In the United States, homeowners who have sold their houses should be familiar with the MLS platform, which is a system dedicated to aggregating real estate listing information. Sellers typically have to go online to register, while buyers can search for properties. However, on March 25th of this year, the National Association of Realtors in the U.S. announced a new selling policy, one of its aims being to discourage sellers from withholding listings for private sales and to encourage bringing properties to the public market as much as possible. Is this change benefiting sellers or buyers? Let’s find out together.
The full name of the MLS platform is the Multiple Listing Service, which in simple terms is an integrated system for selling second-hand real estate properties. This system was established in the late 19th century in the U.S. to facilitate real estate agents and brokers in better understanding the current market, which properties and land are listed, providing a channel for sellers to release this information. For buyers, it offers easy access to a list of listed real estate properties, including detailed information such as area, listing price, number of rooms, past sales records, property taxes, insurance, and various real estate disclosure facts.
You might wonder: what makes MLS different from Zillow and Redfin? Can’t you find information about listed properties on real estate websites as well? In reality, these real estate websites mostly extract data from the MLS and display it on their platforms for the general public to see. Therefore, the MLS is essentially the source of information for all listed properties, ensuring the most comprehensive and up-to-date data. However, these real estate websites often display only part of the data and may not update it promptly, leading to misunderstandings such as properties being assumed to still be available for sale when they have already been sold.
Another point to note is that only registered and paying real estate agents have access to the MLS platform; the general public cannot use it. However, your real estate agent may provide their own real estate website with local listings, sourced from the MLS through a technology called Internet Data Exchange (IDX), connecting them to the MLS listings provided by other real estate agents.
In fact, the MLS platform in the U.S. is regional and not unified nationwide. According to data from the Real Estate Standards Organization, there are approximately six hundred MLS platforms across the U.S., with each region having its own platform. However, some U.S. markets do not have MLS. Interestingly, New York City is one such example. Even though New York City doesn’t have an MLS, it has other local service platforms available for use.
Looking at it globally, most countries do not have MLS, and even if some do, they cannot cover the entire market. In this aspect, the U.S. indeed leads the world by being open and transparent, providing everyone with a fair chance in competition.
For example, in Taiwan, there isn’t a platform like the MLS in the U.S., but there are numerous real estate websites and individual websites set up by real estate agents to showcase their own listings, creating a situation where everyone operates independently. Sellers must actively post on various platforms, market, and expose their properties. For buyers, they need to diligently search through different platforms to find their desired properties.
Thus, in Taiwan, it’s challenging for everyone to share and compete on the same platform, leading to segmented markets. Additionally, a common practice in Taiwan is for real estate agents to prefer selling to clients within their own network, typically for facilitating negotiations and reaching agreements more smoothly since both parties are under the same company or the same agent. Consequently, this practice tends to prioritize the interests of real estate agents over those of their clients, putting clients in passive positions.
After discussing some off-topic points and the basic rules of MLS, let’s delve into the new MLS policy. The National Association of Realtors in the U.S., after several months of discussion, released a new policy on March 25th: the “Seller Multiple Listing Options,” aimed to supplement the existing multiple listing service policy. This so-called “Seller Multiple Listing Options” offer a new choice where brokers or sellers can opt for both a “non-public” method to sell properties and later market them on the “public market.”
Reviewing a chart published by the National Association of Realtors in the U.S. (link provided), when deciding to list a property, if a seller chooses the route of private sale, meaning non-public market, there are now two pathways to declare on the MLS. The first pathway, introduced in 2020, is the “Clear Cooperation Policy” known as CCP.
This policy allows for an exclusive non-public pre-marketing period termed the “Office Exclusive Listing Exemption.” During this period, the seller’s agent can privately seek buyers, and if unsuccessful, they can proceed with public sales by, for instance, placing a sales sign in front of the property or sending out mass emails, thereby indicating the start of public listing. Once the property is publicly listed, it must be on the MLS within one business day.
Some agents, aiming to extend their marketing period, may choose to publicly list the property on Fridays, enabling them to utilize the weekend to attract potential buyers and only make it official on Mondays.
Moving on to the second pathway, which is the new policy: “Multiple Listing Options for Sellers,” allowing sellers to delay listing on the MLS. During this delay, sellers can privately sell the property while also partially listing it on the MLS, visible to other agents but restricted from linking to third-party websites for display, limiting access for the general public. This method of delayed listing is known as “delayed marketing exempt listings.”
As for how long the delay to publicly list lasts, the exact time frame depends on the seller and broker’s decision on when to list. Thus, sellers have the authority to determine when to conclude private sales. This new policy took effect immediately upon announcement and must be implemented by September 30th.
In summary, these two types of private sale methods involve either a completely closed sales process where the property is only listed when the seller opts to make it public within one business day after the decision, or a semi-closed approach where the property is marketed privately while being listed partially on the MLS without full disclosure until the end of the private sales period. In both cases, real estate agents must fully disclose the pros and cons to sellers and obtain signed agreements.
According to a recent study conducted by Zillow, between 2023 and 2024, the sale prices of properties in the non-public market in the U.S. were typically 1.5% lower than those listed for sale on the MLS, equivalent to $4,975. In California, sellers who did not publicly list on the MLS faced even greater losses, reaching up to a $30,000 difference due to the higher property prices in the state.
Another study by Bright MLS revealed that from 2019 to the first quarter of 2023, properties listed for sale on the MLS had an average selling price that was 17.5% higher than those sold outside the MLS. In 2022, typical sellers on the MLS earned $53,890 more compared to off-the-market sales.
Ultimately, the National Association of Realtors in the U.S. wishes to discourage brokers from selling properties in a non-public manner, which is why they have introduced these exemptions to private sales, offering brokers or sellers the flexibility to keep listings private while also providing opportunities for public sales.
In the public market, a seller’s property gains more visibility, attracting potential buyers to make offers, enhancing the seller’s position. Conversely, with private sales, due to the lack of competition from other buyers, while the sale may proceed smoothly, the final selling price may be comparatively lower.
There are several reasons sellers might choose private sales. Firstly, for privacy reasons, such as celebrities or other sellers seeking anonymity, private sales allow them to control who can visit the property and when. Secondly, sellers may wish to gauge the market, testing buyer reactions to pricing. By privately listing, they can adjust prices without public scrutiny, preventing negative perceptions of price reductions upon going public.
Thirdly, sellers may have personal connections like family members or friends who are interested in purchasing. In such cases, sellers might hire a broker simply to sell their property directly to specific buyers.
Lastly, there are real estate companies intentionally adopting this strategy, like industry giant Compass, accumulating properties internally, bypassing the MLS and solely offering them to buyers collaborating with other Compass agents. This practice is similar to Taiwan’s Sinyi Realty, which exclusively sells their listings and never cooperates with other real estate companies. This approach is possible because these companies have substantial internal systems and market dominance. Hence, negotiations and concessions have been made between the National Association of Realtors and Compass with the hope of integrating them into the public market system, making the new policy a compromise.
As Ashton Alexander, Compass’s director of strategy, stated, “We believe homeowners should be fully autonomous and have the flexibility to choose how to market their homes, and that’s exactly what this is.”
In conclusion, who benefits from this new policy? It provides sellers with more flexible sales options. While public sales may often result in better prices for sellers, there are situations where sellers, for various reasons, choose private sales and later opt to transition to the public market or use the private period to assess the market and then officially list the property. On the buyers’ end, having the opportunity to see more listings and make choices can provide them with significant advantages. ◇