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Internet MLS discussion

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The WebWord community is discussing an editorial over at ZDNet about the amount of data on homes available over the Web. (ZDNet: Realtors to Internet: Drop dead)

I have a fair amount of information and opinion on this subject. I was Product Director for a company that made real estate software. We made MLS software, transaction processing software, and were in the process of creating software that would allow realtors, brokers, and the MLS to put their homes on the Web.

What’s an MLS? To frame the debate, you must understand that the rules governing Realtors, MLSs, and real estate in general are a complex mix of local, state, and Federal laws with rules from the National Association of Realtors (NAR) and state and local Realtor associations thrown in. So what an MLS, Realtor, or broker can do in one part of the country is often different in other areas.

The other thing to understand is what an MLS is. The MLS is a company that offers real estate agents and brokers (the offices that real estate agents work for) a membership. As an MLS member, the agents and brokers get access to view the property listings that the MLS maintains as well as to post listings of their own. The primary product of an MLS is this cooperative property listing database that they have compiled by soliciting listings from their membership.

Rules, rules, rules. In order to be a member, there are rules that must be followed. Rules that come from NAR as well as rules that the MLS decides to enforce to protect their business and their members. Typically these rules govern the use of the property listings. For instance, an MLS may require that at least 90% of the homes listed by a broker are posted to MLS. You see, some brokers would like to keep all their listings to themselves instead of sharing with other brokers. This is because in a typical real estate transaction, the selling and buying agents each get 3% of the sale price. And then each gives a cut of that to the broker they work for. Brokers like to control both sides of the transaction so they get a larger cut. The best way to do this is to not let agents that don’t work for the broker to know about the property for sale.

Sometimes brokers will delay placing a for sale sign on the front of properties until they’re able to arrange a tour of the house by the other agents in the office. This essentially gives their agents an exclusive to the property for a couple of days.

This is a disservice to home buyers and sellers. Sellers don’t have their home shown to the largest number of potential buyers. Buyers have a smaller selection of homes to choose from.

So the MLS, with guidance from NAR, creates rules governing this sort of thing. Properties must be included in the MLS unless a buyer specifically requests that it not be (celebrities may not want their house advertised to protect their privacy). Homes must be listed in the MLS within 48 hours of the seller contract being signed. Realtors must include accurate information when listing a home.

As a broker, if you don’t want to list your properties in the MLS, why do you belong in the first place? The agents want to belong to an MLS because that’s how they find houses for their clients. The cooperative nature of the listing database only works if people actually cooperate and submit listings to the system. Some people would rather cheat than cooperate so the MLS enforces cooperation by withholding viewing privileges from those who don’t also list properties. (Some MLSs allow for exclusive buyers agents, but that’s another discussion.)

As illustrated here, many of the rules are in place to protect the consumer as well as protecting brokers by ensuring a level playing field.

Copyright. The USA Today article that started this mentions that eRealty struck a deal to display MLS listings on Yahoo. I’m not familiar with the specific MLS rules for the markets that the Yahoo deal includes, but most MLSs own the copyright to the property data in their database. That means that you can’t just come along and republish that data wherever you want. So it’s possible that eRealty is violating the copyright of the MLS in each of their markets.

The copyright on the MLS data is also important in the protection of the consumer. Remember those brokers that would like to keep all their listings to themselves? If they can get full access to listing data without belonging to an MLS and following MLS rules, then there’s no reason for them to belong to the MLS. The size of the MLS database may shrink as less brokers list properties there. And that would truly be bad for consumers.

Virtual Offices. ERealty’s position on the matter is that they are a virtual office. When you walk into a real estate office, an agent is allowed to show you as many properties from the MLS as they want. Agents can fax or mail you detailed property information if they would like. ERealty argues (PDF) that they are doing exactly what any other agent does. They are simply doing it over a different medium—the Web instead of on paper.


September 27, 2002 11:01 AM

Firstly, I believe I don't know enough about the topic to make any truely useful recommendations. With that said, I do believe Realtors make far too much money on the sale of each house. In my area, it's usually 6%-7% of the sale price. I believe this is mostly tied to the fact that in order to get your home into the MLS, you need to use a Realtor. If this is not true, and sellers can get their homes into the MLS in another method, why do we need Realtors? This is only the case if the seller agrees to take on the responsibilities of the Realtor, like showing the home, anwering calls, setting up appointments, etc. But I believe that if sellers had this option available to them, they would pocket the 7% and take on the extra work. This may just be my personal preference to use the Web to help me evaluate as many options as possible when buying a home. I believe I will eventually have a better home if I review several hundred online, walkthrough a dozen and buy one. Rather than review the homes my Realtor comes up with, which may or may not have some hidden agenda associated with them. That's my two cents.

Adam Kalsey
September 27, 2002 11:28 AM

It is possible to get your property into the MLS in many areas. Some MLSs have a FSBO (For Sale By Owner) program that will let you list your home. There are also discount agents that will charge a smaller commission and list your home for you. But the selling agent doesn't get the entire 6%. The split can vary, but usually the buyer's agent gets half. That's how they get compensated. So if you use a discount agent or FSBO to sell your home, most buyer's agents won't ever show your home. Why would they? They're not getting paid as much to do it. Buyers also tend to avoid looking at houses where the homeowner is showing the house. It's an uncomfortable feeling to walk though a stranger's house with a critical eye when they are home. One of the seller's agent's greatest sources of leads is the FSBO listing. They scour the lists and offer their services to homeowners that are trying to go it alone. That's because they know that most people who try to sell their home themselves are unsuccessful. The owners end up tired and frustrated from the amount of work and lack of results. It's hard to sell a house. If you don't think your agent deserves the money you are paying them, then find another agent. Good agents work very hard for the money. You are paying for their expertise. They help you understand how to price the home, guide you through the process of responding to offers, design an appropriate marketing campaign, and handle the hundreds of details that come up thoughout the sales process. A good agent almost has no life of their own and will drop everything for their client. Buying or selling a home is one of the most complicated transactions you will ever make. It just makes sense to have an expert help you through it. And if you are in the Sacramento area and would like a recommendation, let me know. I've got a good one for you.

Michael Atkinson
September 8, 2003 4:58 PM

FSBO is a method of selling (or buying) real estate without the expensive help of a broker. Like what eTrade did for buying and selling stocks, FSBO can save the seller thousands, in Northern California, tens of thousands of commission dollars. The big deal is "paperwork" and legal transfer of property. The reality is that one can hire a broker for less than $1,000.00 to do all the paperwork and negotiate the deal if a seller wants. And, at least in California, the title company handles all the escrow and transfer. If a seller can manage the sales process; ie: open houses, putting signs on the lawn "for sale" and doesn't mind communicating directly with a buyer, or their representative, one can save a lot of money. Now, buyers agents don't work for free and will want to get paid. Here is the consumer power...the seller can negotiate the commission. Usually as low as 6% all day long. In some cases, and there are many, sellers can find a buyer and have (0%) zero commsions to pay. This is a cool thing and growing. According to some professional associations that track these things, FSBO market is 25%, and growing. THE CONSUMER WINS!

Don Junkin
October 18, 2003 2:46 PM

I have come across this site in my surfing. What a great forum. Let's make some noise! The market has been hungry for a revolution. Companies like FSBOsystems and OpusXchange simply front run the effort to drastically reduce if not eliminate the excessive commisions charged for "professional assistance". I have been to the four corners of the real estate industry and know them well. I am leading the effort to break down the barriers built by realtors that up until now have prevented access to the simplest of tools like the Multiple Listing Services (MLS). We have sucessfully made a national effort to empower the consumer (buyers and sellers) in the wonderfull world of real estate. We plan to continue our efforts later this year by implementing our franchise system across the country. We have identified 850 exclusive territories which will provide strategically base forward thinking "ground troops" to be part of our revolutionary mission, and give hope and direction to the consumer. Currently we offer MLS placement for a one-time fee of $99 and will have one of our licensed brokers help with contracts and disclosures for only $495. our services all start with a FREE listing on our website and We all remember what etrade did to the securities industry. It ruffle some feathers...the right feathers though. Those charging excessive commisions. Many companies have attemted the change in thinking and habit, but not with the pure commitment to the consumer, therefor not gaining consumer confidence. They all have either missed the point, lack the knowledge, or simply give up and sell out to the den of thieves who call themselves professionals. Our commitment and domain expertise has defragmented the FSBO options. By not allowing the industry to pigeon-hole us away from the larger marketplace and by filling the gaps that have previously existed with FSBO models, we have become the alternative to commision based transactions by leveling the playing field where the consumer definity wins.

Trackback from Kalsey Consulting Group :: Measure Twice
October 18, 2003 10:40 PM

FSBO vs Realtors

Excerpt: I recently sold my home. Even knowing what I do about real estate, I used a Realtor. And unless your job is real estate, I'd suggest that you do as well.

November 25, 2003 10:23 PM

As an operator of a flat fee list on the MLS website, I feel that there should be the oportunity for the consumer to list on the MLS for a flat fee-bare bones fee-for-little service arrangement. I also feel that in many cases the consumer can misjudge their ability to transact a trouble free escrow. As far as the MLs being freely available, I believe that the Boards are risking the MLS getting the "napster" affect. Making it too available, without any identification by the consumer is a mistake and leads the consumer to believe that this is freely available information like the yellow pages. The MLS is in fact the backbone and only "tangible" service a Realtor can give.To give it away for "free" so to speak bastardizes the service.

John Keller
October 26, 2005 2:49 PM

The bottom line about FSBO vs. Realtor is that where does the FSBO get the facts about what the current market value of his home is? MLS...

December 20, 2005 1:04 PM

Attn FSBO: An appraiser will figure out the market value of your home for you at the cost of approx. $250 to $500. Pay a lawyer to draw up a contract for you when you sell your home at approx. $300 to $500. Use a title company to do all the title work, approx $250-$500. You will have to pay a title company, lawyer, or closing company at closing anyway. Use an MLS entry only company to list your home on the MLS. FSBO can keep a lot more money in their pocket by selling themselves! Everything I read says find an experienced agent. You better look hard, they are few and far between. To become a rel estate agent you only need 30 to 90 hours of schooling sometimes just online courses! You pay a licensing fee and you are an Agent! If you have never been in the business world before, you don't know how to negotiate contracts and you don't know how to write them! Yet a lawyer has to go to college for 6 years to write a legal contract! The bottom line is the FSBO, with a little work on their own setting appointments, meeting the termite inspector, meeting the home inscpector, taking calls and spending a little on the services listed above can make a much bigger profit on the sale of their home! FSBO's aren't morons as real estate agents want everyone to think!

Richard Pellecchia II
February 24, 2006 9:52 PM

I am a realtor in New Mexico and this whole argument is rather silly. Both sides are right. FSBO's are a certain breed and many will do fine because they are willing to do the work and the research and spend the time that is required to sell a home. It isn't as hard to sell a home as it is to achieve the highest offer, it is the ebay effect. The more people you have fighting for your home will result in receiving the highest amount of money. The people that do not do the research and work will finally list with an agent because they realize it is alot of work and alot of hours are spent that is basically not value added. If you think about it, you are paying yourself to do the work. What FSBO's need to be careful of is being sued or the deal falling through due to the inexperience. Realtors carry insurance for a reason. 100 sq foot error at $200/sq foot = $20000 which the owner could be liable to pay. Imagine a bigger variance. Failure to disclose material facts or known defects is another big liability. What the home owner needs to understand is you are hiring someone to "market" your home, not just sell it. Why does Coca-Cola spend so much on advertising. Does the public have a hard time forgetting what that brown, bubbly drink is? You have to be in the view of as many people as possible, bottom line. Putting a sign in the yard, an ad in the paper and sticking it in MLS is not going to cut it. How many homes did you look at when you bought your home? 10, 20, 30? Look up how many homes are available in your area or price range or both? How does an agent choose the homes that you are shown? How do you know if your home is not being skipped? MLS is not as simple and definately is not THE solution to selling your home. There are marketing tools and strategies that a good agent would possess that will make it happen. Real Estate is very dynamic, and unless you have attempted the profession, do not carry predisposed ideas. If you ask me, I think doctors and lawyers are overpaid. You barely see them, they never personally return calls, they golf most of the time, etc, etc. Realtors do not question your worth at your profession, please understand that there is a reason why we charge what we do. If it were a scam, the justice department would probably be investigating. Most Realtors don't make much money, it is a difficult business. I must agree that it is easy to become an agent and we definately should have more training and classroom hours. Also, INTERVIEW agents like you would if you were hiring an employee. You need to develop a relationship and need to understand one another. Most Realtors are not used car salesman, you are selling a home, not a car. Hire a professional!

Trent Marks
March 25, 2006 3:05 AM

What a joke, I have 2 friends that dropped out of highschool in 10th grade over 5 yrs ago and became realtors in about a month, and trust me neither is comparale to anything with a brain. You know whats really funny, 8 months ago, evrey other person was a realtor, now with the complete collapse of the market they all went back to the normal jobs they first had. And don't shoot me with b.s. facts about the market not cooling... etc, because no matter how many facts you give about immigrants moving and people still needing housing like before , you will eventually have to face facts that it is over and you will be losing money, open your eyes, just look at the recent drops on condos on the MLS, the inventory has doubled and the sales have dropped in half. I don't know if those fake realtors of a year ago are just in denial or just refuse to get real jobs but it is time to move on. And all those people who made a killing a few months back are about to face a complete meltdown. Why? Well what does one do after he makes 100 grand in 2 months after buying a condo? He says " wow I'm a genius" and dumps that same 100 grand and adds another 50 because it's a sure thing. Well I hate to say it but it's about time for all those greedy realtors and ignorant home developers to get what they deserve. What whould that be? Well a one way ticket to bankruptcy and foreclosure. I would say realtors are just as sleezy as car salesman, but unfortunatley they are worse, because they can lie and don't have to offer a warranty to back up there b.s. Quote me on this, hell copy and paste this to your website because I promise this is what the future holds. Housing prices will drop at least the price of the deposit required for each individual condo projcect, about 20 percent. And thats just by the end of the year. I don't even want to think about 2007....... but I'll be back here in December to gloat in my correct prediction.

Milan Cole
April 30, 2006 2:17 PM

I ran across this article on Google, and the surprising thing is that this debate is still raging. The DOJ is suing the National Association of Realtors and the rules for VOW type websites that publish the MLS data are still being debated with different MLS's offering different policies. Hopefully we will get a unified policy soon, which will then allow somebody to create the eTrade of real estate.

August 9, 2006 3:21 AM

The following is an email sent to me by a realtor who obviously can't stand the FSBO bunch. I am quoting it first then put in my 2 cents. "do the right thing, work with a realtor pay them their fair fee and let them do their job. you are not a realtor why you are trying to do realtors job? You should be watching your tv or doing what ever you enjoy from life. sincerely John" I think the flat fee listing service is great for people who choose to use it. Why can't a property owner who wishes to make an effort to sell his own property list it in any way other than the "tradtional' way? Where is it written that it must be listed with a "traditional' realty? After all, the realtors still have a chance to make good size commission. Realtors, if you don't go with the time, if you dislike competition so much, if you must stick to "tradition", you might as well leave your profession and do something else where there is no competition.

Jim P
August 26, 2006 11:06 AM

The etrade of real estate? Spoken like someone that doesn't really understand what that means. eTrade doesn't do away with anything except the small fees asscociated with certain tocks (the middlemen). Do you think eTrade is a non-proit company? How do you think they make their money, and who do you think is paying them? Do you think that this wonderful eTrade of real estate will be offering free services? Or do you think someone (someone other than you or me) will be getting filthy stinking rich off of it. Also, there is much info in the MLS that is NOT public infrmation. Showing instruction, for instance, that may say exactly when the sellers will be out of the house. Private phone numbers, agent only remarks, etc... When you list your house do you want the local crack head to have access to that info? Do you have any idea how many industries rely on agents and the MLS? Do you also realize that there are no watchdogs making sure FSBO companies are on the up and up? I can tell you that the local companies here lie their proverbial tales off everyday and get away with. Consumers will ultimately pay the price for all of this and I guess and then the NEXT eTrade of real estaet can rip off the next set of consumers. If it ain't brok, don't fix it. Doing away with REALTORS is not a tep forward, but a giant step backwards. Back to the good 'ol days when people were getting scammed out of their hard earned money and there was nobody there to protect them. Of course, this is just my humble opinion.

Richard Newquist
September 3, 2006 8:00 PM

These are great comments, even the ones that are just venting their spleen. Don Junkin in Oct., 2003 said: : What a great forum. Let’s make some noise! The market has been hungry for a revolution." I agree; the industry does need a revolution. I predict that the industry will be quite different in just five years from now but that is another subject. I'm an agent myself and have over 25 years marketing and sales experience. Even so, I'm still sometimes caught with problems that are difficult to solve. Imagine FSBO's having to confront an unqualified buyer waving a letter from his bank saying he's pre-qualified...a letter that is virtually worthless! The sellers take a deposit and the FSBO dance begins. I believe in helping FSBO's sell their houses. FSBO's definitely do NOT understand the nuances of what they are doing. They don't understand what the broker's advertising does. They know nothing about staying safe during the procedure. FSBO's should pay for the service and we agents should't thwart the FSBO's. All this talk about the MLS is bogus because if FSBO's get their properties listed on the MLS for ANY price, they will have to pay a buyer's agent commission. In this day, buyers agents are getting more than 3%. Buyers are hard to find and their agents can get 4% and I've seen up to 6% just for the buyer's agent. If FSBO's pay that side of the commission, they aren't saving enough to make it worthwhile. There are marketing tools the FSBO can use. They can go to and get a cheap website. Put the web address in a cheap classified ad and they get the power of a VERY expensive ad. Put the URL on the yard sign. Put the URL on their flyer, in their email. Advertise it for free on Google, Yahoo, MSN, the newsgroups, in Europe and Latin America. There's a lot more a FSBO can do to sell their property on their own. Email me at for more ideas. I'm in Jacksonville Beach, FL but the same marketing principles apply worldwide.

This discussion has been closed.

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