Greg Hague, Compass’ director of home sale strategy, published a piece in Inman last week arguing that homes should be marketed like Ferraris, using exclusivity, scarcity and urgency to make buyers feel they’re competing for something rare.
He wrote this in the middle of the worst housing affordability crisis in a generation and, in doing so, accidentally made the best possible case against private listings.
TAKE THE INMAN INTEL INDEX SURVEY
The Ferrari pitch sounds clever until you remember that a house isn’t a luxury car. Housing is necessary, not a luxury, and it’s the largest purchase most Americans will ever make.
Private listings take that purchase and strip away the two things that protect buyers and sellers: open competition and price transparency. That lets the brokerage nudge both the buyer and the seller toward the deal that pays it the biggest commission.
The brokerage is creating that scarcity on purpose, and the people who end up paying for it are the ones who can least afford to.
What the Ferrari strategy actually does
Ferraris are scarce because Ferrari makes very few of them and the technology is so expensive that few people can afford them. That’s real scarcity, built into the underlying economics of the product itself and priced accordingly.
The op-ed borrows Ferrari’s prestige while describing something categorically different: manufacturing the feeling of scarcity by hiding a home from buyers who would otherwise compete for it. The home exists, the buyers exist, the market exists. What Compass is selling is the wall between them.
George Akerlof won the Nobel Prize in Economics for establishing what happens when markets suffer from asymmetric information. When one party to a transaction has more information than the other, outcomes systematically favor the informed party and the less-informed party pays more than they should.
Private listing networks are an information asymmetry machine. They’re built to make sure buyers don’t know what else is available, how long a home has been sitting, or how its price history has changed. The urgency and premium the op-ed brags about extracting come directly out of buyers who have been kept in the dark. Exploitation dressed up as marketing is not creating value for a seller.
And Akerlof’s theory points to a second harm. When buyers know they lack information, they end up pricing in more risk. Sellers of the best homes get underpaid, buyers who land on weaker homes still overpay, and only the brokerage benefits.
The data bears this out. Homes sold off the open market consistently sell for less than comparable homes sold through broad public exposure. If private listings reliably generated Ferrari premiums for sellers, there would be a body of research showing it, but there isn’t.
Nor are buyers getting a break in exchange. They see fewer homes with less information about each one. The only party that reliably benefits when a home sells privately is the brokerage, which collects the commission on both sides.
What the Ferrari argument misses
The Compass op-ed treats broad market exposure as a liability, something that makes a home look stale and undifferentiated. But what the op-ed calls staleness is actually price discovery, the process by which genuine competition establishes what something is worth.
Markets with more participants and more information produce fairer prices. Markets with restricted access and insider information produce prices that reflect who has connections, not what a home is worth.
Economists have understood this for the better part of a century. It’s why every state has consumer protection laws built on the premise that buyers deserve accurate information. It’s the same reason it’s illegal to roll back a car’s odometer before selling it. The whole architecture of a market economy assumes people can make real decisions with real information. Private listing networks are a deliberate assault on that premise.
Everybody should be angry
First-time buyers are being priced out of markets across the country. The gap between renting and owning has never been wider for people without family wealth or insider connections. And Compass’ answer is to make housing feel more exclusive, more scarce, more urgent, because that’s how the brokerage extracts a premium.
Meanwhile, sellers are being steered into private listings by the same agent who stands to double their commission when they agree.
So if Compass wants you to think of a house like a Ferrari, fine. Just remember who’s driving and who’s getting run over.
Mischa Fisher is Zillow Group’s chief economist. Get connected on LinkedIn.
