Defining and Communicating the Value of the Multiple Listing Service.
Source: REALTOR® Magazine, National Association of REALTORS®
Every professional involved in the real estate industry should understand and be able to talk fluently about the MLS’s true purpose and value.
What is an MLS?
On the surface, the answer seems simple. A multiple listing service is a marketplace where brokers and agents help consumers buy, sell and rent homes.
But the real estate marketplace isn’t simple. Often, high profile trends absorb the industry’s focus and obscure the image of the MLS. Powerful technology companies use MLS outputs to drive attention-grabbing products and services. News headlines highlight organizations challenging traditional MLS practices in data sharing and compensation.
In light of this uncertain, ever-changing environment, a casual observer might ask, “What is the existential value of an MLS?” The truth is, the MLS has provided an abundance of value over the past century that explains its broad appeal and its continued relevance.
Being able to succinctly communicate the many benefits of the MLS in a modern environment—with historical context, and even from an international perspective—is critical for brokers and MLS leaders to ensure that transparent, liquid marketplaces continue to serve their communities. In fact, any professional who’s involved in the real estate profession should be prepared to describe the value of the MLS.
What an MLS Is Not
It’s often helpful to begin defining something by identifying what it isn’t. Oversimplified descriptions of the MLS are common. The MLS is not:
A database
A website or app
A network for commission payments
A REALTOR® association
While all of these things can exist adjacent to an MLS, or as features of it, they are inaccurate descriptions of the organization. Twenty years ago, former National Association of REALTORS® CEO Terry McDermott challenged association and MLS leaders to clearly understand the MLS with words that ring true today: “They have to make sure their members fully understand the MLS system and how it operates—that it’s not just a collection of electronic listings. ... If we keep cheapening the MLS system and commoditizing the MLS by saying it’s just an aggregation of listings, we’re going to inherit a very negative end result.”
The MLS Cooperative
At its core, an MLS is a broker cooperative: an organization in which multiple competitive companies agree to abide by shared rules. This cooperation agreement empowers MLS participants to provide superior professional services and access to inventory for their clients.
Three core components of an MLS are central to its definition:
Multiple licensed brokerage organizations
Exclusive listing agreements between brokerages and their clients
An organization that establishes the rules and compliance mechanisms that ensure brokers and their customers and clients cooperate efficiently within its environment
MLSs provide many offerings. The most valuable services are those that are grounded in the cooperative rules of the MLS. MLS rules have benefits similar to those of a stock market. Rules for a stock market regulate who can broker products, what they can sell, and what information must be provided about the products. The outcome of compliance with these rules is a market that buyers and sellers can trust: transparent, timely, accurate information about broadly aggregated inventory.