Does the MLS Benefit Me in the Sale of My Home?
I was recently approached by a potential client who asked if it’s beneficial for me to use the Multiple Listing Service (MLS) in my marketing plan to sell their home or are they better off trying to sell it off-market. As a real estate broker for over twenty-five years, I wanted to share my thoughts on the benefits of a marketing plan that includes the MLS as opposed to selling it as an off-market listing.
The real estate markets across the county have seen record sales this year and our local market is no exception. Some speculate the pandemic has moved much of the workforce from office buildings to home offices and the appeal of a lake home has attracted buyers to our area. Many local homeowners have held onto their lake homes for use during this period of time, leaving buyers actively waiting for new listings to hit the market. As a result, demand has outpaced supply for the last year and a half, driving prices up. Sellers who decided to cash out have fared extremely well, seeing lakefront homes selling 30% higher than 2020.
To give you a little background about the MLS, it was formed for the purpose of providing exposure for real estate agents' listings to other agents, thus connecting buyers and sellers. When I first received my real estate broker’s license in the 1990s, the MLS’s were all locally based, but they have evolved into a global network of real estate listings that now cover the entire country. It’s not only used by real estate agents but buyers, as well. On the downside, as agents, we have lost control of our data with online real estate portals, including Zillow, purchasing the data and in turn, selling access to our listings to other agents for buyer leads. While there are parts to the new evolution that bothers me, I can’t overlook the many ways that it benefits sellers.
In this unique market, most agents have buyers waiting in the wings for listings to come available. When a new listing hits the market, buyers flock to see the home, which often results in multiple offers. It’s been a great market for sellers, but not so much for buyers. Sellers often ask me what the value of their home is, but the true definition of market value is “What a buyer is willing to pay.” The only way to know the real value is to test it in the market. With supply and demand in favor of sellers, the more buyers you can get into your home, the better the outcome will potentially be.
One thing is certain, the exposure to buyers that one agent provides can’t compete with the powerful reach of the MLS and their ultimate online network of nearly three million agents. The more buyers that have interest in a home, especially in a seller’s market, like we are experiencing now, the greater the likelihood for multiple offers, and homes selling over the asking price. As a listing agent, I would be putting my needs before a seller if I were to encourage them to forgo the MLS and to work with one of my buyers. It would be to their advantage to list their home in the MLS for all the buyers to see and in the end, if my buyer has the highest bid, then they will be the one to buy the house.
While a seller can have a fairly good understanding of their home’s value, they often base it on data that isn’t always accurate. For example, Zillow uses an algorithm to determine a market evaluation they call a “Zestimate.” Their accuracy depends on the availability of data in a home’s area. Some estimates are far too low and others too high, and unfortunately many homeowners rely on this information in assessing their own values before meeting with a listing agent. I recently met a homeowner who shared their sales goal based on data they found online. In the end, we sold it for a million dollars more than what they thought the value was because we let the market set the price through numerous showings and offers from buyers that perceived a higher value.
There have been several off-market listings that have sold in our area this year with sales prices that were lower than what my buyers would have most likely paid. I can imagine other agents had buyers willing to pay more as well. If other agents had the opportunity to show those homes to their buyers, I believe the sales prices could have been higher.
I have had sellers request to have off-market listings based on privacy concerns, and while I have reluctantly agreed, I did strongly encourage them to list in the MLS, explaining that they could achieve a higher sales price with the broader reach. I understand that some sellers may think the process of listing in the MLS is a burden; however, even if a home is sold off-market, the process remains the same. The home is still shown to potential buyers, although the pool of buyers is much smaller, and there will still be home inspections, and possibly an appraisal if the buyer is to secure financing.
Every home sale in our area sets a precedent for future sales and value. For those looking to refinance their home for a change in rate or term, or to cash out and use the money for other investments, family emergencies, happy occasions such as weddings or education, your home’s value is dependent on good and accurate data. And for a house, the MLS is the main source of data for bank appraisers. Online real estate portals, agents, and buyers all utilize the data in the MLS as well to justify values based on similar sales that occur. Your neighbor’s home sale directly impacts the value of your home, and if it is not listed in the MLS, it will be buried in the tax records and not easily found.
The market is changing throughout the country and we are seeing the number of homes available for sale increasing in our area. As the supply and demand begin to balance, sellers will find greater value in the power of the MLS, and its reach of buyers and agents across a larger platform. But in the meantime, while it still remains a seller’s market, I continue to utilize the MLS and recommend that my sellers do too. Not only will it help to reach more buyers and potentially have a higher selling price, but it will also enable all of us to accurately capture the sales data that directly impacts the home values here in our area.