restrictive practice

Multiple Listing Service

A Multiple Listing Service (MLS) (also Multiple Listing System or Multiple Listings Service) is a group of private databases which allows real estate brokers representing sellers under a listing contract to widely share information about properties with real estate brokers who may represent potential buyers or wish to cooperate with a seller's broker in finding a buyer for the property. There is no single authoritative "MLS", and no universal data format. The many local and private databases--some of which are controlled by single associations of realtors or groupings of associations (which represent all brokers within a given community or geographical area) or by real estate brokers--are collectively referred to as the MLS because of their reciprocal access agreements.

Seen most widely in the US and Canada but spreading to other countries in a variety of forms, the MLS combines the listings of all available properties that are represented by brokers who are both members of that MLS system and of NAR or CREA, (the National Association of Realtors in the US or the Canadian Real Estate Association).

The purpose of the MLS is to enable the efficient distribution of information so that, when a real estate agent is introduced to a potential home buyer, s/he may search the MLS system and retrieve information about all homes for sale in a given area or price range, whether under a listing contract by that agent's brokerage or by all participating brokers.

In North America, the MLS systems are governed by private entities, and the rules are set by those entities with no state or federal oversight, beyond any individual state rules regarding real estate. MLS systems set their own rules for membership, access, and sharing of information, but are subject to nationwide rules laid down by NAR or CREA. An MLS may be owned and operated by a real estate company, a county or regional real estate board of realtors or association of realtors, or by a trade association. Membership of the MLS is generally considered to be essential to the practice of real estate brokerage.

Limitations of access to the MLS

Most MLS systems restrict membership and access to real estate brokers (and their agents) who are appropriately licensed by the state (or province); are members of a local board or association of realtors; and are members of the trade association (e.g., NAR or CREA). However, access is becoming more open as internet sites offer the public the ability to view portions of MLS listings (see below).

A person selling his/her own property - acting as a For Sale By Owner (or FSBO) - cannot put a listing for the home directly into the MLS.(Note: Under the MLS for Spain, [AMLASpain] FSBO listing are allowed.) Similarly, a properly licensed broker who chooses to neither join the trade association nor operate a business within the associations's rules, cannot join the MLS.

However, there are brokers and many online services which offer FSBO sellers the option of listing their property in their local MLS database by paying a flat fee or another non-traditional compensation method.

MLS Systems in North America

Canada

In Canada, MLS is a cooperative system for the 82,000+ members of the Canadian Real Estate Association (CREA), working through Canada's 99 real estate boards and 11 provincial/territorial associations. The website is a publicly accessible and allows consumers to search the MLS database of properties, providing limited details and directing consumers to contact a Realtor for more information.

United States

The largest MLS in the United States is currently the Washington, DC region's Metropolitan Regional Information Systems, Inc (MRIS) covering Washington DC, most of Maryland (including the Chesapeake Bay counties) and suburban Virginia counties, and parts of West Virginia and Pennsylvania. As of late May 2008, it has about 55,600 active members, according to the public access sections of its website, although numbers vary according to when accessed.

According to the Swanepoel TRENDS Report 2007 the following are the MLS Boards with more than 30,000 members:

60,000 - Metropolitan Regional Information Systems - Washington, D.C. region (inc. Maryland & Virginia)
55,000 - Southern California MLS
50,000 - MLS of Northern Illinois
42,000 - South East Florida Regional MLS
38,000 - First MLS- Georgia and the Southeast
37,000 - Arizona Regional MLS
35,000 - Georgia MLS - Georgia
33,000 - MLS Property Information Network - Massachusetts and other part of New England
32,000 - TREND Philadelphia Metro area

New York City

Although the other boroughs and Long Island have an MLS, Manhattan does not, but it does have a database called RLS, which is governed by REBNY (Real Estate Board of New York). Many brokerages are members, but controversies surround it, especially since members are required to place listings on the system within 72 hours. Like many other MLS systems requiring timely inclusion of information into the system, this allows brokers to contact all potential clients before they list.

Policies on sharing MLS data in the USA

The National Association of Realtors (NAR) has set policies that permit brokers to show limited MLS information on their websites under a system known as IDX or Internet Data Exchange. NAR has an ownership interest in Homestore, the company which operates a website that has been given exclusive rights to display significant MLS information. The site is Realtor.com.

Using IDX search tools available on most real estate brokers' websites (as well as on many individual agents' sites), potential buyers may view properties available on the market, using search features such as location, type of property (single family, lease, vacant land, duplex), property features (number of bedrooms and bathrooms), and price ranges. In some instances photos can be viewed. Many allow for saving search criteria and for daily email updates of newly-available properties. However, if a potential buyer finds a property, he/she will still need to contact the listing agent (or their own agent) to view the house and make an offer.

The U.S. Department of Justice filed an antitrust lawsuit in September 2005 against the National Association of Realtors over NAR's policy which allowed brokers to restrict access to their MLS information from appearing on the websites of certain brokers which operate solely on the web. This policy applied to commercial entities which are also licensed brokerages, such as HomeGain, which solicit clients by internet advertising and then provide referrals to local agents in return for a fee of 25% to 35% of the commission. The DOJ's antitrust claims also include NAR rules that exclude certain kinds of brokers from membership in MLSs. NAR has revised its policies on allowing access on web sites operated by member brokers and others to what might be considered as proprietary data.

The case was settled in May 2008, with NAR agreeing that Internet brokerages would be given access to all the same listings that traditional brokerages are.

Alternatives and changes to the MLS system

The MLS model in use today dates back to the 1960s when almost all brokers involved in transactions represented the seller, either as the seller's agent or as the sub-agent of the listing broker. The seller paid the listing broker who, in turn, was responsible for compensating the broker working with the buyer. The MLS was intended to be a simple system that benefited everyone, including both the buyers and sellers.

The 2005 Justice Department antitrust lawsuit against the National Association of Realtors threatens to undermine the exclusivity MLS services in the US. As the impact of that case unfolds, open internet MLS systems will begin to thrive, perhaps combined with Web 2.0 technologies such as social networking, allowing buyers and sellers to interact without the need for an agent.

MLS systems worldwide

Although many countries are lacking regulations regarding real estate transactions, lately there are attempts to align with those in developed markets. A special case may be Italy which is developing the first international MLS. Its multilingual interface, which translates property details and all the web pages instantly and automatically into 8 languages, allows estate agents to share their property listings with other estate agents around the world. The platform links over 1000 real estate agents and over 40000 offers from 16 countries worldwide.

Europe

In certain European countries, most notably in Spain, MLS companies have started up in most of the popular vacation home destinations, including Costa del Sol, the Costa Brava, etc. These companies tend to be privately owned and provide MLS access to any real estate agent paying for membership.

Real estate agents pay subscription fees to an MLS company which then allow property listings to be uploaded onto their servers. Also, all subscribing real estate agents create a property search link on their own websites which links directly to the MLS service. Thus, any site visitor to any of the subscribing agents' sites will be able to find all properties listed on the MLS servers, even though they are visiting the website of a single agent. In effect, every single subscribing real estate agent appears to be offering exactly the same properties for sale, not unlike the situation with IDX systems in the United States.

When buyers use the internet to find property, often using Google, the search results usually provide a list of real estate agents’ websites in the locality which is being searched. The buyer clicks through the various websites and starts browsing properties of interest, although every site visited is offering the same properties because they are all linked to the same MLS server.

The buyer then has to choose an agent (again, not very different from elsewhere), but it does force the buyer to make a decision, since all agents in the area have access to all properties and the seller's agent will benefit regardless of who brings the buyer, again very like the US.

Although there are currently no regulations in Europe in relation to MLS, it may be a matter of time before its use may be viewed as a restrictive practice designed to benefit real estate agents, rather than consumers.