You have heard it at a listing table. You may have said a version of it yourself. “Let’s start it privately. Limited access creates urgency. When buyers cannot have something, they want it more.”
The instinct is not crazy. Scarcity does raise perceived value, and that is not folklore. It is one of the most replicated findings in all of consumer psychology. The trouble is that most of the agents applying it to private listings have the mechanism running backward, and the very research they lean on to justify the strategy is the same research that pulls it apart.
Here is the distinction that settles the whole argument. Scarcity is a limited supply that people can see. Obscurity is a supply they do not know exists. Those two things are not cousins. They are opposites, and only one of them moves the price up.
Two concerts, same seats
Picture two concerts on the same night. The first sells out in nine minutes and the resale market goes wild. The second never gets announced, and the band plays to whoever happened to wander past the venue.
Both rooms held exactly the same number of seats. One was scarce. The other was invisible. Nobody in the world confuses those two things when we are talking about music. Yet we confuse them constantly the moment we start talking about houses. A private listing is not the sold-out show. It is the concert nobody heard about.
The study everyone quotes, and the detail everyone skips
The foundational scarcity experiment is Worchel, Lee and Adewole, published in the Journal of Personality and Social Psychology in 1975. Two hundred people rated identical cookies. The cookies in short supply were rated more desirable and more valuable than the very same cookies in abundant supply. And the cookies that went from plentiful to scarce rated highest of all.
That result is real, and it has held up for 50 years.
The part that never makes it into a listing presentation. The cookies were in a jar. The participants could see the jar. They could see how few were left, and they knew other people wanted one.
Take the jar off the table and the effect does not shrink. It disappears. There is no scarcity signal, because there is no signal at all. A listing nobody can see is not a nearly empty cookie jar. It is a single cookie in a drawer, in another room, in a house down the street.
Powerfact: Scarcity only works when the shortage is visible. A limited supply nobody knows about is not scarce. It is just hidden, and hidden things do not command a premium.
What finance already figured out
Robert Merton, who would go on to win the Nobel Prize in economics, published a model in the Journal of Finance in 1987 describing exactly what happens to an asset when fewer people know it exists.
His finding was blunt. When investors are aware of only a subset of the available securities and invest only in what they know, those assets trade below their full-information price. Same asset. Same fundamentals. Smaller pool of people aware of it. Lower number on the tag.
That model has since been tested against real shareholder data, and it holds. The size of the audience is not a marketing detail bolted onto value after the fact. It is an ingredient in the value itself.
Somebody ran the real experiment
Theory is useful. A controlled experiment with real money on the line is better.
In 2000, Rama Katkar and David Lucking-Reiley ran one on eBay and published it through the National Bureau of Economic Research. They auctioned 50 matched pairs of Pokemon cards. Identical items, split into two groups. One group carried a public minimum bid. The other carried a secret reserve set at the same dollar figure, so the seller’s floor was identical and the only thing that changed was whether buyers could see it.
The result: The secret reserve made sellers worse off. It lowered the odds of a sale, it kept serious bidders from entering at all, and it dragged down the expected price. The work was later published in the B.E. Journal of Economic Analysis and Policy.
Read that middle finding again, because it is the one that matters at your listing table. Withholding information did not make buyers work harder to get in. It made the most serious buyers stay home.
Being seen is not a neutral act
One more, this time from psychology. Robert Zajonc showed in 1968 that simply being exposed to something over and over, with no argument attached, makes people regard it more favorably. He called it the mere exposure effect, and it has been replicated across images, sounds, words and products for almost 60 years. Visibility is not neutral. It builds preference all by itself.
Marketing science walked up to the same conclusion from a different road. The Ehrenberg-Bass Institute has spent decades documenting that brands grow through broad reach and easy availability, not by narrowing down to a hand-picked few.
Notice something about that lineup. Not one of these researchers was studying real estate. Merton was studying capital markets. Katkar and Lucking-Reiley were studying trading cards. Zajonc was studying nonsense syllables. None of them owned a portal, a brokerage or an MLS to protect. They all landed in the same place anyway.
What to do with this in your business
First, separate the two words out loud at the table. Tell the seller plainly that limited supply and limited awareness produce opposite outcomes. Most homeowners have never had anyone draw that line for them, and once they see it, they cannot unsee it.
Second, build the real thing instead of the imitation. Full exposure, a firm showing window, offers reviewed on a set date. That is a visible jar with a few cookies in it and a room full of people watching. It uses the psychology the right way instead of borrowing its vocabulary.
Third, keep these studies in your back pocket for when the internal numbers come out. When a competing presentation leans on one company’s own data, you are not required to answer with a different company’s real estate data. Cookie jars, stock markets and trading cards are much harder to wave away, precisely because nobody running those studies had a dime riding on housing.
Fourth, keep telling both sides.Genuine privacy needs, unusual properties, and informed seller choice are all real. Present the benefit honestly, present the trade-off honestly, and let the homeowner decide with the whole picture in front of them. That is what serve don’t sell, coach don’t close looks like at a listing table.
The homeowner who wants buyers competing over their house is right aboutthe psychology.They deserve an agent who knows how to actually produce it.And thattakesa room full of people looking at the same jar, not a cookie tucked in a drawer where nobody can even want it.
Darryl Davis, CSP, is a real estate speaker, coach, and bestselling McGraw-Hill author who has trained more than 600,000 agents over 40 years in the business. Hisresearch on private listingswas cited in the House Judiciary Subcommittee’s July 22, 2026 letter to Compass. He is based in Wading River, NY.www.DarrylSpeaks.com
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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