Seven Reasons to be Wary of MLS

Dear Monty: Our home is for sale. Last week, our agent called to set a co-broke appointment with a different company. I spent a good part of the day preparing for the showing the day before the showing, including washing all the windows inside and out. At the appointed time, the doorbell rings, and the buyer is at the door with no agent in sight. I invited them in to wait. As we casually spoke, we quickly determined they would not buy our house. They needed a large lot, and we had a small backyard. About 20 minutes after they left, the agent showed up. I asked the agent why they were unaware of the lot size. The answer was, “It wasn’t clear on the data sheet, so I thought I’d ask when we were here together.” I was shocked. She left before I could vent. She did apologize for being late but did not recognize the inconvenience she had caused me, and the prospect. Should I complain to my agent?

Monty’s Answer: The National Association of Realtors (NAR) is the largest trade association in the country, with 1.3 million Realtor members. Their customers are the dues-paying brokers and agents who pay to be called Realtors. NAR has done an excellent job convincing real estate agents and consumers that agents are professionals necessary to avoid financial risk when selling or buying a home. My experience in real estate has evolved from an enthusiastic evangelist into a solid contrarian. It took me over 30 years to realize, but it is financially risky to use MLS. Here are six more reasons:

  1. The dominant brokerage model and the MLS systems are over one hundred years old. Technology rendered these systems obsolete almost 20 years ago, but NAR and its membership must fight to retain high commissions. Why? These old models are so inefficient that real estate companies must maintain them to stay solvent.

  2. NAR has about six hundred individual MLSs and a nine-hundred-member board of directors. The industry is a highly fragmented, chaotic, and loosely managed network of independent contractor real estate agents tied to the agent-driven, non-public, multiple listing service. The industries, size traditions, myths, and failures have blinded the sector and the outside world to these fundamental flaws that expose consumers to invisible and significant financial risks. Here is a link to a 2015 NAR report where 7,800 agents concluded their biggest fear for the future was that “The real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents. This knowledge gap threatens the credibility of the industry.” When I asked a senior NAR official how many of these part-time, untrained, unethical and incompetent agents exist, the answer was, ” We have no idea.”

  3. MLS systems exposes consumers to unqualified and duplicitous agents that use asymmetry to further their advantage. When you hire a real estate agent, you only know how well they will work afterward. Why? The unqualified agents mimic the good agents. They use the same scripts and buy the same cars, clothes, and watches. Here is a link to agents’ different motives for choosing real estate as a career, which I have witnessed.

  4. The customers have no direct access to the MLS data. The system ” filters ” the data to force the customer to trust another person with a significant conflict of interest.

  5. Agents manipulate the MLS. There are many ways this happens. Here is a report by Market Business News describing several practices most consider unethical. 

  6. When a new listing comes in a balanced market, about 30-35 percent of all listings expire unsold with the current broker. Many homeowners know this as they are accustomed to seeing new signs on the same property. While every local market differs, even if the expiration rate was ten percent, it still needs to be more efficient at scale.

It would take time and energy to explain to your agent. Your agent may or may not choose to follow up. Chalk it up to experience and move on.

Published by

Leave a Reply

Your email address will not be published. Required fields are marked *