Each Friday, Russ Anderson, the president and CEO of Briggs Freeman Sotheby’s International Realty and the president of Pacific Sotheby's International Realty writes about luxury, trends, business and more in the advertising pages of the Mansion section of The Wall Street Journal. Below is a guest letter by Gavin Swartzman, the president and CEO of Peerage Realty Partners and a senior partner at Peerage Capital, published October 4, 2024.

 

FROM THE PRESIDENT'S P.O.V.

 

Editor's note: Briggs Freeman Sotheby’s International Realty is part of Peerage Realty Partners, the world’s largest strategic investor in Sotheby’s International Realty affiliates. Gavin Swartzman is the president and CEO of Peerage Realty Partners and is a senior partner at Peerage Capital. A letter from Gavin Swartzman:

 

Trust is the ultimate form of capital.

As with all capital, once trust has been depleted, it is tough to rebuild. Unfortunately, this is a challenge facing the real estate business. A lack of confidence in our industry’s standard of transparency by a group of sellers drove the recent class-action lawsuits against the National Association of REALTORS (NAR) and a wide range of brokerages.

In the wake of the ensuing settlement, change is inevitable. It is essential, however, that we all remember how critical it is to remediate any damage rather than reinforce it. As our industry adapts to new rules, the best interests of clients must remain the singular focus.

For example, we are seeing a proliferation of off-market listings. These “exclusives,” which are not displayed on an area’s multiple listing service (MLS) and therefore not discoverable by agents using that MLS, were once the purview of high-profile clients who wanted privacy, or for unique properties with limited potential buyers. While NAR’s current Clear Cooperation rule — the requirement that properties be listed on the MLS within one business day of publicly announcing them via e-mail blasts, lawn signs, brokerage websites and other ways — has its flaws, the overarching intention is sound: providing an open market to maximize exposure to a full range of buyers and agents. Now, in a bid to profit from representing both sides of every transaction, some agents and brokerages are aggressively encouraging many sellers to list privately, rather than on the MLS. Since off-market properties are known only to agents within the brokerage that has the listing, the buyer is almost always a client of the same brokerage. No one else would know about these listings.

The drive to control inventory and market access is an understandable response, especially in this challenging market. But any lack of transparency — or even the perception of a lack — further erodes trust in the real estate business.

It could be also perceived that limiting exposure of a seller’s property by keeping it off the MLS, which maximizes the pool of potential buyers and almost always generates a higher sales price, is not in the best interest of most sellers. If you owned a valuable painting, and your art dealer told you their friend could buy it directly from you instead of it being offered for open auction, would you not be suspicious of whose interests were being served?

If the industry is going to evolve its practices, we need to communicate honestly and often with all clients. In the end, rebuilding trust and credibility is more important than anything else we do to improve our businesses and better serve them. That means proceeding mindfully with off-market listings and proactively focusing on the long-term values of integrity and transparency over any short-term gains.

 

Gavin Swartzman

President and CEO, Peerage Realty Partners

Senior partner, Peerage Capital

gswartzman@peeragerealty.com

 

The properties, advisors and world-class services of Briggs Freeman Sotheby's International Realty can be explored at briggsfreeman.com. The leading luxury brokerage in North Texas, it is a longtime affiliate of Sotheby’s International Realty, the $143 billion global network of 26,400 agents across 83 countries and territories.