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.
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.
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.
What information does an MLS include for a typical listing?
- 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
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.
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.
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).
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.
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 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.
As seen on: Redfin.com