforms and the wider public exposure that typically comes with it.

The Broker’s Motivations

For large real estate brokerages, private listings are a business strategy. There are a few key reasons why they encourage off-MLS deals:

1. Exclusive Control: When a listing is kept off the MLS, the brokerage has exclusive control over marketing the property. They can dictate who sees it, when, and under what conditions. This allows brokers to position themselves as the gatekeepers, often charging higher commissions or offering additional services for managing a “private” transaction.

2. Fewer Competitors: When a listing isn’t on the MLS, it effectively reduces competition. Typically, the more buyers who see a listing, the more likely you are to get multiple offers — potentially driving up the sale price. But with off-MLS deals, the brokerage controls who gets to see the property and can limit the number of offers that come in.

3. Faster Deals for the Brokerage: Off-MLS listings may also speed up a transaction for brokers looking to close deals more quickly. They can find pre-qualified buyers within their network, which might result in faster, less complex sales without the back-and-forth of public showings, negotiations, and the hassle of an open market.

4. Higher Commission Potential: If a broker is able to sell an off-market property within their own network, they often get to collect both the buyer’s and seller’s commissions, or at least a larger share. In comparison, if the property were listed on the MLS, both sides of the transaction could be handled by different agents, which would split the commission.

The Downside for Sellers

While these practices may work well for brokers, they don’t necessarily benefit the sellers in the way you might think.

1. Limited Exposure = Lower Sale Price: One of the biggest benefits of listing a property on the MLS is the broad exposure it receives. With more potential buyers seeing the property, the likelihood of receiving multiple offers increases — often driving up the sale price. Off-market listings don’t enjoy this advantage, which could mean the seller misses out on top-dollar offers.

2. Lack of Market Transparency: Sellers may believe that off-MLS listings will help them avoid the public scrutiny of market trends and pricing fluctuations. However, without broad exposure, it becomes much harder to know whether they’re getting a fair market value for their property. The sale price could end up being lower than it would have been in a competitive, open market.

3. Missed Opportunities for Larger Audiences: Real estate buyers today are sophisticated. They often search for properties on various websites, not just the MLS. By limiting exposure to only a small group of buyers, you may be missing out on a larger pool of potential offers — and the one buyer who’s willing to pay the most.

4. The “Off-Market” Myth: There’s a misconception that off-market listings are only for high-end properties or high-net-worth buyers. The reality is that any seller, regardless of price point, could find themselves “encouraged” to go off-MLS. While it might sound like a special, exclusive opportunity, it’s actually more about brokers protecting their own interests.

What Sellers Should Know

While there are situations where an off-market sale might be appropriate (e.g., a seller prioritizing privacy or having very specific buyers in mind), for the majority of sellers, listing on the MLS is still the best option.

Here’s why:

• Higher sale prices: MLS exposure almost always leads to more offers, which increases the likelihood of selling for the highest price.
• More buyer options: More visibility attracts a wider range of potential buyers, including those who may be looking for properties outside the immediate local market.
• Transparency: An open listing provides data points like sale prices for similar homes, helping to set realistic expectations.

The Bottom Line

If you’re a seller, it’s important to understand why a brokerage may recommend an off-market listing and weigh whether it’s truly in your best interest. More often than not, large brokerages are pushing for private listings because it benefits their bottom line, not yours.

As a seller, you have every right to question whether an off-market deal is the right path for you. If you’re after the highest price, the most exposure, and the most competitive offers, it’s worth insisting on listing your property on the MLS. Keep in mind that a good agent will work for you — not just their own commission.

Before you make any decisions, take the time to get a full picture of your options, and ensure your broker’s goals align with your own. In the long run, more visibility and a broader pool of buyers will likely lead to a better outcome — both in terms of sale price and the overall selling experience.