The Multiple Listing Service (MLS) is a comprehensive, detailed list of homes for sale.
The power of the MLS lies in the fact that it is a connected network that shares information on homes all across the US. The MLS was created by Realtors and only a licensed Realtor can access it. Realtors basically cooperate with one another in order to maintain the Multiple Listing Service. The National Association of Realtors has spent millions of dollars to create, maintain and promote the Multiple Listing Service.
Textbook definition of a Multiple Listing Service:
A multiple listing service (MLS, also multiple listing system or multiple listings service) is a suite of services that enables real estate brokers to establish contractual offers of compensation (among brokers), facilitates cooperation with other broker participants, accumulates and disseminates information to enable appraisals, and is a facility for the orderly correlation and dissemination of listing information to better serve broker’s clients, customers and the public. A multiple listing service’s database and software is used by real estate brokers representing sellers under a listing contract to widely share information about properties with other brokers who may represent potential buyers or wish to cooperate with a seller’s broker in finding a buyer for the property or asset. The listing data stored in a multiple listing service’s database is the proprietary information of the broker who has obtained a listing agreement with a property’s seller. (from Wikipedia) That’s an extensive definition that throws a lot fancy terms and points to the great service that the MLS provides. However, the most important portion of this definition exists in the first sentence: “a suite of services that enables real estate brokers to establish contractual offers of compensation.”
Translation: The MLS was created to guarantee that real estate brokers would be paid their commissions.”
This isn’t necessarily a bad thing, but it is important to understand why the MLS exists, as it should help you better understand its role in selling your home. With the guarantees of commission promised in the MLS, real estate brokers have promoted the MLS as the de facto standard for property listing. They claim that 80 percent of all properties sold in the United States are listed on the MLS. In short, this makes the MLS the most important tool you have to market your home.
The History of the MLS
The model of the Multiple Listing Service really got started in the 1800’s when realtors shared information at local gatherings. Later, books were developed and then, with the advent of the internet, the MLS was born. It serves a purpose by connecting those who wish to sell their homes with those looking to buy, but it does more than that.
The MLS Creates a Monopoly
It is a way of controlling the information, creating a monopoly. Why? It works. As of today, statistics show that four out of five homes are bought and sold by using a MLS listing. There is nothing necessarily nefarious in this, it is just a tool that realtors can use, but it does create a problem for people who want to access the vast power of a closed market. It means that you have to pay a realtor to list your home.
Getting a MLS Listing to Sell Your Home
No one can blame realtors for protecting their own interests. That is, after all, they way they make a living. You can however, use the massive power of the MLS without paying the traditional 6%. How?
Flat Fee Listings
Flat fee listings are a newer trend that allows you to put your house on the market and save money doing it. This is because fully licensed realtors accept a flat fee up front (and many include other services) instead of charging the full commission.