MLS stands for Multiple Listing Service. It is a database that real estate agents have been using for decades to track homes that are for sale or have sold. The MLS is privately controlled and funded by real estate agents, which allows them to deny access to anyone who is not a member. This has been the stronghold of the real estate agent for years: to control the information so that an ordinary consumer cannot access it without a real estate agent.
I can imagine that twenty or so years ago real estate agent Bob would sift through a stack of paperwork to educate himself on the properties available in a certain area. This search must have been time consuming and keeping up to date on this information would have required a daily effort. Discovering the taxes of liens against a property likely had Bob making a trip to a government building. If Bob pays a monthly ‘due’ to the National Association of Realtors (NAR), part of which is to fund the MLS in his town, then of course he wants to control that information.
Selling your home on your own twenty or so years ago would have been very difficult indeed. How would you let people know that your home is for sale? Stick a sign in the yard. Put an ad in the newspaper. Tell all your friends. Without the MLS there was not an effective way to ensure your home had high visibility to prospective buyers.
Then a little thing called the Internet happened. Today all of this information is readily available at the click of a button. A consumer can visit their counties assessor website to find out a plethora of information about a house including square footage, number of bedrooms and bathrooms, additions, taxes and sometimes even the how much the current owner paid for the property. National real estate sites like Zillow allow anyone to search for homes in their area and even show homes that have recently sold and their sales price. The Internet has made it more difficult for information to be privately controlled.
Real estate agents are not taking these developments lying down. In 2005, the US Department of Justice filed an antitrust lawsuit against the NAR because some agents were withholding their listings from other sites like Zillow. This information should be readily available and not kept under lock and key to the tune of 6% of yours sales price. While the real estate profession is trying to hold onto the notion that they have exclusivity over this information the NAR admits that in 2009 one out of four home buyers found their home on the Internet. So, if home buyers can search and find their own properties on their own, why has the MLS remained so costly?