Many of the questions we get from home sellers haven't changed in the last decade:
- Where do buyers look for homes to buy?
- How do buyers find a home to buy?
- How can I make sure buyers know my home is for sale?
- How do buyer agents find a home for their buyers?
- What is the Multiple Listing Service?
- How do I find a buyer for my home?
Most of these questions revolve around the same answer. The Multiple Listing Service, or MLS is the tool used by agents to find a property for the buyers they help. It is important to note that the MLS is "the" tool, not "a" tool used by agents. For the many agents I have known, it is extremely rare that they use any other tool to find a property other than the MLS. So to be clear, it is rare for an agent to use any of the other possible tools to find a property for their buyer: driving neighborhoods, newspaper ads, websites, or others (keep in mind other agents looking for sellers to list will use these methods--realize they don''t have a buyer, they want you to list with their company, that is why they are contacting you).
The next logical question, then, is: how many buyers work with agents and how many buy a home on their own? Statistical studies have consistently shown that nearly 9 in 10 home buyers end up working with an agent (86% in the most recent study). Those two facts are the basis for why flat fee MLS listings sell a home for a higher price and in a shorter time than sellers trying to sell on their own.
Who owns the MLS? There are an estimated 800+ MLSs in the United States, and most of them are owned by one or more local Realtor Associations. Some are owned by a combination of large real estate brokers and/or Realtor Associations. The MLS owners and management generally establish strict rules for the MLS so transactions flow smoothly, commissions are paid without confusion, and property information is displayed in an organized and consistent manner. Nearly all the MLSs also have strict rules that only allow Realtor Association members to access the database. The handful of MLSs that allow non-Realtor members require that members be licensed real estate brokers and capable of practicing buyer or seller representation.
Do MLSs cover the whole state or metro area? MLS territories follow few general rules. The answer to this question varies greatly depending on where you are. A few MLSs cover an entire state, the Northern New England Real Estate Network covers all of New Hampshire for example. At the other extreme, the two largest metro areas, New York City and Los Angeles are covered by a confusing array of sometimes overlapping MLSs depending on what part of the city the property is located in. Fortunately, most metro areas have only one MLS, and there has been a very, very slow trend towards MLSs combining into larger organizations.
To further explain the MLS, it may be helpful to clarify what what the MLS is NOT: A publicly available website-this has gotten confusing lately. The MLS is not available to non-MLS members. MLSs have made some of their data available to the public on websites like the Houston Association of Realtors HAR.com website. But these websites are not the MLS. In general, these websites show less than half of the information about a property that is in the MLS (important fields that these websites won''t show are the data listed, agent comments, buyer commission offered, etc.) More importantly, they don't update the data instantaneously like the MLS does-some still only update once per day, and some are even a day or two behind on updating the data.
One National Insititution-the MLS is not a single, national MLS (unless you live in Canada). There are 800+ individual MLSs, and they are not part of one organization. Realtor.com, the most popular real estate website, is sometimes misperceived to be a single, national MLS. Realtor.com is just another example of a slice of MLS data being shared with the public as described in the paragraph above. The National Association of Realtors (NAR) does help organize, assist, influence, and in some cases insure many of the MLSs, but the NAR does not own the MLSs.
A Governmental Entity or Public Utility-the MLS is not a public utility or governmental organization. The MLS was invented, developed, and some might say nearly perfected by the private Realtor Associations, and they continue to own and manage the MLSs. The federal government, through the US Department of Justice (DOJ) and Federal Trade Commission (FTC) has forced MLSs to adjust their rules in order to have a level competitive playing field for innovators like flat fee MLS listing brokers or other discounters. The FTC and/or DOJ have intervened with particular MLSs dating back to the 1960s when they forced the MLSs to stop having minimum commissions. The MLSs are not regulated by any governmental body.
Available for listing by contacting the MLS directly--the MLS does not accept listings from non-members. The closest a seller can come to listing directly with an MLS is to use a flat fee MLS listing broker. The MLS is a tremendously powerful tool for matching real estate buyers and sellers. It has a critical mass of current buyers and sellers that have so far soundly defeated attempts to replace it with non-Realtor controlled mediums.
The future of the MLS will be interesting to continue to watch, as the technology becomes more and more commonplace and inexpensive. I wouldn't bet against the MLS continuing, as it has so far successfully adapted to technological advances and is stronger than ever. I hope to also post a blog entry in the near future about the history of the MLS. I vividly remember entering the real estate industry just as the computer database started the movement away from the weekly printed "MLS Book."