If you put your house on the market this year, there's a good chance a Madison area realtor will pitch you on something called a "private listing". It's worth understanding what you'd be giving up before you say yes.

What are private listings? 

A private listing is one that's never exposed to the open market. Only the listing firm's own buyers — less than 5 percent of the total buyer pool — ever get the chance to make an offer. These programs are often marketed as "exclusive", giving sellers the chance to test the market quietly, without the showings, staging, and uncertainty of a traditional sale. On paper, that sounds appealing. In practice, that convenience can come at a real cost to your bottom line.

What's the cost? 

Selling privately means selling without competition — and a lack of competition almost always favors the buyer, not the seller. The numbers from the South Central Wisconsin MLS make this clear.

Through June 25th of this year in Dane County:

• Homes that sold without competing offers sold for 2.3% below their original list price.
• Homes that sold with competing offers sold for 2.6% above their original list price.

Add those together, and you're looking at nearly a 5% swing in your final sale price. On a $500,000 home, that's roughly $25,000 — money that stays in a buyer's pocket instead of yours, simply because no one else was allowed to compete for your home. 

Our recommendation

If a realtor is encouraging you to sell privately, ask yourself who that arrangement really benefits. Then get a second opinion — talk to a realtor from another firm and ask how they'd approach your sale.

There are situations where a private sale genuinely is the right call. But for most Madison area sellers, marketing your home to the widest possible pool of buyers remains the surest way to get full value for it. That's the approach we recommend to our own clients, and it's the one the numbers support.