When a real estate agent needs to find prospective homes for their clients, they turn to the MLS. As a homebuyer or real estate investor, it's important to have a basic knowledge of what the MLS is, why it can be a valuable tool for agents, and how it differs from some of the major real estate listing websites that are accessible by the public.
What is an MLS?
MLS is short for multiple listing service, and the short explanation is that it's a centralized location for real estate listings for a particular market. While the idea of an MLS originated as an in-person sharing of listings between agents, in the modern era, MLS databases are housed online, providing agents and brokers quick and easy access to listed properties.
Contrary to popular belief, there isn't just one MLS. Instead, regional real estate markets each have their own MLS -- there are over 800 in the United States. Real estate professionals use the MLS to see each other's listed properties.
How does an MLS work?
Most MLS databases in the U.S. restrict access to licensed real estate agents and brokers. This means that in order to browse the MLS listings, or to post a home for sale, you need to be a real estate professional. When buying a home, you can generally not access your local MLS by yourself.
Real estate professionals pay to post homes on the MLS, and each listing is typically only accessible to professionals who have access to that particular MLS. In other words, a real estate agent with access to the MLS in South Carolina wouldn't be able to peruse MLS listings in Miami unless they became a member of that MLS as well.
The MLS is intended to help real estate agents and brokers conduct their business more efficiently and effectively. Agents can narrow down the listings in the MLS according to their buyer's preferences, such as square footage, number of bedrooms, neighborhood, and more. And each listing often contains extensive information and remarks about the property.
Are all home listings on the MLS?
Most homes for sale in the United States are listed on the local MLS, but not all of them are. Specifically, there are two types of listings that are notably absent from the MLS: for sale by owner and pocket listings.
For sale by owner (FSBO)
In most cases, you need to be a licensed real estate agent or broker to post a home directly to the MLS. So, if a homeowner decides they want to sell their home themselves, the lack of exposure that comes with not being listed on the MLS is one of the key disadvantages. There are FSBO sites, and homeowners can list their properties on websites such as Zillow, but these don't get the same level of attention from agents and brokers as the MLS does.
Another type of listing that you won't find on the MLS is known as a "pocket listing." Unlike FSBO listings, pocket listings are situations where the homeowner is working with a real estate agent but makes the conscious choice not to list on the MLS. This is a common practice when famous people sell their homes, for example, but it's not unheard of in more modest home sales as well.
What's the difference between an MLS and sites like Zillow and Realtor.com?
There are some aggregator sites that contain listings from markets around the U.S., such as Zillow and Realtor.com. Aside from the obvious difference that these are nationwide listings and not just from a local market, there are some other big differences as well.
Specifically, there is generally much more information in MLS listings. Zillow and Realtor.com listings mainly come from local MLS databases but are shorter versions. Think of these as the "CliffsNotes" version of real estate listings, while MLS listings are the entire original book.
Some of the information an MLS listing might contain that listings on aggregator sites don't include, but isn't necessarily limited to:
- Agent remarks: These are notes written by the listing agent in the MLS listing that are visible only to other real estate professionals. For example, preferred showing times and offer procedures are often mentioned. If the seller is offering any additional incentives to buyers' agents, that can also be included.
- Relevant documents: MLS listings often have important files attached to them. These can include things like seller disclosures and HOA documents, which can be important when it comes time to apply for a mortgage.
- Sensitive information: MLS listings contain some information of a sensitive or confidential nature, such as alarm and gate access codes.
On the other hand, there is some information that the aggregator websites have that MLS databases don't. We already mentioned that FSBO homes aren't listed on the MLS because access is generally restricted to real estate agents, but these listings can be found on the listing aggregator websites.
Why list on the MLS?
The most obvious benefit to sellers of listing on the MLS is exposure. While buyers often use aggregator websites like those mentioned earlier when shopping for a home, agents typically look in the MLS. If you want real estate agents to present your home to their clients as a possibility, you want your home listed in the MLS.
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