While first-time homebuyers and even seasoned homeowners might have heard of MLS, they may not be familiar with the role it plays throughout the home buying and selling process. Understanding how the MLS factors into the process can help you get the most out of your purchase or sale. In this article, we explain all the MLS essentials:
- What an MLS is and how it works
- What information is included and excluded from a listing
- How to access the MLS in your area
- Why the MLS is important to everyone
These essentials will give you a deeper understanding of how the homebuying and selling process works. Let’s get started.
What is MLS?
MLS stands for multiple listing service. It is a database of homes for sale that is produced and maintained by real estate professionals to help their clients buy or sell property. Homes for sale on an MLS are called listings. The MLS listings typically include important property information, such as exterior and interior details, asking price, taxes, and other costs.
The MLS was first created in the United States in the late 1800s. Members of the Board of Realtors in a given area would come together on certain days and share information about what properties were for sale. During these meetings, realtors exchanged information about properties and carried out the purchase of properties on behalf of buyers they represented.
Today, a local MLS provides publicly available information about listings to interested buyers. However, some information is kept private. This includes anything that could expose the seller or the property to certain risks. For example, contact information about the seller is not publicly listed to protect their privacy, and details about when the home is vacant for showings is never listed to prevent break-ins. To access those details, buyers need to work with a licensed real estate agent.
MLS systems range in size, sometimes covering the local municipality— such as the Chicago MLS Midwest Real Estate Data (MRED). In rural areas, like Portland, ME, one regional MLS can cover several counties. Potential buyers can also access MLS information via websites like Redfin, where listings can be viewed before buyers decide on their agent.
How does the multiple listing service work?
The multiple listing service works to make the process of buying and selling property easier. Each MLS works a little differently, but here’s how it works in most cases: When a homeowner is ready to list a home for sale, they get in touch with a broker or agent and grant them access to create a listing. The agent will gather the necessary details to complete the listing and will likely arrange for photography to be captured – all with the goal of making the home and listing as attractive as possible for buyers. It’s important to note that home sellers can’t post their home directly to the MLS, because posting access is reserved for licensed agents and brokers who pay for membership
Once the listing is live, it can be shared with potential buyers. Buyer’s agents will assist in getting the listing information out to their clients, so long as the property fits their client’s needs. The buyers then indicate which properties they want to view in person and their real estate agent can then schedule a showing. And from there, if the buyer likes the home, they can enter the negotiation process.
What information does an MLS include for a typical listing?
The MLS contains information and details to help understand the current value of the home, its carrying costs, and its potential value. In other words, information that aids in real estate investing. Details you should pay attention to include:
- Photographs and videos of the property
- House style, such as Tudor or Victorian house styles
- Lot dimensions and square footage
- Number of bedrooms and bathrooms
- Detailed descriptions of the property room by room, including flooring
- Details of the exterior features, such as type of siding and roofing
- Asking price, taxes, and, if any, homeowners association (HOA) dues
- Days on market and original listing price if it has changed
- County and township, plus subdivision information if applicable
- Year built or at least a notification if the home was built before lead paint was banned (1978)
- School district information— elementary, middle/junior high, and high school
- Utility information, such as how you get your water (well vs. city)
- “Green” features, if applicable, including solar capabilities and green building rating score
- Seller’s disclosures, if any
When viewing condo listings, you’ll also find information about the type of management for the HOA. A condo listing should also include a pet policy, storage availability, parking availability, and whether or not the parking spot is deeded. Finally, the unit’s exposure— north, south, east, or west— should be noted, which will indicate the level of natural light you can expect.
Often the listing should also mention any tax advantages the previous owner has received, but sometimes this information is left out. For example, in most states, senior citizens get a reduced property tax rate. If the listing doesn’t note this discount, you could be surprised by a high tax increase in the second year of ownership. Your accountant or financial advisor should be able to assist you in understanding the tax implications of the property.
Can I look for homes on the MLS?
To look for homes on the MLS, you will need help from your real estate agent or broker. MLS access is limited to real estate brokers and agents who pay an annual fee, So when you work with an agent or broker, they will give you access to a portion of the MLS that matches your search criteria. Typically, this is done either through email, a special log-in, or both.
If you have a real estate license and pay a small fee, you may be able to access the MLS on your own— it depends on the MLS in your area. Some MLS databases are made accessible to anyone with a license, while others require a license and that you are active in the real estate market in your area. In other words, you are actively assisting buyers and sellers with their real estate transactions.
Luckily, you can get up-to-date home listings on Redfin.com. Because Redfin is a brokerage website, it is able to be updated directly from the MLS. That means its listings are updated soon after a listing broker initially lists the property or makes any updates.*
How many MLSs are there and who updates them?
The Real Estate Standards Organization (RESO) sets standards for and certifies multiple listing services. According to RESO, there are 580 certified MLSs operating in the United States, with dozens more in the certification process. You can look up an MLS’s certification report on the RESO website. More in-depth reports are set to be released and searchable by the end of 2021.
The MLS of a specific area is managed by a group of real estate professionals, agents, and brokers. For example, the Colorado Springs, CO multiple listing service is run by Pikes Peak REALTOR® Services. Some of the time, the group managing an MLS has some connection with the National Association of Realtors (NAR), but not always.
The listing agent updates individual property listings. Exactly how often the MLS updates differs based on the MLS and how it integrates its data. If the listing agent has made any changes to the listing, the MLS will pick up those changes and the new information will be shown.
Are all homes that are for sale listed on the MLS?
No, not all homes available for sale are listed on an MLS. There are three instances where a home may be for sale but is unlisted. The first instance is homes for sale by owner (FSBO).
FSBO properties are not allowed on many MLSs. This happens when the MLS only accepts listings from licensed agents and brokers. In some areas, FSBO sellers can list their property for a flat fee. At Redfin, we source the FSBO listings from Fizber.com and FSBO.com.
The second instance where a property might be for sale but remain unlisted is that the property is a pocket listing. Pocket listings are homes for sale where the selling agent only shows the home to a select group of buyers. In some markets, as many as twenty percent of properties for sale are pocket listings.
The third instance where a home may not be listed on the MLS is new construction homes. Sometimes builders opt out of working with a real estate agent to sell their development. You’ll see this happen more often when the market is hot and builders don’t necessarily need to bring buyers in.
The National Association of Realtors banned this practice in 2019. But the ban wasn’t enforced, and pocket listings have been on the rise ever since. The reason these listings can be problematic is that it prevents certain buyers from participating in the real estate market, leading to unfair housing practices.
Why the MLS is important for everyone
While the MLS is created for and maintained by real estate professionals, it benefits many aspects of the real estate market and the people with stakes in the market. The MLS brings transparency to the real estate system— everyone can see what’s selling at what price— which is crucial to creating and maintaining a fair housing market.
How it benefits agents
An MLS is a great real estate agent resource and has many business benefits. The MLS makes it easy to share listings with buyers, usually by setting them up with a portal to view their matches. When the buyer finds something they like, they can easily communicate their interest with the agent and get set up with a viewing.
Agents can also promote the homes they are representing for sale with thousands of potential buyers. They can easily tweak the listing details to make the property more appealing or update the listing if anything significant has changed.
How it benefits sellers
Home sellers also benefit from the MLS. The service makes it very easy to share their listing with potential buyers— exposure they wouldn’t typically get if selling on their own. During the comparative market analysis (aka “comps” process) the seller will get information about what other properties are selling for and the features they offer. This is how the initial asking price is determined.
But, a seller can use this information to their advantage in other ways. For example, if their home has a competitive disadvantage the seller may be able to address that disadvantage before putting the home on the market. Sellers should examine the property details of similar homes that are selling at the higher end of the spectrum for ideas for home improvements. Often a few small projects can result in less time on the market and a higher sales price.
How it benefits buyers
Through the help of an agent, a buyer can also benefit from the MLS. As they’re in the process of buying a home, a buyer will have more options to choose from that meet their criteria and the MLS will provide more detailed information about the listing such as size, features, style, neighborhood, and more. This makes sorting through the potential hits much easier for the agent, which in turn saves the buyer time.
* 85% of new listings in MLS feeds received by Redfin will post within 5 minutes.
The post What is MLS? Multiple Listing Service Explained appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.
- Originally posted on Redfin