A multiple listing service is a marketing database set up by a group of cooperating real estate brokers. It provides accurate and structured data about properties for sale, and it's also a mechanism for listing brokers to offer compensation to buyer brokers who bring buyers for their listed properties.
Each multiple listing service has its own rules and procedures, but they're generally patterned on regulations published by the National Association of Realtors. Multiple listing services have become the primary vehicle for the vast majority of real estate transactions because they use rigid data criteria and provide rules for the offer of compensation to other brokers.
What Is a Multiple Listing Service?
Real estate professionals gathered with their local organizations as early as the 1800s to exchange information and to work out deals for compensation if one brought another a buyer. These gatherings were the first known "MLS" initiatives. They evolved over the years into print listings and agreements, then electronics and the internet took over and made the whole process infinitely easier.1
The terms "MLS" or "multiple listing service" don't denote any one network. Numerous networks exist all over the country. There isn't an accurate count of all MLS organizations in the U.S. because they're constantly merging and breaking off.
How Does a Multiple Listing Service Work?
Brokers in a market area join an MLS to share listing information with other brokers about homes that are listed for sale. It's a highly efficient system in that every broker wants as many others as possible to know about their listings so they can bring buyers who have an interest in the properties.
MLS rules typically specify that brokers must indicate the percentage of the listing commission that will be paid by the seller in each listing. This is the amount that they'll share with another broker member who brings a successful buyer.
MLS members who don't adhere to the structure and content rules of the service can be fined.
Technically, this information is available only to the participating brokers, but they're usually generous about sharing. They'll do so free of charge to the public because their incomes depend on word of their listings getting out. Some information is nonetheless kept under lock and key for sellers' safety, such as personal and proprietary information and whether the home is vacant.
For sale by owner properties—"FSBO" sellers—can be left out in the cold without automatic access to list their homes with an MLS as brokers do. Many brokers and online services will list them for them for a fee, however.
Requirements for Multiple Listing Services
MLS listings databases are considered the most accurate as far as property details on the internet or elsewhere. New listings must be entered within a specified time period. Fines can be generated if a member doesn't enter the full listing data by the deadline. This is generally from 24 to 48 hours after the listing agreement is signed.2
MLS associations maintain a high level of accuracy in the information that's entered, from square footage to directions and location. The number and quality of photos included are often mandated as well, although the exact criteria of this requirement can vary.
Complaints and Disputes
MLS organizations normally mandate mediation, arbitration, or both for disputes between members. Each local MLS has an ethics committee to hear complaints from members about other members. The committee hears both sides of disputes and rules on the situation. Many of these problems have to do with commissions.
The use of the internet has aggravated the issue of "procuring cause." People go to websites and search for home listings, and they might call or email the listing agent with a question about the property. Later, the listing agent might say that this initial contact made them the procuring cause if another agent brings the same buyer, all because they first worked with them in finding a home.
"Procuring cause" is a concept that decides which real estate agent is the primary reason for a buyer's involvement in a transaction. Who got this buyer to the point of contracting to buy this home?3
The ethics committee will look at this type of situation as a whole and in the context of who did what and when they did it. Generally, the buyer's agent will be entitled to the commission if answering a question about the property is all that happened with the listing agent.
Multiple listing services also try to be the first destination for consumer complaints against members, because the next level is the state licensing board.
- Multiple listing services are marketing databases set up and maintained by a group of cooperating real estate brokers.
- There are numerous multiple listing services across the country, each serving its own particular area.
- Each service has its own rules for the quality and content of new listings added to the database.
- MLS organizations often mediate or arbitrate disputes between their own members, such as commissions to be paid to a procuring agent.