The private listings opt-out: impediment or enablement?

Back in February, I wrote about the emerging trend of states embracing their regulatory powers over private listing strategies in the residential space.

Legislative activity continues as Connecticut passed a measure requiring public marketing just a few weeks ago and a similar New York state bill is near the finish line. This comes on the heels of laws passed in Wisconsin and Washington state earlier this year. Hawaii and Illinois still have measures waiting in the wings.

As with anything legal, the devil is in the details. Three distinct approaches are emerging, and the differences matter more than headlines suggest.

The West Coast model: the mandate

Washington state took the most direct approach: residential listings must be publicly marketed unless there is a specific reason not to, grounded in seller safety or privacy. Hawaii’s proposed legislation follows the same path.

This is the cleanest regulatory posture. It does not ask consumers to understand a disclosure and sign it. It simply requires public exposure as the default.

The Northeast model: the legislature writes the warning

Connecticut and New York take the “opt-out” path. Sellers may choose to forgo public marketing, but only after receiving and acknowledging a disclosure of the potential drawbacks. In these states, the legislature spells out the warning in the law itself.

How far they go is where things get into the weeds. Here’s a brief excerpt of Connecticut’s language:

The Seller understands that foregoing public marketing may reduce competition for the property, may result in fewer offers to purchase the Seller’s property and may adversely impact the final sale price and terms of the sale of the Seller’s property.

New York’s corresponding language trends just a bit more forward (as one might expect from New York), and puts the form in the first person, for good measure:

FEWER OFFERS AND POSSIBLE IMPACT ON PRICE AND TIMING.

I understand that reducing the exposure of my property may reduce the number of offers I receive from buyers and tenants, and could negatively impact my ability to sell or lease the property sooner, with better terms and at a higher price.

The Midwest model: let the agency draft the form

Wisconsin and Illinois also follow the “opt-out” model, but don’t dictate the specific language in the law. Instead, they delegate creation of the form to real estate associations and/or oversight agencies, with broad directions to explain the benefits of public marketing and the drawbacks of limiting exposure.

It’s a small but meaningful distinction. Legislative sessions are brief, and laws are not so easy to change. By contrast, an agency-drafted form can be more easily revised, and may be more susceptible to latent advocacy from all quarters.

What’s next?

We likely won’t see more states step into the fray in the immediate future, since most state legislatures have limited sessions. New York’s bill has passed both chambers but still requires final ratification by the Assembly. The legislative sessions in Hawaii and Illinois are complete for the year and do not resume until next January, when the issue will have to be picked up again.

Restrictions become effective in Washington on June 11; in Connecticut on October 1, and in Wisconsin on January 1, 2027.

Will opt-out forms dissuade private listings?

The opt-out regime is attractive because it allows the most flexibility for agents and sellers, relying on the principle of informed consent. It derives its force by requiring the listing agent to tell the client the drawbacks of private listings, not just the marketing pitch. While that may not be a pleasant conversation to have with a client, “warning fatigue” is a real phenomenon.

When sellers decide to list a home and hire an agent, there’s a flurry of paperwork: an agency agreement, various consumer notices, and likely an affiliated business disclosure. One more “the government requires that I tell you this” form might just get buried in the stack of sign-offs that quickly lose meaning.

In the end, opt-out forms may prove to be more of a liability protection for brokerages than an impediment to executing a private listing strategy.

Anthony V. Mannino, Esq. is the CEO of Dual Mind Strategies.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

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