The majority of home sales in the United States occur through a multiple listing service (MLS). This regional database allows real estate agents to share information about available properties. Recently, MLSs have garnered attention due to changes implemented following a significant legal settlement concerning real estate commissions. But what exactly is an MLS and how does it function?
The first known MLS was established in San Diego in 1885, according to Frederik Heller, director of the library and archives at the National Association of Realtors. This system provided updated listings twice daily to its members.
Heller noted that in the early days, runners would deliver the updated listings manually to various real estate offices around the city. Cleveland and Chicago soon adopted similar systems. At that time, anyone could claim to be a real estate broker, as there were no formal education requirements or state licensing laws.
The formation of MLSs enabled real estate brokers to share information with trusted colleagues, providing access to the latest property listings. However, it also served as a means of exclusion. Even into the 1960s, many real estate boards deliberately barred Black, Jewish, and female brokers from membership and, consequently, from accessing the local MLS.
In the 1920s, the National Association of Real Estate Boards, the forerunner of the National Association of Realtors, advocated for broader adoption of MLS services, which surged during the post-war housing boom of the 1950s. Early listings were recorded on notecards and gathered into large books, as explained by Sam DeBord, CEO of the Real Estate Standards Organization. Agents had to physically bring clients into the office to review these listings, which quickly became outdated.
With new books published once or twice a month, the anticipation surrounding these releases was palpable in MLS offices. Saul Klein, now CEO of the San Diego Multiple Listing Service, recalled being captivated by an MLS book in the mid-1970s, noting its detailed property information despite the limited presentation.
As technology advanced, Klein transitioned to electronic searches when computer terminals were introduced to his office in the late 1970s. This shift marked a significant improvement from the manual book searches.
The advent of the internet in the mid-1990s revolutionized the industry. Klein was part of the development team for Realtor.com, which made MLS data publicly accessible, a move that initially caused concern among professionals who were accustomed to having exclusive access to property information.
Today, platforms like Zillow, Redfin, and Homes.com provide nearly universal access to home listings based on MLS data. Currently, Klein oversees the San Diego Multiple Listing Service, now part of a network of over 500 MLSs nationwide, primarily operated by local Realtor associations under the guidance of the National Association of Realtors.
The MLS system is largely unique to North America. In many European countries, potential buyers often have to drive around to various real estate offices to view available properties. Moreover, listings can often appear multiple times with different agents and prices, leading to confusion.
However, efforts are underway to adapt the North American MLS model internationally, spearheaded by the International MLS Forum, which aims to streamline property listing practices globally.