How the MLS has endured, and what the future holds
In the third of a three-part series, RESO CEO Sam DeBord explains why rules are critical to the MLS and how shifts in the industry influence MLS functions.
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 three, he explains why rules are critical to the success of the MLS, and how shifts in the industry will continue to influence the definition and services of the MLS.
For more than a century, the MLS has been core to the workings of residential real estate, and it continues to provide great value today. But how has it endured for so many years, even as the industry has changed over time?
The benefits of an MLS are largely dependent upon its members' adherence to rules. An MLS's ability to enforce its participants' rule set defines its success.
While this is one of its least publicized values, the MLS's compliance practices can be compared to a nation's enforcement of laws — just as critical to an orderly society as they are to a working marketplace.
Consistency in information, services and participant experience is directly reliant upon this conformance with rules. Compliance processes to ensure that the cooperative's regulations are followed are a key element in defining an MLS.
Rules-based services of an MLS
Rules for securities markets are set by government agencies, as are many of those for licensed real estate brokers. Industry organizations such as NAR, local Realtor associations and MLSs create additional rules through their subject matter expertise in the day-to-day business, further enhancing consumer marketplaces. Among the rules set:
Solicitation of listings
Forms and disclosures
Listing input and updates
Signs, advertising and open houses
Usage of MLS-wide data (IDX, VOW, BBO)
Marketing of property information
Access via electronic keys and keyboxes
Property showings and offer submission
Earnest money distribution
Closing of listings and transactions
Compensation between parties
Dispute resolution
Penalties and fines for noncompliance
This list is just the services you might find defined in an MLS's rule set. There are many other features of an MLS that brokers access regularly, such as:
Tax records
CMAs
Listing alerts
Statistical reporting
Training and education
Safety programs
Industry news
Political and regulatory advocacy
So although headlines about changes in data and compensation rules may bring some uncertainty about the MLS's place in the industry, the plethora and importance of services that it brings to the market ensures its continuity. Being able to express the stability these services will continue to provide to markets should be a priority for every professional involved in communicating the value of an organized real estate industry.
MLS in the future
Just as the services, policies and definitions of the MLS have shifted over the past century, they will continue to change. The real estate industry is moving through some dynamic phases of technology, law and practice. The way brokers advertise homes, interact with clients, get paid for their work and develop new business will all likely change over time — and some of those changes are already on their way, following NAR's recent settlement agreement in the buyer-broker commissions cases.
Leaders of MLSs, associations and brokerage organizations have the opportunity to face inevitable changes head-on. Communicating the many strengths of the MLS that have endured through an ever-changing industry adds clarity and confidence for all participants in the MLS ecosystem. It strengthens the industry's professionals and the services they provide to consumers.
If you've ever sold anything in an online marketplace, you know that trust is a critical element. With something as large and complex as the selling and buying real estate, the professional guidance, representation and cooperation provided through MLS is essential.
Portions of this story were excerpted from Realtor Magazine, where it was originally published on March 12, 2024.