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What does MLS mean and what do I need it for?

Question:

What does MLS mean and what do I need it for?

Answer:

MLS is the abbreviation for Multiple Listing Service. The Multiple Listing Service is a database of virtually all the homes that are for sale in the United States.
“Virtually” means that most sellers choose to add their property into this database and the maintainers of this database charge a fee. Some brokers offering to list for a flat fee ($300 - $600, depending on the market) or you can list for a commission of the sale price (tends to be more, *if* it sells). The big advantage to sellers is that the MLS is the No. 1 resource used by buyers through their agents to locate homes.

Many web sites will give you access to the MLS without an agent but they do not give out all the information that an agent would see. Most importantly, they do not give out the address of the property or the owner’s contact information.

Real estate agents use the MLS systems on a daily basis usually as their only source of real estate availability and past sale data. Properties that are not listed in the MLS (usually those being sold by their owners) will not be exposed to those homes. Also notice that even if you do a sale-by-owner and decide to pay the fee to get listed on the MLS, most realtors will not mention your property to their clients because
  1. they want to discourage from the ‘for sale by owner’ method
  2. they (rightfully) fear not to get the full 3% buyer’s agent commission

Fact is that the MLS presents some sort of monopoly which gives realtors power over the market.

The MLS is also often used as an instrument to tell how fast properties are sold in the current market. When you look at these numbers, keep in mind that a seller usually takes a property off the MLS if it does not sell within a few weeks. They don’t want to get the stigma of a property that has been sitting for sale for a long time – prospective buyers may (rightfully) think that there is something wrong with it.
Instead they remove it from the MLS and relist it next day, possibly at a lower price. That makes it look to the buyer like a ‘new on the market property’ and the average DOM (days on market) number stays low, giving the impression that houses sell faster than they really do.



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