90% of potential home buyers turn to the internet to find a new home. Likewise, sellers rely on the internet to market their home. However, traditional housing listing websites are quickly becoming outdated; making it an unreliable tool for both buyers and sellers.
Don’t rely on a house listing system that was invented for your great-grandparents. In this article, I’ll break down why traditional housing websites are BS. Plus, I’ll point you to some proven tools to add to your house hunting or house selling, arsenal.
The internet is all about expanding access to information. More information means more options for home buyers. Likewise, the internet can provide more exposure to sellers. However, traditional multiple listings services also known as the MLS can actually limit real estate information. This is because MLS listings come with strict membership requirements.
The average Joe can’t just list their home or browse listings. MLS listings are only open to agents. In fact, you not only have to be an agent, but in some instances, you must be a dues-paying member of specific realtors associations.
According to the National Association of Realtors, a Michigan lawyer recently challenged these restrictions. He sued the MLS Realcomp, claiming that they were monopolizing the market by requiring realtor association membership for their MLS access. Eventually, the lawsuit was dismissed. The court claimed that the lawyer had no grounds for bringing up an antitrust lawsuit. The court explained that requiring membership in a realtors association in order to have access to Realcomp’s MLS database isn’t an unreasonable requirement.
Even if the Realcomp MLS was found blameless, this is still a critical case. It illustrates the problem of limited access in the traditional MLS system. This limited access impacts both buyers and sellers. If you’re in the market for a new home, you’ll be limited to only those homes listed by agents who have access to the MLS.
This is why we often hear stories of home buyers purchasing a new home only to find out through word of mouth, that their actual dream home was also on the market. However, they missed out because that property wasn’t listed in the MLS. If you’re a real estate investor, this can lead to a huge missed investment opportunity.
Likewise, if you’re trying to sell your home, the MLS shouldn’t be your only marketing tool. Because the MLS is limited to the exclusive group of realtors who have access, it limits your home’s exposure to the wider public. This might have been an adequate means of advertising in the past, but today’s market is a lot different.
Buyers are more independent these days. Like the couples on House Hunters, they know exactly what they want and they want it NOW. You want your home to be in these buyer’s initial search so that you can be competitive while the opportunity is hot. This means not simply settling for a passive listing on the MLS, but also listing your home on general search sites open to the public. Which leads us to another problem with the MLS.
Another problem with the MLS is that even if it does get your home in front of a prospective buyer, the advertising it offers is the bare minimum. The core role of the MLS is to list your property not market it. Thus, relying on the MLS for marketing your home is risky. Adequate selling involves great marketing. Just like any other product, the more buyers know about its features, the more they are interested in buying.
Ethics and Data Quality
Besides the issue of limited access, the traditional MLS system is also unreliable because it keeps an exclusive group of realtors as the gatekeepers. As we’ve seen from other industries, whenever there is one group of gatekeepers, it can lead to abuse and practices that harm the end users. In this case, it’s the home buyers and sellers.
This is because the gatekeepers will naturally do what’s necessary to protect their monetary interest, which is their commission fees. As a result, the MLS system is maintained according to what optimizes the realtor’s monetary interest.
For instance, Mortgage Sandbox, a website focused on empowering homebuyers, claims that some real estate agents recycle property listings on the MLS. This means that they cancel and then relist a property. As a result, the property looks like it’s new to the market.
While various cities now have rules regarding recycled listings and how long to wait before relisting a property, it’s still something to watch out for.
On a small scale, recycled listings can mislead a buyer into thinking a property is new to the market. This can lead to a higher selling price since a home’s selling price usually goes down the longer it sits on the market.
On a larger scale, all the canceled and relisted properties can mislead buyers into thinking that homes are being sold faster than they truly are. This can create a false sense of urgency that favors the sellers and leads to higher sales prices or quicker sales. All of this benefits the real estate agent who controls data input into the MLS. It can lead to more commission. Sadly, this isn’t always in the best interest of the consumers.
Also, keep in mind that some companies will list a property on the MLS on behalf of a seller who doesn’t have access. They’ll often do this for a flat fee. Again this benefits the gatekeepers of the MLS, the agents who have exclusive access. But this isn’t in the best interest of the consumers.
Consumers are best served by having open access to a variety of options to meet their housing needs. The MLS limits consumers to the listings posted by the exclusive group of agents, or the listings that were paid for. This is just another reason why consumers can’t rely on the MLS when house hunting.
As you can see, the traditional MLS has its faults. Plus, with the rise of public listings, artificial intelligence, and advanced data, the MLS is becoming outdated.
In fact, Zillow is stepping up its game by using AI, specifically neural networks to evaluate the quality of different rooms in a home. Zillow is using AI to analyze all this through a simple home photo. While the traditional MLS is posting a photo of your home, Zillow is going a step above by analyzing that photo and giving buyers and sellers useful data.
While it may not be time to completely abandon the traditional MLS or your real estate agent, it is time to acknowledge that the MLS is far from the gold standard. Buyers and sellers should supplement their use of the MLS with public listing sites, AI tools, and new real estate marketing technology such as Facebook Messenger ads and 3D tours.
Have you utilized any of these technologies in your house hunting or selling journey. If so, leave us a comment below and tell us what you think. Perhaps you still think the MLS is the gold standards, tell us why by dropping a comment below.
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