What is An MLS?
Surfing Realtor websites, you inevitably encounter the term "MLS", as in "Search the MLS", or "Member, MyCounty MLS." If you've clicked through to one of the "MLS Search" pages, like the Sullivan County MLS Search on my website and done a few searches for property, you may be thinking to yourself, "What's the big deal? It's just a big online classified ad system. Kind of like Craigslist with more photos."
A Multiple Listing System is actually much more than just an online property database that you can search. In fact, the consumer search component is just the tip of the iceberg of a well honed system that enables Realtors to show — and sell — each other's property listings in their market areas.
The MLS concept is very familiar to real estate buyers in every part of the U.S., except New York City. Real estate brokers in Manhattan, in particular, have been very slow to adopt the practice of sharing their listings with each other. If you've shopped for an apartment in Manhattan, you've likely had to go from broker to broker to make sure you had information on all the properties on the market that fit your criteria. When you worked with an agent at Corcoran, they would show you the Corcoran listings, but they wouldn't have access to the properties for sale through Prudential Douglas Elliman, much less add a couple of Douglas Elliman properties into the group of properties they were taking you out to see. So you'd have to schlep over to Douglas Elliman, Brown Harris, and on and on, to find out about all the properties.
This isn't to say that listing sharing, also known as "co-brokeing" in the industry, doesn't happen in Manhattan. It certainly does, but until recently it has been on an informal, selective basis between real estate agents. Agents who focus on specific buildings or neighborhoods often share their listings with other agents who also work those buildings or neighborhoods. But you couldn't, say, drop into a Brown Harris office and ask for information, say, on every one bedroom apartment for sale west of Broadway between 72nd and 79th.
The situation in Manhattan is changing. (A good ole recession can do that.) REBNY, the Real Estate Board of NY, has established the "Real Estate Listing Service of NY." A number of the big players had refused to join, but recently (Jan. 2010), Corcoran, the biggest gorilla on the block, announced it would join, and the last big player holdouts will probably follow suit. But while the mechanism for cooperation is coming together, it will likely be quite some time before the spirit of cooperation follows.
The outer boroughs and all of the suburbs do have active multiple listing services, so the situation is different there, although in the outer boroughs broker participation is far from universal.
So this is a very long winded way to say that if you're used to the way things are done in New York City, you haven't experienced the convenience of looking for real estate in an area with a well functioning and cooperative multiple listing system like Sullivan County.
What Makes an MLS More Than Just Classified Ads on Steroids?
Great question. Glad you asked. In Sullivan County, every Realtor® broker located in the county is a member of the Sullivan County Multiple Listing Service. Quick definition here: you can be a licensed real estate broker or salesperson without being a Realtor®. Realtors® are members of the National Association of Realtors, and abide by standards of practices and a code of ethics, and agree to participate in an arbitration process. There are a few — very few — brokers and salespeople who are not Realtors®.
When a Realtor® (who is also a member of the Sullivan MLS) takes a listing, he or she enters that listing into the MLS and agrees to cooperate with other Realtors® who may have a potential buyer for that property to show and sell it. That's the real power of the MLS, for both sellers and buyers. (There are exceptions, known as "open listings", where a seller doesn't want to list with a single broker. Open listings used to be more common than they are today, but have fallen out of favor because the MLS has proven so effective as a method for marketing and selling property.)
When the listing is entered into the MLS, it becomes instantly available to the other MLS participants. In the professional version of the MLS that Realtors® use, new listings appear on a special "Hot Sheet" screen, so the 300 or so members of the Sullivan MLS see it as soon as it "hits." In addition to information on the property, the MLS listing also includes an "offer of compensation", the portion of the commission that the listing agent is agreeing to share with another agent who brings a buyer who purchases the property.
How Does An MLS Benefit You as a Buyer?
The most visible benefit to you is that you don't need to go from broker to broker to find out aboud available properties. Any MLS participant can pull up everything in the multiple listing system that might fit your needs, whether it's listed with that particular broker or one of their competitors. They can also arrange to show you that property and, if you decide to purchase it, the listing agent has agreed to share the commission paid by the seller with them, so you don't pay anything extra.
The MLS also includes a lot of information that a buyer broker, like myself, can access to assist a client in determinging the value of a particular property for example, or how motivated the seller might be — like the days a property has been on the market, a history of the price reductions, if any, and what other similar properties have sold for.
The Sullivan County MLS has been around for a couple of decades now, and the spirit of cooperation between brokers is well established. Simply having an MLS doesn't always mean that Realtors® play well with others, but in Sullivan County we do.
What are the Limitations of an MLS?
There are a few things that you, as a buyer, should be aware of. In Sullivan County, the primary Multiple Listing System is the Sullivan County MLS, operated by the Sullivan County Board of Realtors. Virtually every Realtor® located in Sullivan County is a member. The 3 New York counties that border Sullivan also have their own MLS's, and some agents who are located in those counties and are members of those MLS's (but not Sullivan's) occasionally list property here in Sullivan County. This is more common along our southern borders, between Rock Hill and Wurtsboro, and in the Barryville / Glen Spey area, where agents just to the south in Orange County are picking up listings in those areas.
Many Sullivan County-based Realtors® who work in those southern border areas also belong to the neighboring system, the Greater Hudson Valley Multiple Listing Service. If you're looking for property in an overlap area, you should make sure the agent you're working with participates in both systems. (Yes, I'm a member of GHVMLS as well.)
Not every property that's for sale is in the MLS (although only a small percentage aren't.) For Sale By Owner (FSBO) properties are not included in the MLS, nor are "open listings". As a buyer agent, however, I do keep track of both as well, in the event that there might be an available property that may fit what a client of mine is looking for. See What is Buyer Agency for an overview of how I work with FSBO properties. Brokers, by the way, are usually very willing to share their "open listings" with a cooperating broker. The decision to go "open" was likely the choice of the seller, not the broker.
There is a widespread misconception that bank owned foreclosure properties aren't included in the MLS. Most are, although usually not immediately after foreclosure. There is a process a bank goes through to bring foreclosed properties to market, involving transferring responsibility to an asset manager, stabilizing or winterizing the property and then listing it for sale. This can take a couple of months. HUD homes are also generally not listed in the MLS, although this is a very, very small percentage of available properties.
A handful of brokers who participate in the MLS have chosen to not permit their listings to be displayed on MLS Search systems on other brokers' websites available to the general public, like my MLS Search. This is sort of old school thinking that I don't quite understand, but it is permitted by the MLS rules. So there may be some properties that you can't pull up in a consumer search that are available.
Also, keep in mind that data input into the MLS is not always accurate. The listing agent is responsible for data accuracy; there's no outside verification. So information can be wrong. Incorrect data is most common in two areas — square footage and property taxes. There is no commonly accepted standard for listing square footage, so take that with a grain of salt. And taxes are sometimes just plain wrong, not because accurate tax data isn't available from online sources, but rather because some agents are too lazy to verify what the seller tells them.
Even with these caveats, the MLS is a wonderful system that greatly streamlines the process by which buyers can find a buy property.