In today's merciless real estate market, you need all the help you can get. How do you put your house out there to attract serious buyers? You're going to need to do more than just posting a For Sale sign on your lawn and putting an ad in the paper. For decades, the most effective way to do that has been to hire a real estate agent to help sell your house. He or she will list your property on a multiple listing service.
A multiple listing service is a collection of private databases used by real estate brokers who agree to share their listing agreements with one another to locate ready, willing and able buyers for properties more quickly than they could on their own. Brokers earn sales commissions from the sale of properties they listed and properties they help sell as a buyer's representative.
So what advantages does a multiple listing service offer to the consumer? As a seller, you can expose your property to thousands of potential buyers you would otherwise never reach. As a buyer, you enjoy the benefit of instant access to listings that match specified criteria, beyond price range and location. Maybe you want to see homes with a big yard, a garage and a lake view, or homes in a certain school district or close to public transportation. Many multiple listing service sites can also tell you how much you should expect to pay in real estate taxes, mortgage payments, and utilities on a particular property. This service has saved everyone involved in real estate transactions -- buyers, sellers and their agents -- time and legwork in sorting through the millions of properties on the market.
For more than five decades, the broker-controlled MLS® system has been the primary marketplace connecting buyers and sellers of real estate in the United States. But recently its dominance has become threatened by communications technology -- chiefly the Internet -- and the ability of consumers to easily share information with each other without the need for a middleman.
But before we look at this revolution in the real estate industry, let's look at how multiple listing services have historically worked until the turn of the millennium.
What is a Multiple Listing Service?
If you've ever bought or sold a home, you've probably heard your agent talk about comps. He or she is referring to comparative market analyses (CMA) -- what similar properties in an area are listing and selling for. Your seller's agent will do such an analysis before suggesting an appropriate asking price for your home. If you're a buyer, comps help your agent determine what properties you should be shown based on your price range. Agents get this data from the multiple listing service.
The listings also offer the advantage of timeliness: They are updated daily and continually display new properties coming on the market. Technology has only enhanced this benefit, making information even more up-to-the-minute. In a competitive market, this allows you to get a jump on other buyers who may notice the property by driving by a "For Sale" sign.
Most multiple listing services require that a member agent release new listings to the service within a short time frame of obtaining the listing. Your broker must have your written consent to include your property on a multiple listing service.
Usually, brokers and agents who use the MLS® in the United States must be members of the National Association of Realtors (NAR), a real estate trade association. The NAR has long had domain over the MLS®, but successful antitrust challenges to this member requirement have been mounted in several states, and currently non-NAR member brokers in Alabama, California, Florida, and Georgia must be allowed to participate in the MLS®.
Multiple listing services are organized and operated by professional, licensed real estate agents. Until recently, you couldn't get your property listed on an multiple listing service unless you wanted to pay a 5 to 6 percent sales commission. But some brokers and listing services are beginning to allow flat-fee listings by FSBO (for sale by owner) sellers, along with other a la carte services.
Keep reading to find out how the Internet is changing the real estate industry -- and putting more power in the hands of buyers and sellers.
Sharing Multiple Listing Service Data: Consumers Take Control
The advent of the Internet in the 1990s has changed the way the Multiple Listing Service® (MLS) works. At one time, only brokers saw and controlled the listings on the service. Now the Internet has turned it into more of a consumer marketplace. This trend has leveled the playing field between buyers and sellers and their agents.
Through the Internet Data Exchange, the National Association of Realtors (NAR) allows limited listings to be viewed by potential buyers on its consumer Web site, MLS®. According to NAR, more than half of real estate buyers in 2006 used this site or another multiple listing service Web site to search for a home. For what it says are security reasons, NAR deliberately withholds some information from the public, including seller contacts, whether a home is vacant and showing times.
But buyers and sellers increasingly have less need of the MLS®. This is due to Internet search capabilities and a burgeoning number of online service providers specializing in real estate. With a spike in the number of American homebuyers now finding their homes on the Internet, the role of the real estate agent is transitioning from one of matching buyers with sellers to one of helping them navigate the paperwork and procedures involved in the transaction.
What the future holds for multiple listing services remains to be seen. But few agents would deny that they'll have to evolve to avoid becoming obsolete. They'll have to become more transparent and accessible to compete with rival services, and they'll have to keep pace with the rapidly changing demands and expectations of an Internet-savvy public.
Whether you're buying or selling, the links on the next page can help you join the revolution of enlightened, well-informed real estate consumers.
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More Great Links
- Galaty, F., Allaway, W. and Kyle, R. Modern Real Estate Practice in Illinois, 4th edition. Dearborn Financial Publishing: 2001.
- National Association of Realtors: Talking Points: Multiple Listing Service http://www.realtor.org/press_room/public_affairs/tpmls
- Cook, John. John Cook's Venture Blog. "Zillow's Rich Barton Storm's The Data Bastille." http://blog.seattlepi.nwsource.com/venture/archives/137881.asp?from=blog_last3
- Knox, Noelle. "Home Shoppers Do Their Hunting Online." USA Today. http://www.usatoday.com/tech/news/2007-02-08-net-real-estate-usat_x.htm?POE=TECISVA