The MLS is the Realtor ® Mutliple Listing Service
Listing in the MLS is the greatest marketing exposure possible for your for sale by owner home.
Simply put, the Real Estate Multiple Listing Service (MLS) is the database of currently available properties for sale or lease by real estate brokers within a given geographic market area. Essentially, the Realtor ® MLS was formed by real estate brokers in a cooperative marketing effort for the purpose of pooling their respective property listings and assisting one another in selling these properties. In exchange for a potentially larger audience of home buyers and a far greater likelihood of sale, the brokers agree to share the listing commission (paid by the seller).
There are a number of MLS's across the country covering various sized geographic areas from small local MLSs to large metropolitan areas, regional, statewide and even multi-state MLSs. The MLS service system was originally created and is still controlled by real estate professionals through their professional organization, the Associations of REALTOR®s. Realtors use the MLS as a way of marketing their listed properties. Today the MLS is a computerized relational database system containing almost all of the properties for sale or lease within a given geographic region. By gathering local housing data into a single repository, Realtor® members of the MLS exchange information about properties for sale with each other and offer compensation to other real estate practitioners for selling their listed properties.
The MLS is an exclusive club. Only MLS members may list their properties in the MLS and only members may view the actual MLS system itself. There are several hundred MLS listing services around the country. All of these MLS listing services are owned and/or predominantly controlled by REALTOR®s and in order to get property in MLS listing, one must be a REALTOR® member of MLS. REALTOR®s use the MLS real estate listing to cooperate among real estate brokerage firms to sell each other's listings.
Above all, the MLS is a cooperative system. REALTOR® members agree to abide by the rules of the MLS and a blanket offer of compensation is generally made to all participants of the MLS. As part of this agreement with each other, REALTOR members agree to split the commission paid by the Seller between the listing firm and the selling firm or "buyer broker". For example, if Listing Broker lists a property for a 6% commission, through the MLS, he will generally agree to pay all of the MLS member brokers one half of the listing commission (3%) for procuring a "ready, willing and able" buyer for that listing. The Listing Broker keeps 3% and the Selling or Buyer Broker receives the other 3%. While the amount of compensation and the "split" with other brokers is not fixed by the MLS, it is fair to say that the prevailing rate across the country has remained at between 5% and 6% for a very long time. Most agents are willing to share half of the commission they negotiate from the seller with a buyer's agent from their own or another firm.
In most areas, the MLS has become the "de facto" market for homes. Although statistics vary from region to region, the MLS is responsible for approximately 75% to 85% of home sales in any given market. Compared with other forms of advertising, an listing in the MLS is, by far, the most important means of advertising a home for sale . As the below chart illustrates, the agent members of the MLS are the predominant means through which home buyers find their home. Most buyers are made aware of properties for sale by their agent using the MLS system. However, even when buyers initially find a home through a yard sign or other means, they generally go through a Buyer Broker who is a member of the MLS system to purchase the home.
If you do nothing else, a properly priced home with MLS listing can virtually assure a sale in any type of market. Compared with running newspaper ads or holding Open Houses, the MLS is a far more effective way of letting the buying public know your home is on the market. Originally, the MLS home listing data was complied into large books with each REALTOR® receiving a new book every two weeks or so depending on the number of listings in a given market area. With the advent of the Internet, most MLSs have discontinued the publication of these large books and REALTOR®s access the MLS database through the Internet. One additional advantage for sellers today is that an MLS listing is now published (in a limited format) to the Internet through websites such as REALTOR.com and Broker IDX sites. Now the exposure for a property with MLS listing has jumped exponentially to include everyone with access to a computer device and the Internet. In fact, now that MLS listing data is available online, studies have shown that over 75% of home buyers now use the Internet when shopping for a home.
