When we asked our banker one day if he used a special system to determine the value of a property, his answer was “I always use MLS.” At first we weren’t aware what he meant as we had never heard of it before, but we dared not ask about it, in case he changed his mind about lending us the money to purchase our first home.

Five years later, the concept of the Multiple Listing Service is clearer to us, having done a bit of real estate research for some projects. Judging from what we’ve learned so far, it is a very efficient tool not only for real estate brokers, but also for property owners.

MLS: Definition

The Multiple Listing Service is a listing contract. A real estate agent who is selling your house will list your house in MLS so that other agents may know that your house is on sale and may have a potential buyer in mind. Even if they are not your agent, they can share the information with fellow brokers because your house is on the MLS.

Second, the Multiple Listing Service, by virtue of its description above, is a database. It contains information that is efficiently distributed throughout a network. The MLS system is however an exclusive system in that only brokers and salespeople who are members of the local real estate board have access to it. The local real estate boards in every region run the MLS.

When your property is on the MLS system, information about it is available to all members of the real estate estate board, whether they are brokers or agents. Using the MLS system enables a member broker to earn a commission on the sale of your property, provided you accept his offer. Once your house is on the MLS system, every broker goes to work for you. Whoever sells your house eventually simply splits the commission with the selling company and the listing company.

MLS: extent of scope

The MLS is the collective “information centre” of all listings of properties that are available. These properties are handled by brokers who are members of either the US’s National Association of Realtors (NAR) or Canada’s Real Estate Association (CREA). In Canada, there are some 82,000 members registered with the CREA who use the MLS system, which is operated by almost 99 real estate boards and close to a dozen trade associations.

MLS It is not an exclusively North American practice. It is also used in other geographical areas.

Given that the goal of the MLS system is the systematic dissemination of information about properties, every real estate agent who has access to it can search the database and obtain information about properties being sold in a specific area. Prices are also indicated.

The MLS is not run by the government. It is operated independently by the local real estate board, consisting of all member brokerage firms in the region covered by the board. The individuals who man the MLS system are volunteers (as far as we know) and the MLS system itself is not intended to be a profit entity. One thing stands out, however: a residential real estate office cannot hope to succeed in the business if it isn’t a member of the local board that runs the MLS system.

MLS systems have their own membership rules including the criteria that enable access and the sharing of information as set out by the boards. These boards are governed either by the NAR or the CREA.

The size of the real estate board is determined in part by the size of the region. Large boards usually keep computerised archives of prices and recent listings. This information is available online for a modest fee. In fact, it is a clever tool in itself because brokers or agents – if they want to impress a client – can access the data with their laptops right in the home of a prospective client.

How does the information help both buyer and seller of properties?

• by providing immediate comparisons so that you know what your property should be priced at;
• it gives you a close to accurate reading of recent listings;
• it facilitates the appraisal work;
• if you’re a buyer, it can narrow the choices for you based on your parameters.

A good thing to bear in mind is that if a person is doing a private sale – an FSBO as an example (for sale by owner), this person cannot list his property on the MLS system. Nor can a broker or agent who is not a member of the board access the MLS. Today, however, many brokers or firms will offer private sellers to list their property in the system for a fixed fee.

MLS Data

Apart from price and new listings, what kind of data can one have from the MLS system?

Large MLS systems in large metropolitan centres organize the information either as residential or commercial (including industrial properties). This data is presented in three ways:

• MLS number – the master data is repeated and then classified as to mortgages and number of rooms as well as how large these rooms are;
• civic address – a person who wishes to see a listing of all available properties say on Andrews Street can specify this variable; or can limit the search further by keying in “all civic numbers beginning at 2000 to 3000 on Andrews Street only.”
• price and district – this further narrows down your search. If your client is willing to pay $250,000.00 but wants a house with 3 bedrooms and 2 bathrooms and a 2-car garage, this can be inputted into the system and MLS will yield the narrowed down results.

MLS: Advantages

The Multiple Listing Service, as we said earlier, is an excellent tool that serves the many needs of brokers and sales agents. But it does more than provide lists of availability and prices and house descriptions.

Its other advantages include:

• gives an idea of market trends – what’s hot and what’s not in the housing industry. Since it archives all lists that go back a few years, it gives the user a fairly good idea of buying and selling patterns. Also, since a listing expires at a certain date, agents know that expired listings make way for new listings. A serious seller will want to put his listing more than once;
• brokers can request future listings by spelling out what he wants to receive. The MLS system simply filters out the undesired properties and delivers those that are desired by the broker;
• provides photos of properties instantaneously. As we all know, there are certain things that catch a broker’s attention: photo of the house, price and location. The MLS system also can provide clues as to closing date, whether the property is vacant (indicates seriousness on the part of the seller) and if the seller reduced his price a few times, as well as the agents who worked on his property.

Newly licensed agents and brokers must study the MLS system in depth. Because of the abundance of listings, the process can get complex. All brokers and agents who want to have a successful real estate career must not underestimate the power of MLS! And using it efficiently is paramount.