MLS - What is it?

In the REALTOR® world the MLS, or Multiple Listing Service, is our lifeline of sorts.  However sometimes we in the industry find ourselves using acronyms or terms that the consumer may not be familiar with and, while many home buyers and sellers have some knowledge of, or familiarity with the term MLS, many don't really know that much about it.  Keeping with our desire to provide as much information and education as possible to consumers and our clients with regard to real estate, we are going to provide you with information on the MLS here.

The origin of the MLS dates back to the 1800's according to the National Association of REALTORS®.  As the story goes, real estate brokers would get together on a regular basis to share information on properties they had for sale with other brokers.  In addition, during these meetings, the brokers would also offer to compensate the other brokers if they were able to sell their listing.  

From those informal broker meetings in the 1800's was born the idea that is still the basic foundation and purpose of the MLS (Multiple Listing Service) which is to share information about properties for sale with, as well as offer compensation to, other real estate brokers and agents.  

The unilateral offer of compensation is the main foundation of the MLS.

What may come as a surprise to you is that first, and foremost, the purpose of the MLS is to provide a platform for real estate brokers to offer other real estate brokers (and their agents) an offer of compensation if they sell one of their listings.  The sharing of listing information among brokers is really a secondary function of the MLS, albeit a critical one.  Many MLS's, including MARIS, the regional MLS that serves agents that are members of the St Louis REALTORS, St Charles REALTORS as well as several other boards, are not accessible by the public and only available to REALTORS® that have joined the MLS.  Every broker that joins the MLS agrees to submit all of their listings to the MLS or must submit a signed form from the seller indicating they do not wish to have their listing in the MLS.  In addition, the MLS rules provide that all listings submitted to the MLS must have a unilateral offer of compensation to agents working with buyers.  

Shedding light on how buyers agents get paid.

Another mystery to many consumers is how does the real estate agent that is showing them homes get paid?  We could probably back up and add the mystery of who does the agent the buyer is working with really represent?  Well, that's another topic, but the short version is that license law requires an agent to disclose to you who they represent before they get into any significant conversations with you about a property. But, in any event, whether you are working with a buyers agent, who has a contractual as well as fiduciary obligation, to represent you, a sellers agent who is actually working on the seller's behalf, a transaction agent who represents no one and is really just the paper jockey or a dual agent who represents both (which  is a really horrible idea, stay away...) the agents compensation, will come from the seller, through the listing broker, by way of the compensation offered through the MLS.