5.2 The ( your city, e.g. Munich) Multiple Listing Service

Multiple Listing Service

    MLS, also Multiple Listing System or Multiple Listings Service) enables brokers to share listings and other information. It provides, for instance, comparison information for appraisals. The listing data stored in a multiple listing service's database belongs to the broker who has the listing.

The Opportunity

    Astonishingly, MLS systems are more the exception than the rule. Most places in the world, a broker can only show you the listings his agents and he have acquired. He may have a cross-marketing arrangement with one colleague or another, but a region wide, automatically updated system does not exist. Given the patent advantages to the brokers, and the speed with which other Internet based networking has developed in the world, the dearth of MLS defies belief. 

    Let us take Munich, Germany as an example. It is one of the high-tech centers of Europe. The Munich Business Plan Competition, based on M.I.T.'s concept and implemented with the aid of McKinsey & Company, thrives. All kinds of high-tech businesses have been spawned by it. Yet try to buy a property here, and one feels one has gotten on a time-machine to return to 19th century America. There is no MLS system!

    The explanation below is summarized from several different articles about the real estate industry in Wikipedia (2011), with a little salt and pepper from my own international real estate experience. 

U.S. Origins

    Real estate brokers in the late 1800s would meet in the smoke-filled backrooms of private men's clubs, well actually in the offices of their local real estate association. They would trade information about the properities they were trying to sell, agreeing to share the commissions. Out of these meetings came the first formal MLS systems. They were based on the win-win concept of: "Help me sell my inventory and I'll help you sell yours.”

    MLS spread from Canada and the U.S. to the UK, and then to other countries. MLS systems generally list properties being sold by brokers who are members of that particular MLS system and of a brokerage association. Prominent examples are U.S. National Association of Realtors (NAR), Canadian Real Estate Association (CREA).[citation needed] and (The Independent Network of Estate Agents) INEA in the UK.

    There is not  a single MLS entity, any more than there is a single Internet entity. Multiple databases use XML data feeds to update listings. Data sharing and reciprocal access agreements give rise to the MLS.

How it works

    To get full access to the system you need to be a broker, or one of his licensed agents. You can then see on the system complete information on all the properities that have been entered into it by the participating brokers. That includes the commission the listing broker is offering to other brokers. A broker will only enter a property into the system if the owner grants him an exclusive listing, typically for six months or a year.

    For a long time, the norm for real estate commissions in the U.S. was as follows. The real estate broker kept 50%; 25% went to the agent (working for the broker) who had listed the house; 25% went to the agent who sold the house.  That meant that agents always first tried to sell the houses they themselves had listed. High producing agents were always able to negotiate better terms with real estate brokers.

    Two events futher complicated the commission landscape. The first was the arrival of Real Estate Max.  The firm offered a different business model.  It offered to all its agents 80% of the commission. The agents needed to be high producers, and in return the brokerage services were kept to a focused minimum. The second event was the advent of the Internet and a multiple of web-based real estate services such as Craig's List.¹

    Access by private persons selling their own property is restricted. FSBO ("for sale by owner") information can not be entereed into the MLS system. One way around this restriction in other countries is to pay a broker a flat fee to get entered in the local MLS database. 

    Move Inc. operates a website, Realtor.com, which displays MLS information through Internet Data Exchange (IDX). Interestingly, Move Inc. is partly owned by the National Association of Realtors (NAR), which sets the MLS policies. Users can search by location, type of property (also leased and vacant land), features (e.g. number of bedrooms, swimming pook), price ranges, and view photos, etc. To visit the property, one then makes contact with the listing agent.

Benchmarking of MLS Systems in other countries (examples)

 - Canada

    MLS has over 98,000 participating members from the Canadian Real Estate Association (CREA). CREA works with 11 provincial/territorial associations which include 101 real estate boards. 

- Czech Republic

    MLS exists through IMMO2, which is affiliated with many realtors in Europe.

- Israel

    MLS, known as Shiran, began operating in 1990. (The link is to the English version; if it does not work, try entering www.shiran.co.il) It deals mainly with Jerusalem and the surrounding area.

- United Kingdom

     For a long time MLS was paralysed in the whole of the UK by software incompatiblity. The many competing software packages for the real estate industry did not allow agents easily to share data with the software from another provider. A solution has now (2011) been instigated by the Independent Network of Agents (INEA). It has convinced about 2/3 of the main software providers to enable data sharing.  Nevertheless, MLS is still in its infancy in the United Kingdom.

- Spain

    MLS in Spain is known as AMALASpain, which has a well-done, attractive website. (The link brings you to English.) Unlike most other systems, AMALASpain allows private owners (FSBO's) to enter properties, a welcome innovation indeed.

- Philippines

    The Philippine Association of Realtors Boards (PAREB) operates the RPMLX, a MLS for the Philippines. PAREB is officially associated with the NAR in the USA and hence can lawfully use the trademarked term "Realtors." When I wrote my MBA thesis, the most accurate and extensive data about investments into U.S. real estate from its corporations came from the Philippines!

- Vietnam

    An MLS was started in Vietnam in 2010. It is based on the US model, and therefore does not permit private (FSBO) listings. Apparently the real estate market there does not usually work on the basis of an exclusive listing. Therfore multiple (open agency) listings are allowed, in contrast to the U.S.

1 Craig's List offers real estate ads both for rentals and purchase as a minor part of its services. It was started in 1995 by Craig Newmann to post events in the San Francisco Bay Area. In 2000 in expanded to 9 other U.S. cities, offering what newspapers do in their classified ad sections.  By June 2011 Craig's list was present in 570 cities in 50 countries, and had become the 37th most viewed website in the world with 20 billion page views a month. (Wikipedia, 2011).