#United States #Seattle #Zillow #Real Estate #Home Sellers

The Impact of Privately Listed Homes on Sellers of Color: A Concerning Trend

Recent research conducted by Zillow reveals a troubling trend in the U.S. real estate market regarding home sellers in communities of color. It appears that those who choose not to utilize the Multiple Listing Service (MLS) — which effectively allows for the broad marketing of properties — face significantly greater financial losses than their counterparts in predominantly white neighborhoods.

In 2023 and 2024, Zillow's data highlighted that home sellers who opted to sell their properties off the MLS saw an average loss of nearly $5,000, translating to about 1.5% less than those who sold their homes through the MLS. However, this situation is compounded in neighborhoods predominantly inhabited by Black, Hispanic, Asian American and Pacific Islander, or Native American families. In these areas, homes that were sold off MLS averaged a staggering 3.2% loss compared to MLS-listed homes, equating to a financial deficit of approximately $9,850 per property.

This pattern raises alarms as it underscores an alarming disparity: sellers in predominantly white neighborhoods fared better than those in communities of color, suffering losses of only around $3,700 per home sold off the MLS. Unsurprisingly, the MLS listings disclosed a stark contrast in financial outcomes based on racial demographics.

A Closer Look at the Data

A deeper dive into the data reveals more startling figures: in neighborhoods mainly populated by Hispanic families, sellers experience the most severe impacts, often receiving about 4% less for their homes when sold off MLS—an average loss of up to $13,730. Meanwhile, sellers in majority Black neighborhoods typically miss out on $5,576, which is about 3.1% less than their MLS-listed counterparts.

The implications of these findings are profound. Homeowners of color not only lose significant amounts of wealth when selling their homes off-market, but they also encounter limited visibility for their listings, which can escalate existing inequities within the real estate landscape.

Orphe Divounguy, a senior economist at Zillow, emphasized that “the data is clear that selling off the MLS costs home sellers in communities of color thousands of dollars in lost value.” Such findings highlight the urgent need for transparency within the housing market, as the absence of adequate market exposure could revert the system to problematic practices reminiscent of the past.

A Systematic Issue

Unfortunately, many Hispanic and Black home sellers are often steered towards private listings by their agents. Zillow's survey found that a substantial majority, 74% of Hispanic sellers and 73% of Black sellers, reported that their agents recommended private listings as opposed to just 24% of white sellers.
This systemic issue reveals a potentially dire scenario where communities of color miss out on opportunities for homeownership, a critical pathway for building wealth, because homes are not made accessible to all potential buyers. In today’s market, where inventory is already constrained by 26% compared to pre-pandemic levels, ensuring that all homes for sale are adequately listed becomes especially crucial.

As the housing market grapples with these disparities, it’s vital for stakeholders—agents, sellers, and policymakers alike—to advocate for equal opportunities for all sellers, ensuring a fairer playing field where every home has the chance to reach its full market potential.