Did you hear? Zillow recently released a study that claims selling your home without using the Multiple Listing Service (MLS) will lose you money compared to a public sale on the MLS. Should we be surprised? Of course selling your home on the MLS – exposing it to the highest number of buyers possible – would result in a higher sale price for your home when you go to sell it. That’s obvious, right?
Well, not so fast. Like most things in real estate, the devil is in the details—and when you dig into Zillow’s study, you’ll find that what they claim – that sellers lose an average of 1.5% by skipping the MLS when they go to sell – is probably not what’s actually happening.
Let’s break it down and, more importantly, talk about what this means for Bay Area home sellers who want to maximize their sale price while minimizing hassle and risk.
What Zillow’s Study Really Says
Zillow’s study looked at closed home sales in 46 states between 2023 and 2024. They specifically examined homes that sold off-market—meaning these properties were never listed on the MLS, never appeared on Zillow, Redfin, or Realtor.com, and were sold privately. They didn’t include all closed sales – they limited their research to homes under $10,000,000 that weren’t foreclosure sales or bankruptcies or anything like that. Just normal, ordinary home sales. Since not all states report sale prices publicly (e.g. Texas), they couldn’t include data from all 50 states.
Their Key Findings:
- Homes that sold off-market sold for an average of $5,000 less than those listed on the MLS.
- That’s a 1.5% lower sale price nationwide for off-market sales vs. on-MLS ales
- In California, the price difference was even larger—off-market homes sold for 3.7% less than homes listed on the MLS.
- Zillow also found that the gap in sale price was larger for lower-priced homes:
- Bottom-tier homes (lowest 5% of home prices): 3.1% less when sold off-market.
- Mid-tier homes (35th to 65th percentile): 1.6% less off-market.
- But Luxury-tier homes (top 5% of sale prices): sold only 0.4% less off-market.
At first glance, this study seems to prove that selling on the MLS is the way to go. But before you make any conclusions, let’s talk about why Zillow’s study is misleading.
Luxury Homes Benefit Least by Selling On the MLS
One of the findings from this report that absolutely leaped out at me was the fact that “luxury tier” homes (those in the top 5% of sale prices) only took a 0.4% cut in sale price by selling privately off the Multiple Listing Service. Why would that be?
Luxury homes are often one-of-a-kind, making them harder to compare directly with other properties. When a buyer falls in love with a unique estate, oceanfront home, or architectural masterpiece, they’re less likely to negotiate aggressively based on comps. The lack of direct substitutes means that off-market listings don’t necessarily suffer from reduced competition in the same way that lower-tier homes do.
Also, luxury homeowners aren’t typically selling out of necessity—they have the financial flexibility to wait for the right buyer at the right price. Lower-tier homes may be sold off-market to a greater degree in distressed situations (e.g. job loss, divorce, health issues), leading to steeper discounts. However, luxury off-market sales are often strategic, ensuring that sellers still receive strong offers without needing to discount heavily.
Ultimately, these top-tier homes are less impacted by off-market sales because the buyer pool is smaller, wealthier, and more relationship-driven, rather than being driven by mass-market exposure and price competition. Sellers can often achieve strong pricing without the MLS because buyers in this segment prioritize exclusivity, privacy, and uniqueness over bargain-hunting.
Your Neighbor Sold their House too Cheap!
Why Zillow’s Study Doesn’t Mean What They Think It Means
Zillow’s claim that off-market homes sell for less doesn’t take into account the net proceeds upon sale – which is really what every seller cares about. Zillow’s study is all about the top-line, not the bottom line, which is how much money the seller walks away with from the closing table. When homes are sold off market, the costs of sale are typically significantly lower than when they are sold off-market. Why are off-market costs lower…and how much lower? Let’s explore this.
1. Off-Market Homes Are Typically Sold “As-Is”
Many sellers who choose to sell off-market do so because they don’t want to go through the hassle of preparing their home for sale. That means:
- No fresh paint
- No new flooring
- No staging
- No curb appeal upgrades
- No decluttering or deep cleaning
- No improvements to landscaping
These costs – which are very common for on-market sales – can add up quickly. The typical homeowner spends 1-3% of the sale price preparing their home for market – and some home sellers spend quite a bit more than that. In my experience, very few sellers spend less than 1% on pre-sale home improvement projects. By eschewing an on-market sale, sellers can often save tends of thousands of dollars getting a home in California “market ready,”
2. Lower Commissions on Off-Market Sales
One key reason some sellers choose to go off-market is to reduce commission costs. Many off-market deals involve only one agent instead of two, or a seller working directly with a buyer. That means less commission is paid out—potentially saving many thousands – even tens of thousands – of dollars. Zillow’s study doesn’t factor this in, which means the “lower” sales price might well result in the same (or better) net proceeds for the seller.
3. The Zillow Zestimate Isn’t “Market Value”
Here’s the kicker: Zillow’s study defines market value using the Zestimate, which, as we all know, is often wildly inaccurate. Zestimate error rates can vary by city and price range, but they’re usually off by 5-6% or more. If Zillow is using its own algorithm as the benchmark for market value, that’s a pretty shaky foundation for a study.
The Hidden Advantages of Selling Off-Market
Zillow’s data actually proves something that Bay Area homeowners have known for years: there are real advantages to selling off-market—and not just financial ones.
Here’s what selling off-market can do for you:
- ✅ Avoid the Stress of Showings & Open Houses – No need to keep your home pristine for weeks or allow strangers to walk through your space.
- ✅ More Privacy – Your home sale details don’t become public record the way they would on the MLS.
- ✅ Lower Costs – You might spend less on home prep, staging, and agent commissions, putting more money in your pocket despite a slightly lower sale price.
Concierge Services
The Compass Three-Phase Listing Strategy: The Best of Both Worlds
At Compass, we recognize that every home sale is unique. Some sellers want maximum exposure on the MLS. Others want a discreet, off-market sale. That’s why we offer a three-phased listing strategy that gives you the best of both worlds:
Phase 1: Compass Private Exclusive
- Your home is privately marketed to other Compass agents and buyers.
- No public advertising, no signs in the yard.
- You can test pricing and get early feedback without committing to the MLS.
Phase 2: Compass Coming Soon
- Your home is visible to agents outside Compass but not to the general public (except on the Compass website, if so desired).
- You gain more exposure while still avoiding the hassle of showings.
- You can adjust your price or marketing strategy before going live on the MLS.
Phase 3: Active on the MLS
- Your home is now fully available to the public on all major listing sites.
- This maximizes buyer exposure and gives you the highest chance of a bidding war.
Why This Works
Compass has run the numbers on our own transactions, and the results are clear:
- Homes that use Private Exclusive or Coming Soon sell for an average of 2.9% higher than those that don’t.
- They also sell 20% faster—accepting offers an average of 8 days sooner.
- Homes that go through these pre-market phases have 30% fewer price reductions, which means they hold their value better.
That’s a real advantage—not the kind of misleading stat Zillow is trying to sell you.
The Bottom Line: What’s Right for You?
Zillow wants you to believe that selling on the MLS is the only way to make the most money. But their own study actually shows that there are major benefits to selling off-market—especially if you want to avoid costly home prep, lower commission costs, and sell with minimal hassle.
At Compass, we offer you options—not one-size-fits-all solutions. If you’re thinking about selling, let’s talk about what makes the most sense for you.
- ➡️ Want a top-dollar sale with zero hassle? Let’s discuss an off-market or pre-market approach.
- ➡️Want to maximize exposure and bidding wars? We’ll craft a full-market MLS strategy that gets you the highest price.
Either way, you’re in control—and you won’t fall for misleading studies from Zillow. 😉
Time to talk to a REALTOR?
Silicon Valley Luxury Homes for Sale
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