The Real Power of the MLS® System

The Multiple Listing Service® (MLS®) system is often thought of by the typical consumer as a simple advertising system – a fallacy propagated by media and companies who think it is the magical solution to helping owners sell their own homes.

Unfortunately, this misunderstanding was probably started - or at least helped along - by real estate agents unduly weighting the advertising exposure as a benefit of the MLS® system.

But the reality is that the MLS® system as an advertising system is nothing special – it’s just a website that provides information, and is not the magic bullet for owners who want to sell on their own. The real purpose of the MLS® system is to facilitate collaborative selling between real estate professionals.

Some might scoff and say that this is out-dated thinking, but I would reply that the proof is in the results: if buyer exposure was the real power behind the system’s success, I would find buyers and sell more of my own listings rather than another agent bringing an offer. But at least 90% of the time, it is another agent that ultimately sells my listing, and you would find this is pretty typical in the real estate industry.

This raises some interesting questions.

First, if the MLS® website is an automatic source of buyers, why am I not selling more of my own listings - why so many other agents bringing offers?

Next, why should a private seller expect better results than a professional working at it full-time?

The answer is simple, as much as some companies would hate to admit it, since it takes the wind out of their marketing pitch. The real power of an MLS® listing is that you have a huge professional sales force working for you - well over two thousand in the Hamilton-Burlington area alone - who are not paid unless results are delivered. When you list your home and offer a selling commission, you give them access to complete information on your property and (usually) commission as a motivation to sell it to buyers they come across in their day-to-day dealings.

The funniest thing about this is that I have actually seen one for-sale-by-owner company suggesting on their website that this “cross-selling” is a bad thing. Their website forewarned that your real estate agent may show your house but not sell it, instead selling the house down the street. This may be true, but it entirely neglects to mention all of the agents "down the street" who may first show their listing but end up selling yours.

Again, when you sign an MLS® listing with a traditional full service agent, you have the entire REALTOR® population working for you indirectly as a sales force, and you don’t pay them a thing unless they sell your house. So when you stop and think about it, cross-selling by full-time professionals is not a negative but rather a huge positive.

Indeed, those professionals are the real power behind the MLS® system.