Multiple Listing Service: What Is An MLS?
How does your real estate agent know which homes are for sale in the neighborhoods in which you want to buy? How are they able market a home you’re selling to as many potential buyers as possible?
It's all about the multiple listing service, or MLS, that these agents are using.
What Does MLS Mean In Real Estate?
An MLS is an online database that lists homes for sale in a specific area. Only real estate professionals – those with a real estate license – can access an MLS.
Homebuyers and sellers can’t view the properties listed on their local MLS. They instead must find online home listings through public portals, such as Rocket HomesSM, that pull information from multiple listing services across the country.
Why Does Your Agent Use An MLS?
A local MLS is the best way for agents to find home listings that might fit the needs of their clients. It’s also the best way for them to market their sellers’ properties to other agents and buyers.
Listings on the MLS usually contain additional information about a property for sale that agents can use to find homes that meet their client’s needs. This could include any seller disclosures that whether a home’s basement floods, it has lead paint or it has suffered damage to its foundation; homeowners association guidelines for homes that are governed by one; the square footage of a home for sale; and a home’s most recent property tax bills. Not all this information is included with every home listing, though many agents do include it to help buyers and their agents narrow their home search.
Benefits Of Using A Multiple Listing Service
While the MLS is a tool reserved for real estate agents and brokers, it provides benefits for home buyers and sellers, too.
When agents list your home on their local MLS, your property gains added exposure. And buyers benefit because their agents have access to an entire list of properties for sale in the neighborhoods in which they want to buy.
An MLS also helps sellers set the right asking price. That's because these services tell agents how many homes are for sale in an area and what prices they are fetching when they sell.
The information contained in many MLS listings can also help sellers promote their home and buyers find a property that meets their needs. This information can include:
- Photos of the property
- The total square footage of the home
- The renovations that owners have made
- The age of key appliances such as a home’s furnace and hot water heater
- Any special features, such as a wooded backyard, finished basement or location near good schools or public transit
How Does The MLS Work In Real Estate?
The MLS plays a crucial part in the home selling and home buying process even though members of the public can’t access them. Only real estate professionals such as your real estate agent, REALTOR® or real estate broker can scour the home listings on these services.
Multiple Listing Service For Buyers
There are multiple listing services across the country. Real estate agents use the MLS that serves their market to find and list local homes for sale. When working with buyers, agents can bring them information on new listings and their buyer clients can use this information to determine which homes they’d like to tour.
Real estate agents can show MLS listings to their buyer clients. They might, for instance, bring their clients information on open houses for homes that boast the exact number of bedrooms or bathrooms their clients want. If buyers prefer an open floor plan, large backyard or expansive master bedroom suite, their agents can share homes that offer these features.
Multiple Listing Service For Sellers
Real estate agents also list the homes that their clients are trying to sell on their local MLS. This exposes these homes to other agents, who can provide information about them to their buyer clients. This constant exposure increases the odds that sellers will attract buyers to their homes.
This is why an MLS is so important to both buyers and sellers even though only real estate agents can access them: They provide the information that fuels the home buying and selling processes.
Multiple Listing Service For Real Estate Professionals
An MLS also benefits real estate professionals. Without connecting to their local MLS, agents would not have access to all the properties that are up for sale in their markets. They also wouldn’t be able to promote their seller clients’ homes as effectively if they couldn’t list them on their local MLS. Agents and brokers can help sellers set the right asking price by scouring their local MLS for real estate comps, the sales prices at which comparable – or similar – homes have sold.
Alternatives To MLS
While multiple listing services are only available to real estate professionals, there are other home listing tools that can help people when they are buying or selling their home.
- Real Estate Portals
When you’re looking for a home, you can turn to real estate portals. These are online listing sites that show homes for sale throughout the country. One such place is the Rocket HomesSM Listings page, which can show what homes are selling in different cities near you.
These sites aren’t an MLS, but they do pull information from them, with permission. They give home buyers the chance to search active listings in the neighborhoods where they want to live and also provide buyers an idea of how much homes are selling for in these communities. Many buyers start their home searches by looking at online listings, and then asking their real estate agents to set up showings of the properties that interest them.
- Pocket Listings
A pocket listing is a home for sale that its agent doesn’t list on an MLS. Instead, the home is marketed to buyers directly by real estate agents. Owners sometimes request pocket listings for privacy. Luxury or more expensive homes are often sold as pocket listings.
These listings provide another reason why working with a real estate agent is so important: Agents will know of pocket listings that aren’t on the MLS and will arrange showings if these listings meet your needs.
- For Sale By Owner
Some owners sell their home as a for sale by owner (FSBO) listing. This means that the owners are selling their home on their own without the help of a real estate agent. Because the seller isn’t using an agent, the house won’t be listed on any MLS.
Owners may choose to go this route so they won’t have to pay a commission to a listing agent. In most home sales, the agent representing the seller and the agent working with the buyer split a commission, usually 6% of the total home sale. The seller’s agent gets 3%, while the buyer’s gets the same amount. The money for this commission comes from the sale proceeds, meaning that the owner pays the entire 6% after closing the home sale.
In a FSBO listing, though, the seller doesn’t have to pay that 3% commission to a listing agent because there isn’t one. Instead, the seller only pays a 3% commission to the buyer’s real estate agent.
While sellers can save money, there are risks to going FSBO. Because your home won’t be listed on the MLS, it won’t be exposed to as many buyers. You also won’t benefit from any marketing a real estate agent would do. This could cause you to sell your home for a lower price.
The Bottom Line: A Multiple Listing Service Can Help Many In A Future Real Estate Transaction
While you won’t have access to the MLS on your own, you’ll benefit from the existence of these services. Your agent will use the MLS to find you the best home for your budget and needs. And if you’re selling a home, your agent will list it on your local MLS to showcase it to other agents. In turn, those agents will share it with their buyer clients. If you’re ready to take the steps to home ownership, get started with the process today.