The Multiple Listing Service or (MLS) is the probably the most powerful marketing tool for selling your home. Certainly, all sellers want their homes on their local MLS, but most them seem to have no idea what the MLS actually is.
Recently, I’ve had several requests from home sellers that want me just “put their homes on the MLS” – and they’ll do the rest. Others would like me to manage the transaction after they have found a buyer. Some are willing to offer compensation to the buyer’s agent, most are not.
Many sellers think that they have a “right” to be on the MLS, whether they are working with a brokerage or not. But, the MLS is not part of the public domain and it is not a bulletin board. It is a proprietary database. Its users are licensed agents or brokers who are members of that particular MLS and they pay some very hefty fees to maintain that privilege.
Those fees are used to maintain the MLS, and ensure that the rules of accuracy are maintained and that listing updates are recorded in a timely manner.
The MLS’s got their start back in the late 19th century. Today, there are over 1000 MLS’s in the United States each geared towards a local market. Their primary purpose was…
…To create a database of current listings that allows competing brokerages to cooperate with one another on the sale of their listings.
This is what makes the MLS so powerful. The information on the MLS is shared with every cooperating agent who has buyers in that market. The collective power of all those pooled buyers is enormous. This is why sellers want their listing in that database.
One obvious consequence of such an arrangement is that in order for brokerages to cooperate, everyone needs to know up-front how the commission pie is going to be sliced. If you don’t do this, you are inviting a food fight.
So, the offering of compensation to cooperating agents within the MLS is required. The bottom line for sellers who don’t want to offer compensation is that they are out of luck. No offer of compensation, no listing in the MLS.
There are a few online brokerages that allow sellers to list their homes for a flat fee. These brokerages merely place the listing on the MLS. The fee is something in the line of $500.00 or thereabouts.
These brokerages offer no support to the seller. As far as vetting buyers, showing the home, liability issues, marketing the home, photographs, videos, planning open houses and negotiating the transaction, the seller is completely on their own.
The compensation requirement for cooperating agents still remains.
Some sellers try to get around the buyer agent fees by putting in small token fee for the buyer’s agent. They do so in the hope (I guess) that the buyers will see their listed property and show up without their agent, and VIOLA!!!! An expensive middle man has just been removed.
Since the entire point of the MLS is to have access to the combined buyer pool of cooperating agents, not cooperating with agents defeats the entire purpose of having your home on the MLS. Please, if you are going to to do this, save yourself the $500 and just list on FSBO sites.
Agents who have extensive lists of potential buyers have spent hundreds of unremunerated hours nurturing these potential buyers. They educate them, qualify them, show them homes and hold their hand. Maintaining leads like this is expensive in terms of both time and money. So, trying to peel a buyer away from an agent who has spent months with that buyer is going harder than you think.
Issues like this have prompted agents to respond by putting their buyer clients under contract. These contracts specify that if the buyer purchases a home, the agent’s brokerage must be compensated a specified sum or percentage of the purchase price, regardless of the circumstances of of the purchase.
This “locks in” a certain commission and assures the agent that their time and money isn’t being sent into a black hole that a random FSBO or open house can snatch away. In return, the agent represents their buyer as a fiduciary, putting their best interests first and foremost.
Unless such a buyer is head-over-heels in love with your home, chances are they won’t be making an offer. Someone who is absolutely crazy about your home will make an offer through their agent. And you can rest assured that paying their agent’s commission will be a contingency of any such offer.
This is possible. But the truth is that the vast majority of serious buyers have agents. So the pool of potential buyers is vastly reduced and you are probably better off sticking with FSBO sites for this sort of buyer.
Furthermore, the buyers that are working without agents are very often bargain hunters looking for steal more than a deal. They expect to get a nice chunk of the commission pie that FSBO sellers worked so hard to save for themselves.
There is also the question of qualifying these buyers. Most agents will not take out a buyer who they haven’t qualified as a ready, willing and ABLE buyer. So, you may get an offer from such a buyer only to find out they lack the funds to purchase your home in the first place.
Trying to sell a home without an agent not easy. Even in a strong seller’s market, it’s a lot harder than you think. In fact, about 90% of all FSBO’s end up being listed by a brokerage. If you want to try to do so using the MLS, you really need to cooperate with buyer’s agents which means that you are, at best, saving about half the commission.
© 2017 – RGHicks – https://thewestchesterview.com – All rights reserved.
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