What Is the Multiple Listing Service?
The multiple listing service (MLS) is a group of databases providing information about real estate that’s for sale. Real estate agents use the MLS to help their clients sell and buy properties.
After signing a listing agreement with a property owner, a listing agent enters that property’s information into the MLS database. Doing so creates an MLS listing for other agents to view, which has pertinent property information—everything from a house’s square footage to open houses and if the property’s a short sale. Each listing also includes the agent’s contact information.
Because the real estate market is location-based, multiple listing services are regional. There are more than 800 MLSs across the U.S., with a single MLS usually covering one area. While each MLS operates under its own rules, most MLSs follow guidelines established by the National Association of REALTORS
One such rule is that only people with a real estate license can use the MLS, which limits access—for the most part—to real estate agents or brokers, who pay a fee.
An MLS usually does not include for sale by owner properties. Homeowners, such as those selling a for sale by owner property, aren’t able to create their own MLS listing—although they can hire an agent to do so.
Real estate websites such as Trulia and Zillow include some information from the MLS. However, these sites only aggregate MLS listings—they don’t display all the data from an MLS listing, and they don’t always include all MLS listings.
History of the Multiple Listing Service
In the early 20th century, real estate agents and brokers met in person to exchange information about the properties they were selling or looking to buy.
People started using the term “multiple listing” in 1907. In 1908, the National Association of REALTORS forerunner—the National Association of Real Estate Exchanges—endorsed such a system. At the time, brokers called these in-person exchanges MLS initiatives.
The system’s grown and adapted into the digital version that agents and brokers use today.
Benefits of Being On the MLS
The multiple listing service is the fastest way to buy or sell properties. Agents and brokers use the MLS every day.
As mentioned above, real estate websites such as Trulia and Zillow don’t often don’t include all MLS listings. If they do, they aren’t able to provide all information about a listing. That’s one of the reasons most homebuyers work with a real estate agent. Through the MLS, agents can find properties fitting their buyers’ needs.
The MLS also benefits the real estate market and facilitates home ownership by making the system fairer. Without the MLS, brokerages could only sell properties for which they were the listing broker.
Should Real Estate Investors Get a Real Estate License?
Only people with real estate licenses have access to the multiple listing service. But real estate investors don’t need such a license to leverage the MLS. Here are some ways investors without a real estate license can use the MLS.
Working with a real estate agent or broker is the best way to access the MLS. And finding an agent early in your investing business can save you time and money—because they can show you properties before the general public sees them. If your agent has worked with real estate investors before, they might already understand how your needs differ from their non-investor clients.
Public websites, such as Trulia, Zillow, and Realtor.com, are also options for finding properties without using the MLS. The downside, as covered above, is that these sites don’t include all the information contained in the MLS database. And others use these websites, including homebuyers, so you might face stiffer competition for these properties.
Wholesalers buy and sell properties without going through agents or the MLS. Wholesalers are real estate investors, so they’re likely to understand your business. But wholesalers usually only sell properties they own, so they have a more limited inventory than a real estate broker.
There are a few ways to find wholesalers in your area. Often, you can connect with a wholesaler through your local real estate association. You can search online for “real estate wholesaler” or “off-market real estate” and your city. Or, you can look for advertisements that say something like, “We buy houses.”
Reaching a homeowner before they sign a listing agreement is one way to find investment properties without using the MLS. You may be able to do so by direct marketing to homeowners in the area where you’re looking to invest.
Direct marketing includes everything from mailing postcards to online advertising. This approach can cost time and money, yet it can produce positive results. The key is to be as targeted as possible in your outreach. For example, you don’t want to spend money marketing to people who don’t own their homes, since they’re unable to sell the property to you.
Public auction can be a great way to buy real estate investment properties. You can often get real estate for less than market value, because properties sold at auction were foreclosed upon or repossessed due to unpaid taxes. County governments hold these auctions, often advertising and conducting them online.
While investors can find lower-priced properties through auction, there are some drawbacks. You have no control over the properties included in an auction. You’re not able to view the property before the auction. And you need cash on hand to bid and make the purchase. Most auctions require a property’s winning bidder to pay at least 5-10 percent of the purchase price on auction day, followed by the remaining cost within five business days.
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