The Ultimate Guide: What is Multiple Listing Service ( MLS ) in Real Estate and How Does It Work?

In the world of real estate, the term “MLS” is commonly used, but not everyone knows what it stands for or what it entails. MLS stands for Multiple Listing Service and is an essential tool in the real estate industry that has revolutionized how properties are bought and sold. In this article, we will explore the definition and significance of MLS and its historical background and evolution.

Definition and Explanation of MLS

MLS is a database system used by real estate agents to share information about properties that are currently on the market. It lets agents see detailed information about properties, such as price, location, size, and features. This information is obtained from listing agreements and is crucial for both agents and clients in the buying and selling process.

When someone wants to sell their house, they tell a real estate agent, who then enters all the details about the house into the MLS. These details include the house’s many bedrooms and bathrooms, what it looks like, how much it costs, etc.

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Now, if you’re looking to buy a house, you can work with your real estate agent, and they can search the MLS to find homes that match your needs and budget. It’s a handy way to see what houses are available in your area without visiting each one individually.

In simple terms, the MLS is the go-to place for real estate agents and buyers to find all the information they need about real estate properties, making buying or selling a home much easier.

Who Owns the MLS

MLSs are usually owned and operated by realtor associations or boards. These organizations are responsible for maintaining the data quality rules of usage and ensuring the MLS runs smoothly and ethically. 

Historical Background and Evolution of MLS

MLS was first introduced in the late 1800s when real estate brokers would gather at their local associations to share information about properties they were trying to sell. 

This process was time-consuming and limited to a small group of agents. In the 1960s, technological advancements allowed for the creating of a centralized database that could be accessed by all participating agents, thus giving birth to the modern-day MLS.

The MLS Digitization started to happen in the mid-20th century when real estate associations and organizations began to formalize the sharing of property listings among agents. This kind of collaboration made it easier for agents to work together and expand their reach beyond their local areas.

Some History...
One of the first fully computerized MLS systems was introduced in San Francisco in 1975. This system allowed brokers to search for listings and receive instant updates, a revolutionary change that made the property searching process much more efficient.

In the Late 1990s – 2000, with the help of the internet, MLS listings became accessible online. This change revolutionized the real estate industry, making it easier for buyers and sellers to find information about properties. Real estate websites and online portals emerged, further streamlining the process.

In the present day, MLS systems began to adopt standardized data formats and technology standards, allowing for more consistency and compatibility across different MLS databases. We are talking about IDX and, more recently, RESO standards and the Reso Web API.

Significance in the Real Estate Industry – Why MLS is Needed

MLS has become an essential tool in the real estate industry for several reasons:

  1. It provides a centralized platform for agents to share information about properties, making it more convenient and efficient for buyers to search for their dream home.
  2.  MLS simplifies the process of finding properties. Agents can search for homes that meet their clients’ criteria quickly, saving time and effort. Buyers benefit from the ability to see a wide range of available properties in one place, making their search more efficient.
  3. Sellers benefit from MLS because it exposes their properties to a vast network of real estate professionals and potential buyers. It’s like having a massive marketing platform that increases the visibility of a property and attracts more potential buyers.
  4. It allows for collaboration among agents, leading to a broader range of options for clients.
  5. MLS brings transparency to the market by providing accurate and up-to-date information on properties.

How Real Estate MLS Works

For a property to be listed on the MLS, the owner must enter into a listing agreement with a licensed real estate agent. This agreement authorizes the agent to market and sell the property on their behalf. The agent then enters all relevant information about the property into the MLS system. 

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MLS is only accessible to licensed real estate agents who are members of their local Association of Realtors. This ensures that the information on the platform is accurate and reliable. Agents must also abide by a code of ethics, further adding to the credibility of MLS listings.

MLS databases are constantly updated with new listings, price changes, and other relevant information. This data is entered and managed by agents with access to the platform. The database allows for real-time information to be available to all agents, ensuring buyers can access the most current and accurate data.

Once the property is added to an MLS database, it will become available to potential buyers through various channels, from agent websites to mobile apps and even third-party platforms like Zillow and 

The MLS database allows for more efficient and accurate results. By using specific search criteria, buyers can narrow down their options and find properties that meet their requirements. It saves buyers and agents time and effort in the property search process.

When an MLS listing is sold, the commission earned by real estate agents is typically split between the listing agent and the buyer’s agent. Here’s how it works:

  1. Total Commission: When a property is listed, the seller agrees to pay a certain percentage of the sale price as a commission. The value is typically around 5-6% of the sale price, but it can vary based on local market conditions and agreements.
  2. Listing Agent’s Commission: The listing agent is the real estate agent who works with the seller to market and sell the property. The commission is usually split into two parts: the listing agent’s share and the buyer’s agent’s share. The listing agent’s share is a portion of the total commission, typically around half of the sale price, around 2.5%.
  3. Buyer’s Agent’s Commission: The other portion of the commission goes to the buyer’s agent, who represents the buyer in the transaction. The buyer’s agent helps the buyer find and negotiate for the property, and his commission is about the same as the listing agent’s share, around 2.5% of the sale price.
  4. Brokerage Splits: Both the listing agent and the buyer’s agent are affiliated with real estate brokerages. A portion of their respective commissions may go to their brokerages as well. The specific split between the agent and their brokerage can vary based on the agent’s agreement with their brokerage.
  5. Cooperating Broker’s Commission: In some cases, when a buyer’s agent from a different brokerage brings the buyer to the transaction, a portion of the buyer’s agent’s commission might be shared with the cooperating broker’s brokerage. This arrangement incentivizes cooperation between different brokerages.
  6. Seller’s Cost: It’s important to note that the commission paid by the seller covers both the listing agent’s and the buyer’s agent’s commissions. The seller typically pays the full commission, and the commission is then split among the involved parties as agreed upon in the listing agreement and buyer’s agent agreement.

Getting Started with MLS If you are a Realtor

The initial step for those interested in utilizing the Multiple Listing Service (MLS) is to acquire a real estate agent license. This typically entails completing a pre-licensing course, passing a state examination, and fulfilling additional requirements stipulated by the real estate commission in their jurisdiction. 

Once licensed, agents can join their local MLS board, a membership-based organization that provides access to the MLS platform.

Membership in an MLS empowers agents to list properties for sale or rent, search for available properties, and collaborate with other agents in their area.

The membership unlocks access to a centralized database of property listings, streamlining the buying and selling process by facilitating connections between buyers and sellers.

Once they have access to the MLS database, the realtors can create their own MLS websites, dramatically improving the chance to close a deal. 

Also, agents must comprehend the rules and regulations specific to their MLS. Each MLS may have its guidelines regarding data entry, listing requirements, and ethical practices. 

By familiarizing themselves with these rules, agents can ensure compliance and leverage the MLS platform effectively to serve their clients and succeed in their real estate endeavors.

MLS Fees

MLS fees can vary depending on the local real estate board or association. These fees are used to maintain the MLS, including data management and technology upgrades. If you are a realtor, verifying the fee schedule with your local board is important to ensure an understanding of all costs associated with MLS access.

You can look over this document and see the ABOR MLS listing fees. The pdf is an example so you can get a better idea. The prices may vary from one MLS to another, depending on the level of access. So, to understand clearly, you should check with your MLS.

Benefits of Using MLS

The Multiple Listing Service (MLS) offers numerous benefits to all parties involved in the real estate transaction process. 

Increased Exposure for Sellers

MLS offers sellers unparalleled exposure, ensuring their property is visible to a vast network of potential buyers. It maximizes the likelihood of a quick sale and increases the chances of securing the maximum price for their property. 

Streamlined Property Search for Buyers

For buyers, MLS streamlines the property search process. It provides a centralized platform where buyers can view various properties that match their specifications. It saves time & effort, making the buying process more efficient. 

Data Accuracy and Reliability

The MLS also ensures data accuracy and reliability. All listings on the MLS are vetted and verified by real estate professionals, which means buyers and sellers can trust the information they find on the platform. This approach reduces the chances of encountering issues or discrepancies during the transaction process.

Efficient Communication Among Real Estate Professionals

Lastly, MLS facilitates efficient communication among real estate professionals. Agents can share information, work collaboratively, and negotiate deals on the platform, making the transaction process smoother and more efficient. This professional collaboration ultimately benefits buyers and sellers, ensuring a seamless real estate experience.

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MLS vs. Public Real Estate Websites – Key Differences

The MLS and public real estate websites have distinct differences in how they function and what information they provide. 

MLS is an exclusive platform primarily for licensed agents and brokers, offering detailed and up-to-date property information. It includes seller contacts, commission splits, showing instructions, and property history, which public platforms typically need to improve.

Real estate agents can set up notifications to alert them when new properties that match their clients’ criteria are listed, which gives buyers an advantage in competitive markets.

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Also, some confidential information, like the seller’s contact information, is only available to licensed real estate professionals.

On the other public real estate websites are accessible to anyone but may not offer the same thoroughness or timeliness as MLS because private sellers may add the listings and not real estate professionals. They are accessible to anyone with an internet connection and are designed for consumers, including buyers, sellers, and those interested in real estate.

MLS sites excel in data verification, accuracy, and timeliness, promoting fair practices and cooperation among professionals. However, its listings are not instantly available to the general public, limiting visibility.

Did you know?
Public real estate websites like Zillow or Trulia aggregate listings from various sources, potentially offering wider visibility but sometimes with less accurate or outdated information. MLS is typically more trusted among real estate agents for precise, up-to-date data..

On the other hand, public websites provide broad exposure but may need more depth and accuracy.

At the same time, the major real estate portals provide a mix of both – listings from the MLS database and private sellers. 

MLS Real Estate Data and Property Information

MLS platforms encompass a wide variety of data, providing an informative snapshot of each listed property. This comprehensive information aids real estate professionals in carrying out transactions effectively.

Property page with data imported from MLS

Types of Data Included in MLS Listings

The data embedded in MLS listings is diverse, encompassing everything from basic property features to more detailed aspects. The MLS data includes information such as property size, number of rooms, and age of the property. More specific details may encompass elements such as energy efficiency ratings, architectural style, or even the materials used in construction.

Property Descriptions, Photos, and Videos

Visual information is crucial in real estate, and MLS listings typically provide high-quality photos and videos of properties. These visuals give potential buyers a feel for the property’s layout, design, and general condition. Accompanying these visuals, detailed descriptions provide additional context, highlighting unique features or selling points.

Pricing Information and Market Trends

MLS listings also include in-depth pricing information. The data includes the current asking price, previous sale prices, and sometimes local market trends. Such data can help agents advise clients on competitive pricing or negotiation tactics.

Neighborhood and Location Data

Finally, MLS listings often provide information about the property’s location and neighborhood. Here, we have details about nearby schools, amenities, public transportation, and other factors that could influence a property’s appeal. This broad scope of data reflects the importance of location in real estate, helping agents and their clients make informed decisions.

Hopefully, the MLS you are interested in has transitioned to Reso Standarts. If yes, you could look at a Reso Dictionary and see how data is organized and what fields are available. 

The Data Dictionary is currently at version 1.7; you can check it here: Reso data dictionary 1.7

 However, please note that Data Dictionary 2.0 is currently in production and will replace the 1.7 version in the future.

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MLS Rules and Regulations

Compliance with Local, State, and National Regulations

MLS systems operate under a framework of local, state, and national regulations. These laws ensure that all transactions uphold the principles of fairness and transparency. MLS members must adhere to these regulations when listing properties, which may include zoning laws, disclosure requirements, and other stipulations specific to each area.

MLS Membership Requirements

To gain access to MLS, real estate professionals must meet specific criteria, which vary by region. Generally, they must hold a valid real estate license, be sponsored by an existing MLS member, and pay applicable membership fees. These requirements ensure that only qualified and committed professionals can access and utilize the MLS system.

Code of Ethics for Real Estate Agents and Brokers

MLS members are also bound by a strict code of ethics governing their professional conduct. This code encompasses duties to clients and customers, the public, and other real estate professionals. It encourages honesty, integrity, and professionalism, promoting confidence in the real estate industry.

Consequences of Violating MLS Rules

Violations of MLS rules and regulations carry serious consequences. Depending on the severity of the breach, these can range from fines and temporary suspension to expulsion from the MLS. Such measures are in place to ensure that all members maintain high standards of professional conduct and uphold the integrity of MLS listings.

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MLS in Different Real Estate Markets

MLS systems are not confined to a single type of real estate market but rather extend their reach across various sectors. 

MLS Usage in Residential Real Estate

MLS is primarily used in residential real estate, facilitating efficient transactions between buyers, sellers, and agents. You will typically find various types of residential property listings, including:

  • Single-Family Homes: Listings for detached, standalone houses designed for a single family. These are the most common types of residential property.
  • Condominiums (Condos): Listings for units within a multi-unit building or complex. Condos are typically owned individually, and all unit owners jointly own common areas.
  • Townhouses: Listings for attached or semi-attached homes that share walls with adjacent units. Townhouses often have multiple levels and may have a small yard or patio.
  • Apartments: Listings for individual rental or for-sale units within apartment buildings. These can include both low-rise and high-rise apartment complexes.
  • Cooperative Apartments (Co-ops): Listings for housing where residents purchase shares in a cooperative corporation that owns the building. They do not own their units but have a share in the entire building.
  • Mobile and Manufactured Homes: Listings for mobile homes or manufactured homes, often found in mobile home parks or on private land. These homes can be moved, unlike traditional houses.
  • Vacation Properties: Listings for homes or condos primarily used as vacation or second homes. These properties may be in popular tourist destinations or recreational areas.
  • Investment Properties: Listings for residential properties purchased as investments, such as rental properties. These can include single-family homes, multi-family properties, or apartment buildings.
  • Multi-Family Properties: Listings for residential properties with multiple units, such as duplexes, triplexes, fourplexes, and apartment buildings.
  • New Construction: Listings for newly built homes or condos. These properties may be in various stages of construction, from pre-construction sales to completed units.
  • Luxury Homes: Listings for high-end residential properties with upscale features, amenities, and a premium price point.
  • Age-Restricted or Senior Communities: Listings for residential communities specifically designed for older adults, typically 55 years and older.
  • Special-Use Properties: Listings for unique residential properties, such as historic homes, houseboats, or properties with specific features like equestrian facilities.
  • Foreclosures and Short Sales: Listings for properties that are bank-owned (foreclosures) or are being sold for less than the outstanding mortgage balance (short sales).
  • Fixer-Uppers: Listings for homes that may require significant renovation or repair work, often marketed as opportunities for buyers to add value.

MLS in Commercial Real Estate

A Multiple Listing Service (MLS) for commercial real estate encompasses property listings tailored to various business needs. It may also include office buildings ranging from single-tenant structures to multi-tenant complexes.

Additionally, retail spaces are featured, encompassing standalone storefronts and those within shopping centers and malls. Industrial and warehouse properties, ideal for manufacturing, storage, and distribution, also grace the listings, including warehouses, distribution centers, and flex spaces.

Regional Variations in MLS Implementation

It’s important to note that MLS implementation can vary regionally. Different MLS systems may have distinct rules, norms, and technological interfaces. However, regardless of the regional nuances, the core purpose of MLS — to foster collaboration and ensure transparency in real estate transactions — remains consistent across all markets.

The Role of Real Estate Professionals in MLS  

Real estate professionals, including agents and brokers, are crucial players in the MLS ecosystem. They utilize the MLS as both a marketing tool and a comprehensive database of property listings. It allows them to match buyers’ needs effectively with available properties, facilitating informed and efficient transactions.

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Real Estate Agents and Their Access to MLS

Access to MLS is typically reserved for licensed real estate agents who are members of their local Realtor associations. Agents can use MLS to list properties, view comprehensive property details, track market trends, and share listings with clients. This access lets agents stay current with local markets and provide their clients with the most relevant and accurate data.

If you are a seller, you’ll likely engage with a real estate professional, an agent, a broker, or a realtor. While all of them are licensed to assist in buying, selling, or renting properties, they possess unique qualifications and occupy varying levels on the professional hierarchy, setting them apart.

A real estate agent

Is a licensed real estate professional who assists individuals in buying and selling properties, earning a commission upon successful transactions. This professional can represent either the buyer or the seller, and they have to work for a brokerage firm or a sponsoring broker.

A real estate broker

In contrast, a real estate broker performs the same tasks as an agent but can operate independently and may hire agents under their purview. Brokers receive commissions and also a portion of the commissions earned by their agents. They also have completed additional training and licensing requirements.

A realtor

A realtor is a member of the National Association of Realtors (NAR) and can hold various roles within the real estate industry, including agent or broker.

Realtors use MLS to serve their clients in several ways. They can set up automated searches for clients based on specific criteria such as location, property type, price range, and more. Once a suitable property is listed, the client is alerted, accelerating the home-buying process. Realtors also use MLS data to perform comparative market analysis (CMA), helping clients understand the value of their homes in the current market.

How Realtors Use MLS to Serve Clients

Realtors use MLS to serve their clients in several ways. They can set up automated searches for clients based on specific criteria such as location, property type, price range, and more. Once a suitable property is listed, the client is alerted, accelerating the home-buying process.

Realtors also use MLS data to perform comparative market analysis (CMA), helping clients understand the value of their homes in the current market.

Collaboration Among Real Estate Professionals

MLS systems foster a spirit of cooperation among real estate professionals. By sharing listing information, agents and brokers can work together to facilitate successful transactions, benefitting all parties involved. This cooperative environment is a fundamental aspect of the MLS system, contributing to its effectiveness in the real estate industry.

The Future of MLS  

The American real estate system’s multiple listing services (MLS) have been pivotal for almost a century. As the industry advances with technology and data capabilities, MLSs face substantial shifts.

  1. Regulation and Litigation: High-profile lawsuits challenging the MLS-mediated commission structure and an investigation by the US Department of Justice into the National Association of Realtors (NAR) have sparked debates over potential changes in the compensation structure.
  2. Potential National Competition: Big national real estate organizations are developing data-enhanced platforms that could serve as national listing databases. These organizations, backed by vast resources and potent consumer brands, might bypass the MLS.
  3. MLS Market Expansion: Traditionally, MLSs served exclusive geographical zones. However, as these zones expand or overlap due to growth, it causes friction. MLS subscribers might have to subscribe to multiple MLSs, leading to increased costs and managing varied data systems.
  4. Off-MLS Activity: A significant portion of home sales in some markets bypass the MLS, using private databases or office exclusives. This scenario undercuts the MLS’s core value of being a central market data repository.

MLSs are entering a new era with national and regional collaborations, emphasizing technology investments, data sharing, and strategic partnerships. They’ll likely evolve into three business models:

  • Hyperlocal: Serving unique markets with specialized services.
  • Cooperative: Partnering with neighboring MLSs to leverage resources.
  • Competitive: Suitable for the largest MLSs looking to integrate with or subsume neighboring systems.
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Technological Advancements and Trends

The future of MLS is being shaped by rapid advancements in technology, leading to new trends in data management. Artificial Intelligence (AI) and Machine Learning (ML) are being harnessed to automate data entry, management, and analysis, making the MLS system more efficient and accurate.

Predictive analytics is another area of focus, allowing real estate professionals to anticipate market trends and adapt strategies accordingly.

Potential Challenges and Opportunities

As MLS evolves, it faces several challenges, including data privacy and security issues. Ensuring the confidentiality of sensitive data and protecting against cyber threats are becoming increasingly significant.

However, these challenges also present opportunities for innovation. Blockchain technology, for instance, could be used to create secure, transparent, and decentralized MLS networks in the future.

The Evolution of MLS in the Digital Age

The digital age has revolutionized MLS substantially. The introduction of mobile MLS apps allows realtors to access data anytime, anywhere, enhancing their ability to serve clients effectively. Virtual reality technology is being used to offer 3D home tours, providing an immersive property viewing experience.

As the digital age unfolds, MLS will continue to evolve, leveraging technology to improve its service and efficiency in the real estate industry.

Conclusion and Final Thoughts

In the complex and dynamic landscape of real estate, the Multiple Listing Service (MLS) stands as a cornerstone. It is a comprehensive and reliable resource, providing an extensive database of property listings that is updated frequently, ensuring the most accurate and current information. 

The MLS is pivotal in real estate transactions, playing a significant role in connecting buyers, sellers, and real estate professionals efficiently.

The importance of MLS in real estate transactions cannot be overstated. It streamlines the process of buying and selling properties, fosters transparency, and ensures a fair marketplace. As such, any prospective buyer, seller, or real estate professional should leverage the advantages that MLS offers.

For those who aim to dive deeper into MLS, numerous resources are available for further information. Realtor associations, real estate educational institutions, and various online platforms provide detailed insights into the workings, benefits, and latest trends in MLS. 

Embracing MLS as a tool and resource can undoubtedly elevate your real estate experiences, whether you are a consumer or a professional in the industry.


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