Is ‘exclusive inventory’ a new way for real-estate agents to keep commissions high?

Rent a car from Avis, Budget or Payless and you are doing business with the same holding company. Same with Hertz, Dollar and Thrifty. Real estate brokerages are going the same way. So when Compass Inc. announced on Monday, the New York Times reported, that it had agreed to acquire Anywhere Real Estate for around $1.6 billion in a deal likely to close in 2026, the amount of competition in the Chicagoland real estate industry was set to shrink exponentially.

Anywhere is the parent company of such familiar local names as Coldwell Banker, Century 21, Jameson Sotheby’s International Real Estate and Corcoran. Meanwhile, Compass now owns @properties Christie’s International Real Estate, itself a product of a purchase.

Such is life, you might say. But close observers of this industry see something beyond the usual push for market share that drives consolidations in all industries. Compass is known for its focus on “exclusive inventory,” meaning homes and apartments that have not yet appeared on the traditional Multiple Listing Service or MLS. Or on Zillow, the free-to-enter online site where many look for homes for sale or to determine the likely selling price of one they already own.

Generally, those homes and apartments do show up on the MLS a week or two later, but that’s if they are not already sold. Especially when the inventory is as low as is the case in Chicago and its suburbs, a savvy buyer of real estate knows that you have to keep a close eye on new listings if you want to beat the competition to an especially desirable home or one that is notably underpriced. The situation is analogous to going to an estate sale. Arrive midmorning and you’ll find dealers took all the good stuff while you still were having breakfast.

This all is great for Compass, since exclusive listings surely will help it attract and retain agents and keep commissions in house. It’s also great for Compass agents, since they can tell potential clients that only if they hire them will they get access to fresh, off-market listings. Snooze until they’re on Zillow, they can say, and you’ll lose.

For an example of what we mean by shrouded inventory, take a look at the site Zenlist.

Or, more accurately, try and take a look. You can’t log in and see those homes unless you are working with one of the affiliated agents.

But there are problems beyond even the usual ones of megamergers diminishing competition, which is a big one all by itself, especially in an industry that has been famously reluctant to lower its standard 5% to 6% commission, despite years of protestations to the contrary.

By limiting the freshest listings to only the customers of certain agents, it means only members of an exclusive club can see them. While this isn’t equivalent to the abhorrent historical practice of redlining, it potentially creates conditions where discrimination can take place. The best way to ensure fairness in the marketplace surely is to allow everyone to have access to the same inventory.

There’s another issue here, too. One of the most consumer-friendly aspects of the recent settlements involving real estate commissions, which we have written about before, was the uncoupling of buyer and seller agents’ commissions.

Past practice had meant in almost all transactions, the typical 5% commission in Chicago was split roughly equally between the two agents on the two sides (uncommon outside the United States where commissions are much lower). If a buyer contacted a seller’s agent directly, that agent typically would suggest another agent in their brokerage to “represent” the buyer’s interests and keep all commissions in house. But if the buyer simply asked for the 2 or 2.5% normally paid to a buyers’ agent, in our example nonexistent, to be added to their offer for the home, resulting in the same net result for the seller, the listing agent typically would say it was none of their business, insisting, absurdly, that the seller, not the buyer, “pays” the commission. We’ve seen agents fly into a fury at the very suggestion.

In the new(ish) world, in theory, that ask should now be more easily granted, given that sellers can make their own decisions about how commissions are apportioned on the buyers’ side and it should be easier for home buyers who choose to work only with a listing agent to save at least one-half of the commission, rather than handing the listing agent a huge payday.

But that theory depends on having equal access to the best listings. As Compass gains power, there seems to us a danger that this so-called “exclusive inventory” will effectively force people to hire and pay Compass buyers’ agents, for fear of otherwise not being able to see the best deals. Compass may well just argue, tough cigar. But we don’t see it ending up by lowering commissions, a longtime drag on the housing market.

We’re not the first to take note of the remarkable resilience of this savvy industry when it comes to keeping commissions as they’ve been for ages, or as close as possible, notwithstanding all kinds of legal findings and settlements. We admire the chutzpah.

We would add that there’s a broader public interest in this issue than fairness to consumers. Housing has been identified as a national crisis, and Chicago is right in the thick of it. This area is one of the most supply-constrained housing markets in the country. It’s frustrating enough trying to buy a desirable home here without the industry exacerbating the problem.

The best kinds of markets in our minds are not composed of exclusive inventory for favored folks but are as transparent as possible, immediately open to all who wish to sell or buy. Regulators, plaintiffs and anyone hoping to score a lower commission in a home transaction should keep a close eye on how all this plays out.

Submit a letter, of no more than 400 words, to the editor here or email letters@chicagotribune.com.