Sam DeBord, CEO of Real Estate Standards Organization; Industry Decoded
Illustration by Lanette Behiry/Real Estate News

What every real estate professional needs to know about the MLS 

In the first of a three-part series, RESO CEO Sam DeBord explains what an MLS is — and what it isn't — and how definitions of the MLS can vary.

March 29, 2024
4 minutes

Being able to succinctly communicate the benefits of the MLS in a modern environment is critical for brokers and MLS leaders to ensure that transparent, liquid marketplaces continue to serve their communities. 

In this three-part series, RESO CEO Sam DeBord outlines the functions and value of the MLS, as well as its global reach and future outlook. In part one, he describes what an MLS is — and is not — and explains the components of the MLS and how different organizations define its role. 

Every professional involved in the real estate industry should understand and be able to speak fluently about the MLS's true purpose and value.

What is an MLS? On the surface, the answer seems simple. A multiple listing service is a marketplace where brokers and agents help consumers buy, sell and rent homes.

But the real estate marketplace isn't simple. Often, high profile trends absorb the industry's focus and obscure the image of the MLS. Powerful technology companies use MLS outputs to drive attention-grabbing products and services. News headlines highlight organizations challenging traditional MLS practices in data sharing and compensation.

In light of this uncertain, ever-changing environment, a casual observer might ask, "What is the existential value of an MLS?" The truth is, the MLS has provided an abundance of value over the past century that explains its broad appeal and its continued relevance.

What an MLS is not

It's often helpful to begin defining something by identifying what it isn't. Oversimplified descriptions of the MLS are common. The MLS is not:

  • A database

  • A website or app

  • A network for commission payments

  • A Realtor association

While all of these things can exist adjacent to an MLS, or as features of it, they are inaccurate descriptions of the organization. Twenty years ago, former National Association of Realtors CEO Terry McDermott challenged association and MLS leaders to clearly understand the MLS with words that ring true today: "They have to make sure their members fully understand the MLS system and how it operates — that it's not just a collection of electronic listings. ... If we keep cheapening the MLS system and commoditizing the MLS by saying it's just an aggregation of listings, we're going to inherit a very negative end result."

The MLS cooperative

At its core, an MLS is a broker cooperative: an organization in which multiple competitive companies agree to abide by shared rules. This cooperation agreement empowers MLS participants to provide superior professional services and access to inventory for their clients.

Three core components of an MLS are central to its definition:

  1. Multiple licensed brokerage organizations

  2. Exclusive listing agreements between brokerages and their clients

  3. An organization that establishes the rules and compliance mechanisms that ensure brokers and their customers and clients cooperate efficiently within its environment

MLSs provide many offerings. The most valuable services are those that are grounded in the cooperative rules of the MLS. MLS rules have benefits similar to those of a stock market. Rules for a stock market regulate who can broker products, what they can sell, and what information must be provided about the products. The outcome of compliance with these rules is a market that buyers and sellers can trust: transparent, timely, accurate information about broadly aggregated inventory.

Variations on MLS definitions

Many organizations have their own specialized definitions of an MLS. NAR's policy definitions of an MLS have evolved over time alongside national policy updates. Current NAR MLS definitions include references to orderly accumulation and dissemination of information, offers of compensation, and contributions to a common database for the purposes of sales, appraisals, analyses and valuations.

The Real Estate Standards Organization (RESO) tracks MLSs by the way they identify their unique technology systems and publishes a list of Realtor association-operated and independent MLSs. These MLSs have their data systems certified on RESO's Data Dictionary and Web API standards, which allows their brokers to operate more efficiently in cross-market data partnerships and technology collaborations.

The most popular web portals all have their own technology-focused definitions of an MLS — and these are definitions that consumers are likely reading. 

Being aware of the different ways that MLSs are described can help a professional understand the customer's viewpoint and deliver a nuanced explanation of what information is accurate and what might need more context.

While definitions may vary, it's critical to understand the core value of the MLS: It's much more than a popular technology tool or a passing business trend — it's what makes the market work.

Want to learn more? Read part 2 of this series.

Portions of this story were excerpted from Realtor Magazine, where it was originally published on March 12, 2024. 

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