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One of the biggest benefits of using a real estate agent has long been their access to the Multiple Listing Service (MLS)—a comprehensive database of agent- and broker-listed homes in any given area.
Sellers enjoyed more exposure for their properties, while buyers had access to exclusive listings they couldn’t find elsewhere. It seemed a win-win for everyone—and a good use of that 6% commission the agent charged to handle the transaction.
But that was decades ago.
Today, homebuyers have taken the search into their own hands. They’re using sites like Zillow, Trulia and Homes.com to find potential properties before even calling an agent. And while these sites don’t list full-scale MLS data per se, most agents are putting their homes on them anyway just for the exposure. (Zillow alone has more than 160 million visitors every month.)
When you throw in the countless other industry platforms, tools and startups out there that are circumventing the MLS as well, it begs the question: Could the MLS be on its last legs?
Why The MLS?
The first computerized MLS was launched in 1975, though the practice of sharing listings with other brokers dates back much further—to the late 1800s, at least. Back then, it was a way for agents to swap information about other properties on the market, at a time when the web and other public listings just weren’t around to do it for them.
Now, the purpose of MLS databases isn’t quite as clear, but advocates tout its ability to encourage competition, as well as its standardized, reliable data.
“In my opinion, the MLS is a powerful force for competition,” said Karen Elmir, CEO of The Elmir Group, a real estate agency based in Miami. “The real estate market is competitive, and the business is unique in that competitors must also cooperate with each other to ensure a successful transaction. MLS systems facilitate that cooperation.”
But popular listing sites like Zillow, Trulia and Homes.com are open to the public. Anyone can create an account and list a property, leaving the door open for inaccurate or unreliable information.
“You don’t know who is entering the information in all these new apps coming out,” said Adam Kaufman, vice president of sales and operations at Pordes Residential real estate firm. “In the MLS, the listing agent is required to input all the information, so you know they are going to make sure it’s accurate. The MLS is also regulated by a board, so typically all of the information is going to be correct.”
According to Beth Butler, general manager of real estate brokerage Compass Florida, MLS listings also have more robust information than is available on Zillow or Trulia.
“This tool has data that can’t be found in other places, such as showing instructions, scheduling, disclosures that need to accompany a contract, and even working tools that are not available in other platforms,” Butler said. “The MLS is still front and center in day-to-day business for most real estate agents.”
But it seems not all agents benefit from the database. On June 5, the Department of Justice and the Federal Trade Commission hosted a workshop on real estate innovation—and the topic of MLS databases came up often. During the event, Josh Hunt, CEO of Trelora, a real estate firm in Colorado, recalled being unable to access local MLS data because he wasn’t a paying member of the National Association of Realtors.
Other agents have complained of the same thing—an issue that no doubt trickles down to the buyer, limiting their access to potential properties and other agent’s listings. Currently, there are nearly 900 different MLS systems in the United States, many of which require an NAR membership to access.
“Some of the downsides of the MLS revolve around the debate of who should be controlling the information,” Butler said. “Should we be forced to join these smaller associations, or should a broker be forced to go into four associations to access the data they need?”
Only for Agents?
Issues with NAR aside, it’s clear that most agents still benefit from the system. But what about buyers? According to Butler, the MLS just isn’t relevant to them.
“The buyer and the general public have other places they can go,” Butler said. “They can go directly to Zillow or Realtor.com because the MLS doesn’t have real relevancy to them.”
It’s not just easily accessible websites that are changing the game, though. It also comes down to the changing attitudes of homebuyers. According to Jack Ryan, CEO of REX Real Estate, they just want to be more hands-on than in years past—and that makes the MLS and agents less of a commodity.
“It’s amazing how smart the buyers are when they come to visit the home that we’re selling,” Ryan said. “They spend on average nine to 12 months looking for a home on their own. And then they call us if they want to see a home or email us or text us. They know why they want to move to a certain area, what block they want to live in, where the school districts are the best. They know what other homes sold near for what price. They’re so educated.”
Growing buyer independence is requiring less work of traditional agents—and the tools they utilize.
“Agents are doing less and less every single year because most people are doing their search online to find a home,” Ryan said. “No one’s driving them around Austin, Texas, for eight weekends in a row for three hours a week and showing them homes. They’re doing all the work on their own for nine or 12 months. And they’re happy to do it on their own—they want to.”
New Possibilities
Savvier buying isn’t the only thing rendering the MLS unnecessary. Big data, AI and new tech are also playing a role, paving the way for more seamless, hassle-free real estate transactions on the whole.
Take REX, for example. The company uses data science to essentially remove real estate agents—and their internationally high commission rates—from the home-buying process. Instead of an agent listing a home on an MLS and casting a wide net to find potential buyers, REX uses data to reach the most qualified buyers directly, based on their interests, demographics, location and other data.
“What happens in the traditional process is you ask to list your home, and someone puts up a yard sign, and they put it on the MLS,” Ryan said. “That’s a very passive activity and most people—most vendors of products—don’t put it on a website and say ‘That’s enough. I hope someone checks out this website.’ What we do is much more than an agent does because we have PhDs from the best schools in the country predicting who we think within a certain radius or square mile or demographic is the best buyer for your home, and then dropping them a note.”
REX uses its data to target buyers on Instagram, Snapchat, Facebook, Google and even by snail mail—whatever the data says is the best method to reach them. And though REX still uses humans for some part of the process, Ryan says about 90% of home buying is best left to a computer.
“We can tell that this person cares more about schools and pools, and this person cares more about kitchens than garages,” Ryan said. “And this person cares more about commute time. You can change the ad for all those different permutations for 50,000 different people. There’s just no way a human can do that. It’s just too complex.”
If REX is an indicator of things to come, the days of the MLS—and maybe agents in general—could be numbered.