What is the MLS
Whether you want to buy or sell a home, there is a very high chance that you will encounter a multiple listing service (MLS). The real estate business relies heavily on multiple listing services, to survive. In simple terms, it is a huge database containing multiple home listings. Realtors have spent huge chunks of money to develop these services. However, there is more to it than just a simple listing of homes.
Background of the MLS
Many people would think that the MLS is an innovation of today’s digital age. However, this concept has been in use since 1907. During those times, multiple listing is a concept that was used to refer to real estate agents, who would regularly gather at conferences or offices, in order to exchange information about homes and properties that they were selling. This was being done so that the information could reach a wider network of buyers.
The National Association of Realtors, earlier known as the National Association of Real Estate Exchanges endorsed the use of this method in 1908. With that endorsement, the concept spread quickly, evolving systematically into what we have today, which is an online database that is fully searchable, containing neighborhood, price and other information related to the home on sale. Although it appears like one large database, it is composed of around 800 regional databases.
These databases are all territorial. This means that each MLS database from a certain region or territory, comes with its own listings. On the other hand, agents are required to pay certain fees, in order to access the services provided by these regional MLS databases. This explains why agents looking to reach a wider number of buyers may have to subscribe to several MLS. However, there is a changing trend whereby regional databases can share listings and the agents do not have to belong to each regional MLS.
What does the MLS solve?
The real estate market is one of the most competitive. On the other hand, their business is unique in the sense that competitors have to cooperate with each other, in order for transactions to be successful. Such cooperation is facilitated by MLS.
Additionally, MLS is able to bring together listing brokers and cooperative brokers who are working with buyers, to be able to sell homes. If the cooperative incentive of existing MLS is not available, brokers would have to create their own systems of cooperation separately. Once this happens, property information would be fragmented, rather than being consolidated.
MLS is also a very powerful tool for competition. They provide a level playing field to ensure that the smallest brokerage company in the area can compete largest and even multi-state firms. Sellers and buyers are at liberty to choose any professional they want to work with. This is made possible by the presence of a large collection of properties present in the marketplace for sale.
Benefits of the MLS
Before the development of MLS, buyers had to work with numerous companies, in order to access a wider range of available properties. This was cost and time consuming. On top of that, the buyer would still not get the opportunity of viewing all properties on sale, due to other constraints. As it stands, buyers have reaped huge benefits from the MLS. Buyers don’t have to work with many agents or companies. Any buyer or salesperson can easily access all the listed properties, within a matter of seconds. Additionally, a buyer can establish a strong working relationship with a trusted salesperson and then depend on the person to offer full market service and coverage. Thanks to the MLS, the sales person can then offer all information regarding the listed properties to their customer, which will help them to make a more informed decision.
Sellers too have a lot to gain from MLS. Initially companies would only sell their own listings, without giving access to those of other companies. However, with the MLS concept, realtors agreed to share their listings or homes with other firms, without seeking permission to sell or show. Any agent within the MLS has full access to all listed properties within the specific database. This translates to a wider exposure for sellers since all salespeople, as well as all MLS companies can sell or show their listings.
MLS contains the most up to date property information. Therefore, if you are looking for a house in Chicago for example, you will be able to access the most recent property listings in the area. It is also the most comprehensive source of information for homes and properties, since it brings together listings from different areas. The magnitude and detail of information found on MLS is very rare and hard to find on other websites. Additionally, realtors can access the information of the property owner on the listing and communicate directly with them.
Limitations of the MLS
Technical user interface is not very user friendly for common users. This implies that new or technically challenged users will require training to understand. This can complicate matters for someone who wants quick information.
The membership of most MLS is restricted. Access is only provided to those real estate brokers and their agents, who hold the appropriate licensing from the state or local jurisdiction, or members of a local association of realtors. In most circumstances, membership to these associations has to be paid for. This is very problematic to individuals who just want access to property information, without the need for such membership. However, since portions of MLS listings are becoming available for public viewing, access is becoming more open. Access to information is still limited in several MLS. In most circumstances, only agents who have received a certain proportion of the sale value have unlimited view of property listings.
Each Different areas use different MLS services. This means that Chicago realtors cannot access listings from New York and vice versa. Sometimes, coverage areas tend to overlap. This means that a community in an area might have 70% of their listings in one database and 30% in another. This means that people searching in only one database would miss the 70% or 30% of the homes. Coverage areas on an MLS are not defined by a map, rather than homes listed by member realtors.
Posting a property in the MLS ( MLS FLAT FEE )
To list your property on the MLS market, you must a state licensed realtor. This makes it very hard for homeowners who are not licensed realtors, to list their properties. Traditionally, for sale by owner (FSBO) properties were not listed on these systems. However, you can have a broker list the property for you at a flat fee. With this method, you will only have to pay the broker a commission, instead of having to pay both the broker and the realtor.
If the broker finds a buyer for you, then you will have to pay them additional commission. However, if you find the buyer yourself, you are not under any obligation, to pay the listing broker any commission.
You can also use the flat fee multiple listing, to sell your property through MLS. Most people opt for this method, in a bid to maximize on the returns from the sale. However, the homeowner may not have vast resources, to maximize on the visibility of the home, and attract high value clients. If that is the case, the homeowner will need to list with a realtor.
With the flat fee listing option, the homeowner will just have to pay a certain amount upfront, which will enable buyers with agents to know about the property. Once the home has been sold, the buyer agent will receive a commission of around 3% or the agreed amount.
How Zillow and Trulia Use the MLS to Retrieve Information
Sometimes Zillow and trulia have more information that even that available on MLS websites. People always wonder where they get that information. The way it works is that they source their information from firms known as aggregators. On the other hand, aggregators normally get their data from agreements with brokerage houses, MLS providers, as well as services that provide foreclosure notices.
Whats the IDX
IDX covers standards, software, and policies that pertain to the access of listing information on websites. This is very important for brokers and agents, since it enables MLS members to integrate property listings obtained from the MLS into their own database. However, you should understand the rules and regulations that govern IDX to avoid getting in trouble with the MLS due to misuse of IDX data.
Popularly known as Real Estate Transaction Standard, RETS is a common language that is spoken by systems handling real estate information, like multiple listing services. With a common language, computers can exchange information pertaining to real estate transactions in real time. In simple terms RETS is a protocol or presentation language access to real estate information. RETS provides agents, third parties and brokers unlimited access to transaction and listing data. It simplifies the process of obtaining listing data.
Some Popular IDX Providers are
- Diverse Solutions, Displet, Real Geeks,IDX Broker, iHomeFinder, rewIDX ,Tiger Lead Solutions, Panda IDX and many more..
MLS benefits both the buyer and the seller, by providing a centralized location with property listings
- MLS has made home ownership much easier