As much as I would like to write about and talk about something other than pocket listings... the world has different ideas. The news and interesting developments are around this topic. So I must serve my readers and tell them about such developments. Such as... this one.

A new academic paper dropped on SSRN in late February that deserves attention from everybody who cares about the private listings debate. Which is to say, everybody in the industry right now. The paper is called "Pocket Sales in the Housing Market: Selection, Outcomes, and Policy" by Darren Hayunga, a finance professor at the University of Georgia.

His findings are likely to be controversial:

We investigate pocket sales—residential transactions negotiated privately and recorded in the MLS with zero days on market. Contrary to search-theoretic models where limited exposure necessitates a discount, we document a robust 1.7 percent price premium. We reject agency conflict explanations, finding instead that the premium arises from avoiding the open-market negotiation discount. By immunizing sellers against adverse signaling, pocket sales achieve a sale-to-list price surplus of 1.6 percent, effectively capturing the listing price. We further find these returns are convex, quadrupling for luxury assets where privacy demands are maximized. Finally, we exploit the 2020 Clear Cooperation Policy (CCP) as a natural experiment. We document a compliance paradox: while the policy failed to reduce the volume of pocket sales, it successfully eroded their economic value. By removing the exclusivity essential to the mechanism, the CCP commoditized the channel without eliminating the practice.

Let me translate that to normal English for you:

We looked at home sales where the seller found a buyer privately before putting the listing on the MLS. These show up as "zero days on market." Most economists would predict that sellers who skip the open market should get a lower price because fewer buyers are competing. We found the opposite: sellers who did private deals got about 1.7% more than sellers who listed normally.
This isn't because agents were gaming the system or double-dipping on commissions. It's because selling privately lets the seller avoid two things that cost money on the open market: visible price cuts (which make buyers think something's wrong) and the back-and-forth negotiation where buyers talk the price down. Private sellers basically got their asking price. Normal sellers didn't.
The advantage was biggest for expensive homes, where it jumped to over 8%.
Then in 2020, NAR passed the Clear Cooperation Policy to crack down on these private sales. It didn't work the way they planned. Agents kept doing private deals at roughly the same rate. But the price advantage disappeared. The policy didn't stop the practice — it just made it pointless financially.

It goes without saying that this study – which appears to be neutral, since Hayunga cites only the Terry Sanford Research Award, not any outside party or industry funding – bolsters the positions of Compass, Howard Hanna and other proponents of private listings.

I thought it worth taking a look to glean some insights from this paper.

Let me be straight about something: this is a heavy-duty econometrics paper. I am not an economist. The math is well beyond me. There are Poisson arrival rates and coarsened exact matching procedures and simultaneous quantile regressions in here, and I am not going to pretend I know what those mean, never mind evaluate Hayunga's methodology. What I can do is read the findings, understand what they mean in plain language, and flag some things that my readers should think about before treating this paper as the last word on anything.

Let's get into it.